Justin Goodman was featured in the Legal Q&A for the February 2019 issue of SF Apartment Magazine – the official publication of the San Francisco Apartment Association.
Justin navigated a landlord’s ability to enforce a lease and the law when a tenant unlawfully lists a room on a short term hosting platform. Hosting platforms have largely been unsuccessful in challenging residential unit conversion regulations in California, but many cities do allow registered use within reasonable limits. Landlords do their best to maintain their residential buildings as residential by considering multiple approaches to policing vacation rentals.
SFAA is dedicated to educating, advocating for, and supporting the rental housing community so that its members operate ethically, fairly, and profitably. SFAA’s is a trade association whose main focus is to support rental owners by offering a wide variety of benefits that address all aspects of rental housing industry.
The Ninth Circuit Court of Appeals ruled that the City of Santa Monica is permitted to regulate hosting platforms, which it found “had negatively impacted the quality and character of its neighborhoods by bringing commercial activity and removing residential housing stock from the market at a time when California is already suffering from severe housing shortages”.
Santa Monica’s ordinance allowed licensed “home-sharing” but prohibited all other short-term rentals of 30 days or fewer. It requires platforms to (1) collect and remit “Transient Occupancy Taxes”, (2) disclose certain listing and booking information regularly, (3) refrain from completing any booking transaction for properties not licensed and listed on the City’s registry, and (4) refrain from collecting or receiving a fee for facilitating or providing services ancillary to a vacation rental or unregistered home-share. Platforms who comply receive safe harbor. (A similar safe harbor provision in San Francisco’s short-term rental ordinance led to settlement of a similar lawsuit in the Northern District of California. Here, the district court granted Santa Monica’s motion to dismiss, for failure to state a cause of action under federal law, including the Communications Decency Act of 1996 and the First Amendment.
The CDA provides internet companies with immunity from certain claims in furtherance of its stated policy to promote the continued development of the Internet and other interactive computer services, providing immunity to cases where “(1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause of action, as a publisher or speaker (3) of information provided by another information content provider”. The hosting platforms argued that the ordinance required them to monitor and remove third party content, in violate of the CDA. The Ninth Circuit, however, found that the ordinance did not try to treat them as publishers. It merely prohibits processing transactions for unregistered properties.
The hosting platforms also argued that they were protected by the First Amendment: even if the plain language of the Ordinance only reaches “conduct” (the booking of unlicensed properties), it effectively imposes a “content-based financial burden” on commercial speech and is thus subject to First Amendment scrutiny. The district court, however, found that the regulation affected conduct that lacked a “significant expressive element”, and the Ninth Circuit agreed.
Ordinance 52-19 amends the Building Code’s previous abandoned building ordinance to extend its scope and accelerate its application.
Previously, the code defined a commercial storefront as “vacant or abandoned” if,
(1) it is unoccupied and unsecured;
(2) it is unoccupied and secured by boarding or other similar means;
(3) it is unoccupied and unsafe as defined in Section 102A of the Building Code;
(4) it is unoccupied and has multiple code violations; or
(5) it has been unoccupied for over 30 days.
Properties come outside of the definition of vacant or abandoned if the owner or lessee is actively seeking permits or authorization for a particular use, or if there is a permit for repair, rehabilitation, construction, etc. However, Ordinance 52-19 removes the existing exception where the property is being actively listed for lease or sale. It also requires payment of the registration fee upon registration (as opposed to the former rule: 270 days after it became vacant), and the owner must annually register and pay the fee.
Information about lawsuits is generally available to the public. And for tenants who have been evicted, this information is often used in credit checks for rental applications. (A landlord would understandably be interested in knowing if her applicant had just been evicted for non-payment of rent.) The unlawful detainer statutes have a specific provision governing the masking of eviction lawsuits from the public record. (Formerly, a limited civil eviction lawsuit would unmask automatically, unless a defendant prevailed in 60 days. A 2016 amendment inverted the rule, maintaining the mask unless the landlord prevailed in 60 days.)
AB 1795, however, would prevent the court clerk from allowing access to information about Ellis Act evictions, regardless of whether the landlord prevails in 60 days. Ellis Act evictions often feature a fight about wealth; the tenant has a non-transferable, valuable property interest in their rent-controlled tenancy, while the landlord wants possession of her valuable asset. In San Francisco, for instance, the City actively encourages tenants to hold over and fight Ellis Act evictions. (After all, there’s no better affordable housing than the exiting unit that already has a rent-controlled tenant in it.) But it is difficult to read this amendment as anything other than tacit encouragement from Sacramento for tenants to violate the law and fight an eviction with fewer consequences. A landlord would understandably be interested in knowing that her prospective tenant is likely to violate obligations other than paying rent, as well.
Provoked by infamous landlord Anne Kihagi (whose aggressive reading of re-rental timing for withdrawn units was actually vindicated in the Court of Appeals), Assemblymember Bloom had introduced last year’s unsuccessful AB 2364 – seeking to require that landlords return to the market all at once or not at all. (By comparison, Kihagi was able to return units to the market that were unoccupied at the time she began the Ellis withdrawal, and was thus able to do so without price constraints.)
Gov. Newsom recently challenged the legislature at his “state of the State” address: “get me a good package on rent stability this year and I will sign it”. While many fresh ideas have already been advanced, AB 1399 appears to be another attempt at AB 2364.
As introduced, its language would allow cities to require Ellis-invoking property owners to return all units to the market at the same time. Many different configurations of properties are withdrawn under the Ellis Act, but for those where the owner (or their family) moves into a tenant-occupied unit, this change would either prevent rental of other units or force property owners to leave their own homes to rent units. One wonders how this bill would aid in easing the housing crisis, where it makes the process of putting existing units back on the market more onerous. (The language will likely need to be changed before the statute can advance.)
The Small Property Owners of San Francisco institute featured Justin Goodman’s article on “How to determine if a tenant is just using his unit as his ‘place in the City’, and what to do about it”. San Francisco rent control protects “tenants in occupancy”, and landlords can use the “1.21 petition” (named for Rent Board Rules & Regulations section 1.21) to ask the Rent Board for a finding that tenant is really living somewhere else.
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.
AB 2219 adds Section 1947.3 to the Civil Code to create new requirements for the form of tender of rent payments, landlord’s rights when tenants bounce checks, and the ability of tenants to pay via third parties. This last change is a rent-control red flag, but Section 1947.3 includes requirements to protect landlords from creating new rent controlled tenancies at the historic rental rate of another tenant.
First, a landlord must accept rent in at least one form that is neither cash nor EFT. Second, if the tenant bounces a check, a landlord can require payment in cash for up to three months (provided that they change the terms of tenancy formally, if this is not already in the lease).
Ostensibly to allow greater flexibility for tenants (but with little legislative history to suggest this is a significant concern), a landlord must now accept rent from a third party, at the tenant’s election. The mechanics of this call to mind the classic waiver trap of a subsequent occupant trying to pay rent to her master tenant’s landlord to directly establish a rent controlled tenancy. However, the landlord is only required to accept payment from a third party who is not a “tenant”. The landlord may (and really should) have the third party sign an acknowledgement that includes the following:
I, [insert name of third party], state as follows:
I am not currently a tenant of the premises located at [insert address of premises].
I acknowledge that acceptance of the rent payment I am offering for the premises does not create a new tenancy.
(signature of third party) _____
These new rules do not require a landlord to accept rent after a “three-day notice to pay or quit” has expired. They also do not require a landlord to enter a public housing contact with a Section 8 tenant. However, San Francisco landlords should be cautioned that explicitly refusing to enter such an agreement may now be actionable.