AB 1506 IS DEFEATED IN COMMITTEE

A MESSAGE FROM AAGLA EXECUTIVE DIRECTOR, DAN YUKELSON

COSTA-HAWKINS IS SAVED…
FOR NOW. TO BE CONTINUED.

Today is a great day for the multifamily housing industry. An Assembly bill introduced by Richard Bloom (D-Santa Monica), AB 1506, to repeal the Costa-Hawkins Rental Housing Act of 1995 (“Costa-Hawkins”) has been defeated. In a meeting today in front of the Housing and Community Development Committee, a 5 member committee, two members were in favor, two were against, and one member, Ed Chau, abstained; therefore, preventing the Bill from moving forward to the General Assembly.

Just prior to today’s Housing and Community Development Committee meeting on AB 1506, your Apartment Association of Greater Los Angeles and its affiliated associations mobilized and encouraged their members to email and call Ed Chau’s offices urging him to Vote No on AB 1506. As a result, calls and emails flooded into Ed Chau’s offices and eventually, Ed Chau shut off his phones! We sent busloads of sign-carrying housing providers to today’s meeting in Sacramento to urge the Committee to Vote No on AB 1506. And, it worked! Ed Chau abstained, which is the same as a No Vote.

Advocacy works!
Your efforts paid off. Thank you all that contributed to the effort to defeat AB 1506.

Costa-Hawkins is a landmark, California state law that places many protective limits on local rent control ordinances. Costa-Hawkins provides two major benefits: (i) first, it prohibits municipalities from establishing rent control over certain types of housing units such as single-family homes, condominiums and newly constructed rental units; and (ii) second, it permits “vacancy de-control”, or in other words, it allows rental housing providers to set their rents at the prevailing market following a tenant’s vacancy. Without Costa-Hawkins, rental housing providers in cities such as Santa Monica and West Hollywood could not raise their rent to market under any circumstances. It is Costa-Hawkins that mandates cities to permit an apartment owner to rent an apartment, when vacant, at any price (e.g., market price). AB 1506 would have repealed Costa-Hawkins entirely.

Although we have won today’s major battle, it is likely that AB 1506 will return in a different form by “chipping away” at some of the protections we have under Costa-Hawkins instead of the full repeal sought by Bloom. In addition, we are faced with a statewide ballot initiative that has been filed by well-funded, price control extremists that, if passed, would repeal Costa-Hawkins in its entirety. The proponents of the initiative have raised nearly $20 million to assure its passage.

We must all continue to join in the battle against these dangerous threats to the rental housing industry in California. The only way that we can defeat the initiative or other attacks on Costa-Hawkins is with money and your involvement.

IT IS IMPORTANT THAT YOU GIVE GENEROUSLY TO THE AAGLA POLITICAL ACTION COMMITTEE TODAY.

If you have the means, please give generously. Now more than ever, we need those that can afford to, to write $1,000, $2,5000, $5,000 or even $10,000 or more checks. If we lose the battle to save Costa-Hawkins, we could lose billions of dollars in lost rental income and property value. If we lose the battle over Costa-Hawkins, many of our members will end up in financial peril.

Now more than ever, stay involved, advocate and give to the AAGLA POLITICAL ACTION COMMITTEE. The Apartment Association of Greater Los Angeles is your regulatory insurance. AAGLA is constantly working on your behalf to ensure your voice is heard and your property rights are protected. We always have your back every step of the way. Support us and we will win.

GIVE YOUR SUPPORT

BLOWING UP COSTA-HAWKINS: WHAT IS IT AND WHY SHOULD YOU CARE?

It is Not Just Your Apartments, But Single-Family Homes and Condominiums Will Also be Impacted

By Daniel Yukelson and Stevie Funes

Although a great deal has already been said about it, there is much more discussion and debate to take place this year regarding the Costa-Hawkins Rental Housing Act of 1995 (“Costa-Hawkins”). Anyone that owns a residential property here in our golden State of California, whether new or old, or whether multi-family, single family or even a condominium needs to be informed and care about Costa-Hawkins.

Costa-Hawkins is a landmark, California state law that places protective limits on local rent control ordinances. Costa-Hawkins provides two major benefits: (i) first, it prohibits municipalities from establishing rent control over certain types of housing units such as single-family homes, condominiums and newly constructed rental units; and (ii) second, it permits “vacancy de-control”, or in other words, it allows rental housing providers to set their rents at the prevailing market upon a tenant’s vacancy. Without Costa-Hawkins, rental housing providers in cities such as Santa Monica and West Hollywood could not raise their rent to market under any circumstances. It is Costa-Hawkins that mandates cities to permit an apartment owner to rent an apartment, when vacant, at any price (e.g., market price).

