The City of Oakland appears ready to join the short list of California cities regulating “tenant buyout agreements” – i.e., providing consideration to tenants to voluntarily vacate their rent-controlled rental units. Cities like San Francisco, Berkeley, Santa Monica and Los Angeles view these negotiations as inherently unequal, given that a landlord can threaten to perform an owner-move-in eviction or an Ellis Act eviction if the tenant doesn’t agree to accept money to leave.
The ordinance would add Section 8.22.700 to the Oakland Municipal Code. It would require disclosures of tenants’ rights, provide for a right to rescind (within 25 days, along with requirement to file the agreement in 45 days), and impose “vacancy control” constraints (the old rental rate) if a landlord threatened an OMI or Ellis eviction within 180 days. (Otherwise, a tenant move-out, even for payment, would be considered a “voluntary vacate” allowing a market rate increase.) The ordinance also imposes penalties for non-compliance, including enhanced penalties for non-compliant buyout agreements with elderly, disabled and catastrophically ill tenants.
Assemblymember Bonta has introduced AB 2925, providing for “good cause” for evictions. Originally, this was stated to be a “just cause for eviction” measure. Currently, most “just causes” for eviction are implemented at the city level (with the exception of the Ellis Act). “Just cause” means that a tenant has a substantive defense to an eviction if the landlord did not serve the eviction notice/terminate the tenancy with an allowable “just cause” (like nonpayment of rent or the desire of the owner to move in).
The meaning of “good cause” is a bit more vague. The current text of the bill would add Section 1946.2 to the Civil Code, to read:
“A landlord shall not issue a notice to terminate a tenancy pursuant to Section 1946 or 1946.1 except upon good cause, as set forth with particularity in the notice. This section is in addition to, and does not supersede or preempt, any other state or local law requiring the showing of good cause prior to the termination of a tenancy.”
This would merely seem to reiterate a protection that tenants already have at the state level – a defense against retaliatory evictions. As the California Supreme Court put it: “The retaliatory eviction doctrine is founded on the premise that a landlord may normally evict a tenant for any reason or for no reason at all, but he may not evict for an improper reason”. (Barela v. Superior Court (1981) 30 Cal. 3d 244, 249.)
Justin Goodman was featured in the Legal Q&A for the March 2018 issue of SF Apartment Magazine – the official publication of the San Francisco Apartment Association.
Justin explored San Francisco’s Business and Tax Regulations Code, which sets forth requirements for business registration and the City’s gross receipts tax, and which considers owners of “one residential structure consisting of fewer than four units or one residential condominium” to be a “small business enterprise”. These small property owners do not need a registration certificate and are exempt from the gross receipts tax.
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.
SocketSite.com reports the ten-year trend of eviction notices filed with the San Francisco Rent Board. The trend for 2017 is a decrease across the board, with one exception – the Ellis Act.
SocketSite doesn’t express an opinion on the cause for the trend (at least until you get to the comment’s section). However, a recent decline in breach/nuisance evictions may be attributable to the 2015 Jane Kim Amendment (which heightened both the pleading standard and the substantive threshold for a landlord to prevail here). The recent decline in OMI/RMI evictions may be because of the uncertainty of the “educator” amendment or the more stringent enforcement of fraudulent owner move-in evictions. Ellis Act evictions may be up in recent years (compared to 2013) following a dip during the uncertainty created by the “Campos I” and “Campos II” enhanced relocation assistance payment legislation.
Thus, under Birkenfeld, municipalities may by ordinance limit the substantive grounds for eviction by specifying that a landlord may gain possession of a rental unit only on certain limited grounds. But they may not procedurally impair the summary eviction scheme set forth in the unlawful detainer statutes. The Property Owners argue the Ordinance is procedural because it governs the timing of notices of eviction: ‘The Ordinance does not limit the allowable justifications for evicting tenants; it only delays certain evictions.’ Such questions of timing, they contend, are purely procedural. The City argues the Ordinance is substantive because timing is merely a component of the substantive defense to eviction: ‘When the household to be evicted includes a child under the age of 18 or an ‘educator’ within the terms of the Ordinance, ‘good cause’ for a landlord to undertake any of the specified types of no-fault evictions does not exist unless the eviction is to take effect during the summer months.’ As this case illustrates, the distinction between procedure and substantive law can be shadowy and difficult to draw in practice.
