640 Octavia, LLC v. Pieper delivers a long overdue analysis of an owner’s “bona fide intent to withdraw” in the context of Ellis Act evictions. The Ellis Act was enacted in 1985 in response to the Supreme Court decision Nash v. City of Santa Monica (1984) 37 Cal.3d 97, which found that a city’s police power permitted it to eliminate the ability of landlords to terminate a tenancy in conjunction with exiting the rental market, unless the city permitted it. In that case, Santa Monica would only issue a demolition permit if “(1) the building is not occupied by persons of low or moderate income, (2) cannot be afforded by persons of low or moderate income, (3) removal will not adversely affect the housing supply and (4) the owner cannot make a reasonable return on his investment.”
The California legislature was quick to respond by enacting the Ellis Act to alleviate the plight of landlords and guarantee a “fundamental right” to cease doing business as a landlord. However, it took nearly two decades before the Supreme Court dictated the rubric for use of the Ellis Act in the context of a tenant’s defense of retaliation. In Drouet v. Superior Court (2003) 31 Cal. 4th 583, the Supreme Court determined that a landlord was permitted to retaliate, so long as they had a bona fide intent to exit the rental market. (As a practical example, “mom and pop” landlords should be permitted to exit the rental market even though their tenants complain about housing defects. (In fact, they can exit because of those complaints.)
Drouet set the framework for entry of judgment for the landlord as a matter of law, but remanded to the trial court to determine whether the particular case met the standard. It took another two decades to put that standard into practice.
In 640 Octavia, the Court rejected the evidentiary significance of two themes of arguments by the tenants. First, the Court clarified the primacy of a plaintiff’s establishing a bona fide intent to withdraw in the face of a retaliation defense under Drouet. Essentially, there is no “retaliatory withdrawal defense” when a landlord seeks to go out of business.
Continue reading “640 Octavia, LLC v. Pieper – Court of Appeal delivers guidance on summary judgment in Ellis Act unlawful detainers”
In February of 2022, San Francisco passed Ordinance 18-22, which required landlords to first serve a “ten day notice to cure” (before serving the requisite state law eviction notice) to avail themselves of the unlawful detainer statutes in fault-based evictions.
Case law has asserted the primacy of state eviction procedure over local law to the contrary, while local law has been able to infiltrate procedure if it’s merely incidental to timing.
The San Francisco Apartment Association and the Small Property Owners of San Francisco challenged the ten-day ordinance on the basis of state law preemption, and in particular that a landlord cannot be permitted to wait ten days before serving the three day notice to pay rent or quit (rent being the basic bargain of the tenancy – what the tenant exchanges for occupancy). (The petition for writ of mandate can be found here.)
The Real Property Department of the San Francisco Superior Court granted the petition in part. It agreed that the City could not interfere with the state law procedures for recovering rent or possession of a rental unit. As to other bases for eviction, the Court found itself bound by Rental Housing Ass’n of N. Alameda Cty. v. City of Oakland (2009) 171 Cal. App. 4th 741, which upheld (without much analysis) the authority of Oakland to require a seven day cure period before enforcing certain violations. Whether this too is susceptible to challenge will be up to the Court of Appeal.
The Small Property Owners of San Francisco asked two of its board members, Paul Utrecht of Utrecht Lenvin, LLP and Costa-Hawkins.com’s own Justin Goodman of Zacks, Freedman & Patterson, PC, to discuss November’s Proposition 21 – a statewide ballot initiative to effectively repeal the Costa-Hawkins Rental Housing Act and allow cities to impose vacancy control.
Paul and Justin discussed existing law and the nuances of Proposition 21 – this year’s effort to repeal the operative provisions of the Costa-Hawkins Rental Housing Act (succeeding a previous effort by Michael Weinstein in 2018, and a legislative effort in 2017).
Paul and Justin also contemplated the likely unintended and perverse consequences of once again allowing the vacancy control that Costa-Hawkins eliminated at the state level back in 1996. We at Costa-Hawkins.com rarely take political stances on potential changes in law, but if for no other reason than we would need a new domain name (and that the change in law would authorize misguided rental housing policy statewide), we urge you to donate and vote!
SPOSF’s mission is to provide owners of small rental properties in San Francisco with the tools and information necessary to conduct business successfully in a difficult regulatory climate, through educational programs, publications, and workshops that seek to help members better understand their rights and obligations, how to work constructively with city and state officials, and how to deal effectively with their tenants. SPOSF also seeks to protect the rights of small property owners against unfair and burdensome regulations through legal advocacy.
SPOSF holds monthly meetings at St. Mary’s Cathedral, located at 1111 Gough Street in San Francisco. You can join SPOSF by clicking here. Members have access to the full monthly newsletter.
San Francisco passed legislation, sponsored by Supervisor Preston, which prohibits evictions for non-payment of rent, for any rent due during Governor Newsom’s eviction moratorium, which is currently extended through September 30, 2020. Therefore, for rents due between the original March 16th order and September 30th (as may be further continued), San Francisco landlords cannot collect this rent (and the unit) via an unlawful detainer lawsuit.
Unsurprisingly, several industry groups – the San Francisco Apartment Association, the San Francisco Association of Realtors, the Coalition for Better Housing, and the Small Property Owners of San Francisco Institute have sued to overturn the ordinance.
The full text of Ordinance 93-20 is available here.
Amid the shelter-in-place order and the broader uncertainty surrounding the COVID-19 pandemic, the Small Property Owners of San Francisco unfortunately had to cancel their regularly-scheduled monthly meeting for April 2020. That tough decision came at a difficult time, when small property owners needed updates on rapidly-changing landlord-tenant law more than ever.
Fortunately, the SPOSF board were able to present a “virtual legal Q&A” featuring Paul Utrecht of Utrecht Lenvin, LLP and Costa-Hawkins.com’s own Justin Goodman of Zacks, Freedman & Patterson, PC.
The duo discussed the incredibly rapidly changing area of landlord-tenant law in context of the COVID-19 pandemic, including changes from every branch of government and at ever level of government.
The online video is available here.
Under normal circumstances, SPOSF holds monthly meetings at St. Mary’s Cathedral, located at 1111 Gough Street in San Francisco. You can join SPOSF by clicking here. Members have access to the full monthly newsletter.