Before Costa-Hawkins, rental housing providers in many jurisdictions were often forced out of business and faced bankruptcy. Prior to the protections provided under Costa- Hawkins, a rental housing black market formed, and apartment buildings became dilapidated due to deferred maintenance as owners suffered financially. It was not that long ago when the City of Santa Monica was referred to as the “Skid Row by the Sea” because housing providers could no longer afford to upkeep their properties.

Causes Leading Up to Rent Control

Rent control policies first appeared in the early and mid- 1900s during the World Wars in reaction to these two national emergencies. It was then during the late 1970s that various municipalities throughout California and nationwide began enacting rent control ordinances due, in part, to rising real estate values and surging interest rates, which had made single family homes in California less and less affordable. As a result, people began moving into apartments in larger numbers causing a rental housing shortage. At the same time, municipalities were making poor land use decisions by restricting construction of new housing units. As the demand for rental housing increased and the supply decreased, rental housing providers increased rents – it’s just the “old” supply and demand. And, to make matters worse, in the “perfect storm,” state and federal low-income housing assistance fell, inflation increased, and yet at the same time, wages and salaries fell.

The City of Berkeley became the first California city to adopt a post-war rent control ordinance in 1972. In 1976, Governor Jerry Brown, vetoed state legislation (AB 3788) that would have prohibited local rent control laws. AB 3788 was supported the California Housing Council (CHC), a real estate trade association. Subsequently, the CHC was able to get an initiative to prohibit rent control laws on the ballot in 1980, Proposition 10, but this initiative was soundly defeated.

In the meantime, in June 1978, Proposition 13 had been approved by a two to one margin by California voters. Prior to the election, Proposition 13 proponent, Howard Jarvis, and the California Apartment Association, had suggested that landlords would lower rents if Proposition 13 were to pass. Apparently, numerous voters were said to have thought that by lowering landlord property taxes, Proposition 13 would automatically mean lower rents. The CHC, then became fearful of a tenant backlash if landlords failed to follow through in lowering rents, and decided to oppose Proposition 13. Despite post-election efforts by Governor Brown and the CHC, few landlords lowered their rents.

Across California, tenants quickly began to feel their numbers and formed local groups, which quickly grew in intensity and strength. Tenant activists organized political agitation directed at state and city government. Governor Brown’s newly created ‘tenant hot line’ was at one point, getting 12,000 calls per day. Due to continuing tenant pressure, rent strikes, and adverse news coverage about rent increases and angry tenants, especially seniors, the Los Angeles City Council passed a six-month rent freeze in August 1978. By 1988, fourteen California municipalities had adopted full rent control ordinances.

While the strength of the tenant activism eventually began to dissipate, later attempts to repeal rent control at the state level failed. Today, approximately two-dozen out of 482 California cities have enacted rent control laws.

The Birth of the Costa-Hawkins Rental Housing Act

Authored by Jim Costa, a Democrat Senator from Fresno, and Phil Hawkins, a Republican member of the Assembly from Bellflower, Costa-Hawkins was first introduced in the Senate and eventually became Assembly Bill 1164. After several negotiated changes, it was passed in both chambers. Republican Governor, Pete Wilson, then signed AB 1164 into law and Costa-Hawkins was born.

Although Costa-Hawkins placed limitations on rent control, which was an agenda more favored by Republicans, quite a few Democrats supported the Act. The pro-tenant Western Center on Law and Poverty (WCLP) requested several amendments to the bill such as the prohibition of rent increases “if serious health, safety, fire, or building code violations were discovered and not corrected for six months.”

Costa-Hawkins was later amended in 2002 to close a loophole and clarify the law related to condominium conversions. It prevented owners of apartment buildings, who obtained a certificate for conversion, to an exemption to rent control laws, without selling any such apartments as condominiums.

Life Before Costa-Hawkins and the Passing of the Ellis Act

Without vacancy-decontrol afforded under Costa- Hawkins, municipalities can control the rental marketplace in its entirety. Some cities, such as Santa Monica before the passage of Costa-Hawkins, have exercised “vacancy control” by limiting what rental housing providers can charge for their units once a tenant vacates. Without the protections of Costa-Hawkins, rental housing providers simply could not keep up with the increasing costs to profitably operate their property. As a result, some owners decided to leave the multi-family housing business entirely, while others converted their properties to other uses, such as condominiums.

In the mid-1980’s, California passed the Ellis Act, a law to protect the right of owners to go out of the rental housing business so that they would not be forced to continue operating them at a loss. The Ellis Act was in response to the City of Santa Monica’s challenge to the right of property owners to stop offering their rental housing, and in essence, attempted to compel owners to operate rental housing, even at a loss.

It is clear that Costa-Hawkins has been a great lifeline to the rental housing industry and to property owners who have been able to make-up for some of the lost rental income “ground” once units are vacated. Without Costa-Hawkins protection, rent control laws would expand and California would return to the “dark ages” when the worst effects of rent control were allowed to thrive without abatement while at the same time driving owners out of business, creating a decaying housing stock and drastically reducing housing supply.

Some price control extremists have suggested only certain portions of Costa-Hawkins be modified by, for example, removing only the prohibition on new construction, which excludes from rent control properties built 1995 or later. The multi-family housing industry considers any attempt to alter Costa-Hawkins similar to allowing the “camel’s nose under the tent,” and any change, no matter how extensive, can only lead to a moving the goal post until it is ultimately repealed in its entirety. When it comes to Costa- Hawkins, any modification is the proverbial red line in the sand.

Threatening Costa-Hawkins

Costa-Hawkins is now being threatened with repeal both in the state assembly, and by well-organized, and extremely well-funded tenants’ rights groups who have submitted a ballot initiative. We, as rental housing providers, are under attack! If repealed, many municipalities would dramatically expand rent control.

A bill, AB 1506, that has been proposed by Assembly Member Richard Bloom, a Democrat from Santa Monica, would repeal Costa-Hawkins. However, that bill has been temporarily put on hold by its author amid fierce opposition from the rental housing industry. AB 1506 proposes a simple, one-line repeal of Costa-Hawkins. Bloom’s bill must pass the Assembly by the end of January, but even if it fails, it is likely that another legislative attack will be introduced in early 2018. The simple text of the bill is as follows:

“THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 2.7 (commencing with Section 1954.50) of Title 5 of Part 4 of Division 3 of the Civil Code is repealed.”

In addition to the Bloom bill, a new threat being led by tenant advocacy groups and Michael Weinstein, president of the AIDS Healthcare Foundation. These rent control zealots have proposed a ballot initiative that would repeal the Costa-Hawkins. This group is well organized and well- funded, and have raised, by some accounts, more than $20 million to ensure this initiative gets on the ballot and is passed. The proponents of this initiative submitted a letter to the California Attorney General requesting a title and summary for the initiative on October 23, 2017, which at the time this article was written, was pending issuance by the California attorney general’s office, but expected on December 27, 2017. The proponents will then need to gather the required 365,880 valid voter signatures in order to get on the November 2018 ballot.

Your Apartment Association of Greater Los Angeles and its allied rental housing associations have been able to defeat similar attacks against our industry at the State level many times before. However, this initiative and the bill proposed by Assembly Member Bloom are some of the most awful and egregious political threats to the rental housing industry in AAGLA’s 100-year history! We ask that each of our members be informed, attend Apartment Association meetings, write letters to your legislature, and actively help us to overcome the looming threat to our property rights. You need to care about Costa-Hawkins.
Together we can win!

Credit to AAGLA.com

A Whopping 130 Housing Bills Make for a Very Busy 2017

Reprinted with permission of the Small Property Owners of San Francisco Institute.

State legislators are sponsoring a record setting 130 housing-related bills during this legislative session. Below are the most important. 

Abolishing the Costa-Hawkins Act

AB 1506 (Bloom, D-Santa Monica, Chiu (D-San Francisco) and Bonta (D-Alameda), would repeal the state Costa-Hawkins Rental Housing Act, giving all cities and counties the power to impose rent control ordinances, including vacancy control without limits. The bill’s authors decided not to move forward with the bill in 2017, but will take it up again in 2018. Position: Oppose 

Weakening the Ellis Act

AB 982 (Bloom, D-Santa Monica), would expand the number of tenants entitled to receive a year’s notice from a landlord before that owner closes a building as allowed under the Ellis Act. Under current law, tenants who have lived in the unit for at least one year and are at least 62 years of age or are disabled are entitled to a year’s notice. Other tenants are entitled to a 120-day

notice. AB 982 would extend the one-year notice requirement to all tenants, regardless of age or disability. Position: Oppose 

Undercut the Bonus Density Law

AB 915 (Ting, D-San Francisco) would allow San Francisco to count added density bonus units when calculating the total number of affordable units required for a development. The state’s density-bonus law incentivizes developers to include affordable housing in their projects. In exchange, developers get to build more market-rate units, helping their projects “pencil out.” AB 915, however, would force developers to price a portion of their density-bonus units at below market rate, thereby removing the very incentive that these bonuses are intended to create. The bill would undercut the state’s density-bonus law and make housing in San Francisco even more expensive. Position: Oppose 

Labor-Related Bill Onerous to Rental Industry

AB 1008 (McCarthy, D-Sacramento) would make it unlawful for an employer to include on an employment application any question that seeks disclosure of an applicant’s criminal history, and bars employers from asking about any convictions until the employer makes a conditional job offer. The ability to screen for past criminal activity is particularly important in the rental housing industry, as employees work around children at rental properties and are granted access to tenants’ units and personal possessions. Position: Oppose 

Curbing Ballot-Box No-Growth Measures

AB 943 (Santiago, D-Los Angeles) would require a ballot measure proposed by the voters to curb, delay, or deter growth or development to be approved by 55% of the voters instead of a simple majority. Position: Support 

Fast-Tracking Housing Construction

SB 35 (Wiener, D-San Francisco) would move housing more quickly through the building permit process when developers meet certain standards. Position: Support 

SB 540 (Roth, D-Riverside) would streamline the approval process to spur housing construction by having cities identify where housing needs to be built and adopting specific, upfront plans and conducting all necessary environmental reviews and public engagement. Position: Support 

Boosting Housing Near Public Transit

AB 73 (Chiu, D-San Francisco) would incentivize local governments to complete upfront zoning and environmental reviews, and rewards them when they permit housing on infill sites around public transportation. Position: Support 

Encouraging Affordable Housing

SB 2 (Atkins, D-San Diego) would establish a permanent funding source for affordable housing through a $75 fee on recorded documents; it exempts owner-occupied residential real-estate sales. Position: Support 

SB 3 (Beall, D-San Jose) seeks to provide $3 billion through a statewide housing bond to fund affordable housing programs in California. Position: Support 

SB 62 (Jackson, D-Santa Barbara) would create the Affordable Senior Housing Program under the Department of Housing and Community Development to guide the development of affordable senior housing dwelling units. Position: Support

Landlord to Pay $20,000 to Settle Pet Discrimination Case – by the Editors of Rental Housing Journal

Reprinted with permission from AOA.

The owner of several Reno, Nevada apartment complexes has agreed to pay $20,000 to settle allegations of  pet discrimination and Fair Housing Act violations involving requiring pet deposits from prospective tenants who require assistance animals, according to a release.The Silver State Fair Housing Council filed four complaints against the owner and manager of Silver Lake Apartments, Vale Townhomes, Oak Manor Apartments and Angel Street Apartments with the U.S. Department of Housing and Urban Development (HUD).  These complaints allege ERGS, Inc. and Silver Lake Apartments, LLC discriminated against prospective tenants who required assistance animals by requiring applicants who required support animals to pay a pet deposit fee.

Under the conciliation agreement, ERGS, Inc. will pay Silver State Fair Housing Council $20,500.  ERGS, Inc., and Silver Lake Apartments, LLC, will also adopt written policies that are consistent with the Fair Housing Act and provide fair housing training for all employees who interact with tenants or applicants. Kate Zook, executive director of the Silver State Fair Housing Council, told Rental Housing Journal that a woman with an emotional support animal had tried to apply at the apartments and was told they do not accept pets. The Silver State Fair Housing Council did follow-up testing on emotional support animals and rentals at the apartment complexes. She said they found, “People with emotional support animals were told they do not qualify as a service animal.”

The organization then filed the complaint against the owner and managers of the apartment complexes.

“I hate filing cases,” Zook said. But she said unfortunately sometimes it takes publicity about these issues to get people’s attention. “It is too bad. Somebody has been hurt in this.”

Both Fair Housing Act and Americans with Disabilities Act can apply in these situations.

In addition to the Fair Housing Act’s protections, HUD provided guidance in April 2013 reaffirming that housing providers must provide reasonable accommodations to people with disabilities who require assistance animals.  

Pet Discrimination and Disability

Disability is the most common basis of fair housing complaint filed with HUD and its partner agencies. Last year alone, HUD and its partners considered over 4,900 disability-related complaints, or more than 58 percent of all fair housing complaints that were filed.

HUD writes in the notice that, “An assistant animal is not a pet. It is an animal that works, provides assistance or performs tasks for the benefit of a person with a disability, or provides emotional support that alleviates one or more identified symptoms or effects of a person’s disability. Assistance animals perform many disability-related functions, including but not limited to, guiding individuals who are blind or have low vision, alerting individuals who are deaf or hard of hearing to sounds, providing protection or rescue assistance, pulling a wheelchair, fetching items, alerting persons to impending seizures, or providing emotional support to persons with disabilities who have a disability-related need for such support. For purposes of reasonable accommodation requests, neither the FHA nor Section 504 requires an assistance animal to be individually trained or certified.”

Housing providers are to evaluate a request for a reasonable accommodation to possess an assistance animal in a dwelling using the general principles applicable to all reasonable accommodation requests. After receiving such a request, the housing provider must consider the following:

  • Does the person seeking to use and live with the animal have a disability — i.e., a physical or

mental impairment that substantially limits one or more major life activities?

  • Does the person making the request have a disability-related need for an assistance animal?  In other words,

does the animal work, provide assistance, perform tasks or services for the benefit of a person with a disability,

  • or provide emotional support that alleviates one or more of  the identified symptoms of a person’s existing disability?

If the answer to those two questions is “yes,” then the housing provider is to modify or provide an exception to a “no pets” policy.

RentalHousingJournal.com, an interactive community of multifamliy investors, independent rental home owners, residential property management professionals and other rental housing & real estate professionals, is the most comprehensive source for news and information for the rental housing industry. This website features exclusive articles and blogs on real estate investing, apartment market trends, property management best practices, landlord tenant laws, apartment marketing, maintenance and more.  Reprinted with permission.

Don’t Let Your Estate Plan Be a Hazard for Your Family! – by Kenneth Ziskin, Attorney

Reprinted with permission from AOA.

My wife, Hinda, who helps me with planning for clients, and I  have been lucky enough to meet hundreds of wonderful apartment owners though the AOA seminars we have done throughout California.  The majority of them planned ahead years ago and build living trust based estate plans to protect their families.

Unfortunately, almost all the plans we reviewed (some just a few years old, and some decades old) have now become “HAZARDOUS TO FAMILY WEALTH.”

Many of these “hazards” result from changes in the tax environment which were not anticipated when plans were originally drafted.  Others result from changes in the family.  Many others just reflect the growth in family wealth, which is a “good problem” to have.  And, a few of the “hazards” are the result of “one size fits all” drafting which, without customized planning, rarely optimizes for “your” goals and unique situation.

The vast majority of our apartment owner clients had a net worth of only a few hundred thousand dollars when they started out.  So, it was hard for them to justify the cost of doing good planning and their main goal was probate avoidance.

However, today, the vast majority have built multi-million dollar portfolios, which DO justify the cost of careful, customized planning.

Changes in the Tax Environment

Most of the old (and, sometimes, not so old) plans we review for apartment owners focused on avoiding probate and making sure that estate tax exemptions were optimized.

But, major changes in estate/death taxes, income taxes and the effect of property taxes have now made it more important for most owners to focus on the income and property tax consequences of their estate plans.

  • First, the lifetime exemption (now, an exclusion) from estate and gift taxes grew from $600,000 in 1997 to $5.49 MILLION in 2017!  That means a married couple can now pass nearly $11 million to their heirs free of estate taxes.
  • Second, the estate and gift tax rate on wealth over the exemption actually fell from 55% to 40%.
  • Third, one spouse was finally allowed to leave his or her exemption to the other spouse (we all this “Portability”).
  • Fourth, the top Federal income tax rates rose from 35% in 2003 to 43.4% in Obama’s second term (including the “Net Investment Income Tax”).
  • Fifth, adding insult to injury, California increased its top rate from 9.3% to 13.3%.
  • Sixth, while property tax exemptions under Prop 13 did not change much, massive inflation in income property values made it important to preserve and maximize your ability to prevent reassessment when you die.

Combining all of these factors meant that most apartment owners, even after inflation, no longer needed to worry about estate and gift taxes.  Those who did need to worry (we think this is about 25-30% of our owner clients) faced less estate and gift tax exposure, both due to the increased exclusion from tax, and the reduced rates. 

Changes in the Family

Many old plans were written when owners’ children were still in school, or had not yet built their own families.  So, they gave little thought to how wealth should be left to maximize benefits for adult children and for grandchildren. Rarely was any effort made to protect the inheritance for generations from creditors and predators (i.e.potential ex-spouses!).  

Changes in Wealth

Very few old estate plans anticipated leaving as much wealth as our clients now expect to have.  In many cases, the amount of wealth could now, if not properly handled, change the life of heirs in a negative way, destroying incentives and motivations for heirs.

Lack of Customized Planning

Good estate plans need to be customized to meet your goals.  That requires your estate planning lawyer to help you understand your planning options, tease out your goals and desires, help you make important planning decisions and then take the time to draft customized documents to get results you want for your family.

Very few lawyers have the experience to do this while focusing on the special needs of California apartment owners.  Furthermore, even those who have the experience often price their services at a level that discourages them from spending the time with clients that is needed to do really good planning and draft custom documents.

However, given the larger estates that apartment owners now have or expect to have at life expectancy, good planning is now much more important than ever before.  Now, larger estate sizes, the benefits of good planning more than justify the cost.

Most Common “Hazards”

While we do see some well written trusts, most of the time we see some combination of the following hazardous features (as well as others which appear less often) in trusts and related estate plans that we review.

  • Trusts for married couples that mandate funding of a credit shelter, bypass, exemption or “B” trust.  This then prevents getting a second increase in income tax basis when the surviving spouse passes, and can cost millions in unnecessary capital gains taxes for your heirs.  With “portability” of your estate tax exclusion between spouses, this “old style” planning is no longer necessary to save estate taxes for most couples.
  • Failure to properly document that jointly owned property, (even in the trust) as community property so that both halves get a new, higher income tax basis when either spouse dies.
  • Failure to structure the trust so that the property tax exemption of the first spouse to die can be passed to children after the second spouse’s death.
  • Failure to structure property ownership in the trust to avoid reassessment even when the first spouse dies.
  • Failure to protect assets left for a surviving spouse from creditors.
  • Failure to protect the surviving spouse from undue influence that can redirect property away from your natural heirs.
  • Use of LLCs or partnerships to hold buildings in ways that cause unnecessary increases in property taxes on the first or second death.
  • Failure to provide enough flexibility in your trust regarding allocations of income and principal which can, in turn, lead to higher income taxes after your demise.

Sound Estate Planning Is Also About Opportunities to Better Benefit Your Heirs

We get great pleasure when we can help clients articulate not just what they will leave to heirs, but howthey will leave it in order to enhance the lives of their heirs.

In some cases, that means combining protection from creditors and predators, with provisions that will prevent heirs from misusing their inheritance before they develop enough maturity to manage it themselves.  None of our clients want their children or grandchildren to be “spoiled” by their inheritance, or to dissipate a substantial inheritance early in life and wind up impoverished in later years.

This almost always requires a lot of discussion with property owners about their goals and family.  Then, we teach them about some of the ways they can fulfill such goals.  Finally, we spend significant time doing custom drafting to reflect the decisions the owners made.  And, we follow that up with explanations of the drafting to make sure it reflects the owners’ desires.

Sometimes this includes provisions to encourage or mandate keeping some or all of the family real estate business together, either for a period of time or permanently.

It can also include provisions that help pass values about hard work, accomplishment, thrift or even community service to your heirs.

The fact is, the opportunities to benefit your heirs, protect them and pass values are only limited by your imagination.  We get great satisfaction from educating our owner clients about strategies that have worked for other clients (or not worked) in order to help them think about their planning choices 

Opportunities to Enhance Benefits During Your Life

Although most estate planning revolves around benefits for your heirs, it also provides strategies to help you live a better life yourself. This can include strategies to enable you to sell property without paying capital gains taxes.  One of those strategies is the Capital Gains Bypass Trust (“CGBT”).  We wrote about CGBTs in the July, 2016 issue.

For most owners, with properties valued at currently low cap rates, a CGBT can avoid current taxes on the sale of appreciated buildings (some of which can otherwise face income taxes of nearly 40%).  If can also substantially INCREASE currently spendable cash flow, obtain income tax deductions that can offset gains or income from other properties and give substantial financial and non-financial benefits to your heirs.

Just as important to many clients, the CGBT can enable them to get rid of the burdens of property management.

The upcoming seminar in Torrance will explore the CGBT strategy in greater detail, and include new material on how to use it even for properties that are encumbered with debt.  The seminar will include case studies to help pique your interest and understanding.

Make Your Estate Plan Work Well for Your Family

Making your estate plan work well begins with understanding the planning you have and your planning opportunities.  Generally, this should begin with having an experienced estate planning attorney who understands, and works regularly with, the problems and opportunities of apartment owners.

But the real key is good planning.  That is why my motto is: “If you fail to plan (well), plan to fail”.

The tax environment, your wealth, and your family have probably changed a great deal since you completed your planning.  The odds are high that your existing plan does not reflect your current goals for your wealth, nor does it avoid tax risks that changes in the law and your situation have produced.

In order to prevent your estate plan from being a HAZARD to you and your family, get your estate planning reviewed now by a lawyer who will help you articulate your goals, and then put your goals first in any planning you want done.  You will get peace of mind, and your heirs will gain substantial benefits.

To learn more, register to attend Ken Ziskin’s seminar on “Estate Planning for Apartment Owners”: 

These seminars will include coverage of the Trump proposals to change income taxes on apartment owners. Ken also offers FREE CONSULTATIONS FOR AOA MEMBERS. To register for one of these seminars, call (800) 827-4262 today! 

Kenneth Ziskin, an estate planning attorney, focuses on integrated estate planning for apartment owners to save income, property, gift and estate taxes.  He holds the coveted AV Preeminent peer reviewed rating for Ethical Standards and Legal Ability from Martindale-Hubbell, a perfect 10 out of 10 rating from legal website AVVO.Com, and is multiple winner of AVVO’s Client Choice Award. .  See Ken’s website at www.ZiskinLaw.com or call (818) 988-0949.  This article is general in nature and not intended as advice for clients.  Please get advice from counsel you retain for your own planning.

Usury Interest: How High is Too High? – by Dale Alberstone, Esq.

Reprinted with permission from AOA.

Hello everybody.  At the time when interest rates on mortgages are at a near historic low, AOA members might find it surprising that I am devoting this article to a discussion of high interest rates, that is, usurious interest which exceeds the maximum rates California law allows.

Even with overall low rates, occasionally lenders impose rates which are excessive, if not exorbitant, especially with borrowers who have poor credit or are seeking hard money loans secured by second or third deeds of trust.  So the topic of usury warrants discussion.

A discussion of excessive interest rates is also timely as on May 22, 2017, the California Court of Appeal issued an opinion voiding usurious interest charged by one such lender, and reminding all lenders and borrowers that if the loan transaction is usurious, all interest (not just the amount exceeding the maximum allowable amount), is forfeited.

Personal Loans

For any loan of money which is to be used primarily for personal, family, or household purposes, the maximum interest rate permitted by law is 10% per annum.  This limitation is set forth in Article XV, Section 1 of the California State Constitution.

Loans used primarily for purchase, construction or improvement of real property are not subject to that 10% constitutional limitation.  (But they may be subject to caps under statutory law.)

Bank, Broker and Seller Carryback Loans

Certain types of loans do not have any interest limitation.  Those made by banks, savings and loan associations, certain credit unions, and certain industrial loan companies are exempt from the usury laws.  Thus, a bank may generally charge any interest rate which the market will bear.

Similarly, loans made by a real estate broker which are secured in whole or in part by a lien on real property are not subject to any maximum interest rate.  Likewise, loans arranged by a real estate broker and secured by liens on real property are exempt from the usury laws.

Thus, if a real estate broker participates in the arrangement of a loan to an individual, and the loan is secured by a lien on real property, the general rule is that the lender may charge any rate he is able to induce the borrower to agree to.  This is true even through the broker himself did not make the loan.

For the broker exemption to apply, the loan must be made or arranged by a real estate broker and not merely a real estate salesperson.  (Jones vs. Kallman, 199 C.A.3d 131)  Individual lenders who seek to avoid the 10% interest limitation when their broker arranges the loan should ask to see the real estate agent’s license.  If the license designates the arranger as a salesperson, the transaction will be subject to the usury limitation.  If the license shows that the arranger is a broker, the exemption will apply.

The philosophy behind exempting loans made or arranged by brokers is that brokers are qualified by the State of California on a basis of education, experience and examination, and their licenses can be revoked or suspended if they perform acts involving dishonesty, fraud, or deceit.  While a salesperson’s license may also be revoked or suspended for violation of ethical conduct, their education and training are not as great as that of a broker.

Surprisingly, loans which are made or arranged by attorneys are not exempt from the usury limitations.  In Del Mar vs. Caspe, 222 C.A.3d 1316, the court held that only licensed real estate brokers, not licensed lawyers, could cause a loan to be exempt from the usurious limitations.  If a lawyer also happens to be a licensed real estate broker, then the exemption from usury limitations would be applicable.

Promissory notes and trust deeds carried back by a seller are also exempt from the usury limitations on the theory that the seller never loaned any money to the buyer.  It was simply a credit sale.

Also, modifications of seller carry-back loans are exempt.  In D.C.M. Partners vs. Smith, 228 C.A.3d 729, the court held that an extension of an originally exempt transaction of a promissory note secured by a deed of trust on real estate is not subject to usury when the loan is extended and the interest is increased to 15%.  In that case, the buyer paid a portion of the purchase price by giving the seller a 10% note secured by the property.  Before the note’s due date, the seller allowed the buyer an extension in exchange for an increase in the interest rate to 15%.  The court held that the extension was exempt from the limitations.

Other Loans

For most loans other than those discussed above, a confusing formula prescribes the maximum interest rate as being the higher of 10% per annum or 5% per annum plus the Federal Reserve Bank of San Francisco’s discount rate prevailing on the 25th day of the month preceding either the date of executing the loan contract, or the date the loan is made, whichever is earlier.

Since the current discount rate (as of May 25, 2017) is 1.5%, adding 5% to the formula would allow a 6.5 maximum interest rate on these kinds of loans.  Readers may ascertain the current discount rate for any given month at:

www.frbsf.org/banking/discount-window/discount-rate.

Finance Charges

From time to time, customers purchase products or services from a retailer subject to an installment sale or an invoice showing that the balance is due within a stated period of time, typically 30 days.  If payments are not made in accordance with the time limitations, finance charges are often added to the purchase price, such as 1.5% per month on amounts past due.  In O’Connor vs. Televideo System, 218 C.A.3d 709, the court held that a purchase over time, or payments not made within the period due, are exempt from the usury laws under the “time-price” doctrine.  That doctrine applies when property is sold on credit as an advance over the cash price.  Since that type of transaction is a bona fide credit sale, it does not involve a loan subject to usurious limitation.  Furthermore, the court in O’Connor held that the transaction was not usurious because the debtor had the opportunity to pay the amount due before any finance charge would be added.

Penalties for Usury

Here is a rhetorical question:  If, the maximum allowable interest rate is 10%, but the lender charges 14%, does the lender only have to refund the overage?  The answer is NO.  The consequences for charging usurious interest are severe.  The penalty for receiving a usurious amount is not just forfeiting the extra sum, but forfeiting all interest paid throughout the duration of the transaction.

That was the ruling by the Justices in Hardwick vs. Wilcox, which was decided by the Court of Appeal on May 22, 2017: “A transaction is usurious if there is a loan at greater than the legal rate of interest …   When a loan is usurious, the creditor is entitled to repayment of the principal sum only.  He is entitled to no interest whatsoever.  The attempt to exact the usurious rate of interest renders the interest provisions of a note void.  Interest payments that were made at the usurious rate should be credited against the principal balance in any action to collect on the note.”

In other words (generally speaking), all payments made under a promissory note which provides for a usurious interest rate are applied to principal, not to whatever lower rate might have been the maximum allowable rate.

The Hardwick Court explained that the rationale of usury law is that society as a whole benefits by the prohibition of loans at excessive interest rates, even though both parties are willing to agree to them at the time the transaction is arranged.  The usual principle of  “freedom to contract” does not extend to usurious interest.

Also, a court might find that charging a usurious rate warrants a penalty of treble the amount of the usurious interest actually paid.  Obviously, the amount of the penalty could be painful to the lender.  (Anderson vs. Lee, 103 C.A.2d 24: West’s Annotated Civil Code, Section 1916-2.)

Historical Usury

The earliest account of a usury prohibition is found in the Bible, Exodus 22: 24-25, where it says:  “Neither shall ye lay upon him interest.”  Different versions of the Bible have different translations.  In England in 1545, King Henry VIII’s Parliament enacted a statute allowing interest payments of up to 10% on loans, with any higher rates constituting usury.

Numerous other countries restricted interest rates over the centuries, with the earliest laws prohibiting the assessment of any interest.  The reason was that lawmakers felt that barring all interest would relieve common people from oppression by the rich.

Note to Attorneys

In California, the primary usury provision is set forth in Article XV, Section 1 of the California Constitution.  Additional laws can be found in the Civil Code commencing with Section 1912.  Lawyers should also note that Civil Code Section 1916-2 is only found codified in West’s Annotated Codes.  Deerings does not recognize it as a valid codification.

Lawyers seeking to avoid the effect of usury laws might try to argue that the money was advanced as a joint venture, rather than as a loan, such that the “lender” might share in the profits or losses of the money which the “borrower” invests.  Money advanced by a joint venture or partner is ordinarily exempt.

Dale Alberstone is a prominent litigation and transactional real estate attorney who has specialized in real property law for the past 40 years.  He has been appointed to periodically serve as a judge pro tem of the Los Angeles Superior Court and is a former arbitrator for the American Arbitration Association.  He also testifies as an expert witness for and against other attorneys who have been accused of legal malpractice.

Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell.  An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity.       

The foregoing article was authored in June 2017.  It is intended as a general overview of the law and may not apply to the reader’s particular case.  Readers are cautioned to consult an advisor of their own selection with respect to any particular situation.

Questions of a general nature are warmly invited.  Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 1900 Avenue of the Stars, Suite 650, Los Angeles, California 90067.  Phone:  (310) 277-7300.

The Inner Workings of the Courthouse Chambers – How Judges Work and Decide Cases – Part One – by Nate Bernstein, Esq.

Reprinted with permission from AOA.

The “battle zone environment” of the downtown Los Angeles Superior Court is something to witness in person if you have never been there to experience it.  It is not for the genteel or the faint of heart.   The downtown Los Angeles Superior Court, located in the Stanley Mosk Courthouse, at 111 North Hill Street, is one of the largest in the United States.  It is an old building that needs to be razed, modernized, and rebuilt as a “state of the art” courthouse- it is what it is. The Court has more than 75 judges on 10 floors that handle, civil limited and unlimited jurisdiction cases, unlawful detainers, small claims cases, writs and receivers cases, family law cases, probate matters, post- judgment matters, and other hybrid matters.  The clerk’s office is overburdened, and attorneys must wait in the same long lines as messengers to file a document.  At times the clerk’s office is understaffed and only 2 clerks are working when the line is 25 persons deep.  

Criminal cases are handled in another location around the corner in the Criminal Courts building on 210 West Temple Street.  The court system is overburdened with cases in most departments, and some judges have in excess of 12 distinct case matters on the calendar each and every morning.    You may or may not get a perfect evaluation of your case matter on calendar, or a just and fair result from the Court.  Generally speaking, I will say that the Courts and their staff usually get it right– sometimes they don’t and one side gets a raw deal.  That is when an appeal may be required. Probably the most important safeguard a party can have is retaining counsel that is really watching the case and your opponent, and monitoring court staff carefully.

If you ever visit a courtroom at the Los Angeles Superior Court you will be amazed at the number of attorneys that are present, and you will be amazed at how long matters take to get decided and completed. Due to the large calendars it is generally the norm that a five minute contested court matter can take 1.5 to 2 hours to be heard and decided. Bring a newspaper and a pillow cushion. Judges are overburdened and very busy, and often have approximately 12 case calendars four to five days per week in the morning- that is an enormous case load. Attorneys also use “court call” to make appearances by calling in on routine matters such as case management hearings and post mediation status conferences. