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Amendment to Unlawful Detainer Statutes Affects “Public Records Mask”

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California AB 2819, which will take effect on January 1, 2017, now maintains the public records mask on limited unlawful detainer actions (under Cal. Code Civ. Proc., §1161.2) unless a plaintiff prevails in 60 days. (Currently, the statute automatically unmasks the record, unless a defendant prevails in 60 days).

It also adds a Section 1167.1 to the unlawful detainer statutes, which will allow a court to dismiss an unlawful detainer action unless a proof of service is filed within 60 days.

The new provisions are a result of efforts by Assembly Member David Chiu, who urged that “Tenants who prevail in eviction lawsuits should not be placed wrongfully on tenant blacklists”.

The changes shift the balance from the public policy promoting open access to public records in favor of protecting tenants from the stigma of having an eviction on their “record” (whether or not they ultimately prevailed). (The past few years has seen an increase in evictions, which is arguably tied more to increase in housing costs more than an increase in violative behavior.)

On the other hand, landlords have an interest in learning about the eviction history of their prospective tenants. The new law also creates an incentive for defendants to stall the unlawful detainer “summary proceeding” for at least 60 days, to trigger the maintaining of the mask.

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SFAA v. CCSF – First District Court of Appeals Affirms Challenge to San Francisco Planning Code Ellis Act Discrimination

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“[R]ather than regulating the particulars of a landlord’s proposed merger (or demolition or conversion) of a residential unit, section 317(e)(4) prohibits a landlord withdrawing a residential unit from the rental market from merging the unit with another unit for 10 years. In doing so, section 317(e)(4) imposes a penalty on the very class entitled to protection under the Ellis Act – to wit, landowners seeking to exit the residential rental business. As such, under the legal authority cited above, section 317(e)(4) is indeed invalid.”

Division Three of the First District Court of Appeal affirmed the San Francisco Superior Court’s determination that San Francisco may not deny applications to merge dwelling units, under Planning Code section 317(e)(4), by property owners who have invoked the Ellis Act.

In San Francisco Apartment Association v. City and County of San Francisco, the SFAA challenged San Francisco Ordinance 287-13, which regulated the merger (i.e., joining) of two existing dwelling units, and which specifically prohibited approval for such merger when there had been a non-fault eviction within the ten years prior to the application (or an owner/relative move-in eviction within five years).

The then-existing version of San Francisco Planning Code Section 317(e)(4) provided that, “The Planning Commission shall not approve an application for merger if any tenant has been evicted pursuant to Administrative Code Sections 37.9(a)(9) through 37.9(a)(14) where the tenant was served with a notice of eviction after December 10, 2013 if the notice was served within ten (10) years prior to filing the application for merger.”

The challenge focused exclusively on the Ellis Act (as opposed to other non-fault evictions under the Rent Ordinance) because the Ellis Act is a state (not local) law (Cal. Gov., §§7060, et seq.) that “‘completely occupies the field of substantive eviction controls over landlords’ desiring to exit the residential rental market.”

Courts have traditionally viewed substantive eviction controls as the purview of local governments, while viewing state law (e.g., the unlawful detainer statutes) as occupying the field of procedural rules for evictions. This ruling illustrates the Ellis Act as an exception.

Division Three noted that, “the issue is whether the Ordinance enters into the field of ‘substantive eviction controls over landlords’ that has been reserved for the State”, essentially scrutinizing the impact of local laws imposing a penalty on the exercise of this particular type of eviction. In other words, cities can otherwise enumerate the allowable bases to terminate residential tenancies, but they must include the Ellis Act and they may not discriminate against it.

This decision potentially opens the door to challenges to a variety of Ellis Act “penalties”, including the recent “Accessory Dwelling Unit” ordinance, which allows property owners to create dwelling units out of unused space in existing properties… unless they’ve invoked the Ellis Act within the last ten years.

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San Francisco Legislative Update (2016): Accessory Dwelling Unit Ordinance Finds Additional Housing Stock in Existing Space

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San Francisco’s new “Accessory Dwelling Unit” law – adopted in Ordinance 162-16 – is another effort in the City’s broader plan of trying to squeeze additional dwelling units out of existing inventory. Accessory Dwelling Units (also known as “ADUs”, “Secondary Units” or “In-Law Units”) are defined as dwelling units entirely within the existing built “envelope” of an existing building. (In other words, with the exception of allowing small height increases when ADUs are built in conjunction with seismic retrofit work, the addition cannot increase the size/height of a building.)

The Planning Code distinguishes between buildings with four or fewer existing dwelling units and those with more than four. For the former, one ADU is permitted, while there is no limit for the latter, so long as the additions conform with the ADU rules. These rules include the following:

• An Accessory Dwelling Unit cannot be constructed using space from an existing dwelling unit. They also cannot be merged with another dwelling unit;
• They cannot be created in certain Neighborhood Commercial Districts;
• They cannot be used for Airbnb/short term residential rentals;
• They cannot be converted to condominiums;
• While ADUs are necessarily “new construction”, they are exempted from vacancy control prohibitions under Costa-Hawkins, and this is the case whether or not the building in which the ADU is located is also “new construction”;

ADUs are, however, prohibited where the property owner has performed an owner/relative move-in eviction within five years or any other non-fault eviction – like the Ellis Act – within ten.

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SUPERIOR COURT JUDGE STRIKES DOWN “EDUCATOR EVICTION” LAW: SF Tenant-Protection Measure Violates State Law By Requiring Extended Eviction Notices

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San Francisco’s attack on property rights suffered yet another defeat today thanks to the efforts of lawyers at ZFP Law. Legislation designed to limit owners’ ability to recover possession of rental units for their own use or occupancy or to recover possession to make repairs or improvements was declared invalid by a San Francisco Superior Court judge.

The Law: In May of this year, the City amended the Rent Ordinance such that landlords who want to recover possession of rental units – such as owner/relative move-in, condo conversion sale, removal from housing use, capital improvements, or rehabilitation work – where the tenants have school-age children or are employed, in any way, by a school or school system, could not terminate the tenancies except during the Summer recess. (Ordinance 55-16) For example, a landlord who wants to move her ailing, elderly mother into a unit in her building on September 1 would have to wait until next May. The legislation was sponsored by Supervisors Campos, Kim, Mar, Avalos, Cohen, and Breed, and passed unanimously with the Mayor’s signature.

The Case: The San Francisco Apartment Association and Small Property Owners of San Francisco Institute retained Zacks, Freedman & Patterson to challenge the law, and the lawsuit was filed on June 10, 2016.

The Decision: On August 31, 2016, the San Francisco Superior Court issued an order invalidating the City’s ordinance, concluding that, “Since the Ordinance only regulates when some tenancies may be terminated based on who the tenants are, the Court agrees with Petitioners that it is preempted because it enters the fully-occupied field of the ‘timing of landlord-tenant transactions’ which ‘is a matter of statewide concern not amenable to local variations’”.

ZFP Law shareholder Andrew Zacks argued the matter with the assistance of senior litigator James Kraus. Said Zacks, “The judicial system is currently the only hope for vindicating the rights of property owners under the assault of short-sighted, ill-advised, counter-productive, and illegal San Francisco legislation. After 30 years of failed housing policies that have contributed to some of the highest housing prices in the world, San Francisco needs to explore new solutions. We are grateful that the Court acknowledged our primary argument that San Francisco laws must conform to the requirements of California law.”

San Francisco Apartment Association director Janan New added, “Much farther-reaching than the laudable goal of preventing displacement of teachers, the legislation actually made it illegal for a property owner to make necessary capital improvements to their building for nine months out of the year. It was written so broadly that it also prevented property owners from making major rehabilitations to their property anytime from September to June, and made it illegal for a homeowner to move into his or her own home for three quarters of the calendar year, even if the homeowner himself is a San Francisco teacher or school employee. We thank the Court for rightfully striking down the ordinance.”

Zacks, Freedman & Patterson, PC is a law firm dedicated to advocating for the rights of property owners. With experience and knowledge in rent control issues, zoning, permitting, transactional disputes and other real estate matters, Zacks, Freedman & Patterson, PC has successfully advocated its clients’ positions before local administrative tribunals and at all levels of the State and Federal courts, including the U.S. Supreme Court. For more information, call (415) 956-8100 or visit www.zfplaw.com.

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California Legislative Update (2016): Amendment to Petris Act with Respect to Costa-Hawkins Exempt Tenancies

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The Petris Act (Cal. Civ., §§1947.7,1947.8), adopted in 1986, requires administrative certification of rent levels by rent control agencies that require the registration of rent.

SB 775 amends Section 1947.8 to exclude tenancies exempted from rent registration by Costa-Hawkins, adopted in 1996 and phased in by 1999. The California Legislature was concerned about savvy and unscrupulous landlords/tenants applying for certification of incorrect rent levels and creating a state-sanctioned rental rate estoppel certificate. By limiting the exclusion to post-1999 tenancies, the amendments serve as a compromise between vacancy decontrol and the rights conferred by the Petris Act.

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Morlin Asset Management, LP v. Murachanian: Tenant’s Indemnity Clause Not a Basis for Recovery by Landlord for Premises Liability

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In Morlin Asset Management, LP v. Murachanian, the Second District Court of Appeals found that an indemnity clause in a tenant’s lease did not cover claims by a cleaning service against the building owner, when their employee slipped on stairs attempting to service the tenant’s unit. The employee spilled a bucket of soapy water on the stairs while ascending, slipped, and hit his head. When the employee sued the owner for negligence and premises liability (on the theory that defective stairs caused the fall), the landlord cross-complained for indemnity against the tenant – a dentist who hired the cleaning service.

The Second District Court of Appeals held that, while there was an indemnity clause in the tenant’s lease, for the benefit of the landlord, and while these clauses are construed broadly in the context of insurance coverage, it could not be said that the plaintiff’s injury arose out of the tenant’s use of the property.

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San Francisco Housing Slumps… Literally

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SF Gate reports on the sinking and tilting of SOMA’s Millennium Tower, which has settled 16 inches since its completion in 2008. Theories vary, with some saying this is due to the choice not to drill piles into the bedrock and others shifting the blame to excavation at the adjacent Transbay Transit Center.

Meanwhile, rental housing is down as well (metaphorically)

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