In SFAA v. CCSF, Division Five of the First District Court of Appeal overturned the SF Housing Court’s order mandating that the City not enforce a 2016 amendment to the Rent Ordinance (Ordinance 55-16) that created a substantive defense to certain non-fault evictions for “educators”.
Continue reading SFAA v. CCSF (2018): City’s “Educator” Eviction Defense Upheld as “Substantive” Rather Than “Procedural”
“Accordingly, we hold that an unlawful detainer judgment awarding back-due rent does not preclude a lessor from seeking additional back-due rent in an ordinary civil action. However, the lessor is precluded from recovering back-due rent associated with a particular time period in the subsequent civil action if such a claim was actually determined on the merits in the unlawful detainer action. Thus, the lessor is not only precluded from recovering twice for the same items of damages but also may not renew a claim for back-due rent associated with a particular time period if that periodic claim was denied on the merits in the unlawful detainer action.”
Hong Sang Market, Inc. v. Peng (2018) tracks multiple years and multiple lawsuits, with a building owner, master tenant and subtenant battling over money judgments, unpaid rent, unlawful detainer damages and various awards of attorneys’ fees. For landlord-tenant practitioners, it provides a crucial analysis of the doctrine of res judicata, in the context of unlawful detainers based on the non-payment of rent, contract damages for non-payment of rent, and the holdover damages incidental to unlawful detainers.
Hong Sang is the owner of a commercial building. It leased to Ming Kee Game Birds, Inc., which then subleased to Vivien Peng. Ming Kee sued Peng for breach of the sublease, but Peng cross-complained against Ming Kee, obtaining a money judgment that she began to collect in the form of offsets to her rental payment obligation. However, Ming Kee and Hong Sang agreed to terminate the master lease, and a new tenant – Ming’s Poultry, LLC – assumed the master lease and began operating Ming Kee’s former business.
Continue reading First District Court of Appeal Analyzes Claim Splitting in the Context of Unlawful Detainer Rent Demand and Damages versus Past-Due Contract Rent in Hong Sang Market, Inc. v. Peng (2018)
“Sayta subsequently brought a motion to enforce the settlement pursuant to section 664.6, alleging breach of a confidentiality provision and seeking liquidated damages. The trial court denied the motion on the merits and Sayta appeals Because the parties failed to request, before dismissal, that the trial court retain jurisdiction to enforce the settlement, or alternatively seek to set aside the dismissals, we find the court lacked jurisdiction to entertain the motion. We therefore reverse on that basis and do not reach the merits.”
Sayta v. Chu represents the importance of understanding civil procedure in crafting effective and enforceable settlement agreements.
Very few cases actually go to trial. Through all the posturing, law and motion, discovery and settlement discussions, attorneys are generally able to anticipate likely outcomes to obtain “good enough” results, without their clients paying for an answer to the question “who was right?”. (Or, put another way, settlement allows the parties to determine the outcome, while trial gives control over the outcome to the judge and jury.)
A “settlement agreement” is essentially a contract and is generally interpreted and enforced like a contract. This could create a problem of regression: settling a claim (like one for “breach of contract”) results in a “settlement contract”. The settlement contract could also be breached and enforced with a lawsuit, which can be settled with a settlement contract, which can be breached, etc., etc. Lawsuits could never be settled because the claim would only be deferred to the next lawsuit.
Continue reading Sayta v. Chu (2017) – Parties Must Obtain Court Order To Retain Jurisdiction To Enforce After Dismissal
San Francisco Apartment Association and Small Property Owners of San Francisco Institute appealed the 2015 district court ruling upholding San Francisco’s Buyout Ordinance. The U.S. Court of Appeals for the 9th Circuit upheld the ruling of the U.S. District Court for the Northern District of California, affirming its judgment on the pleadings, and upholding the ordinance on constitutional grounds.
In so ruling, the Court concluded that the Buyout Ordinance did not violate the various constitutional rights asserted (e.g., free speech rights, equal protection of the laws, liberty to contract, right to privacy) under any of the distinct provisions challenged: (1) the “Disclosure Provision”, (2) the “Notification Provision”, (3) the “Rescission Provision”, (4) the “Database Provision”, (5) the “Penalty and Fee Provision”, and (6) the “Condominium Conversion Provision”.
Continue reading SFAA v. CCSF (2018) – 9th Circuit Affirms N.D. Cal. Judgment on the Pleadings for San Francisco in Buyout Challenge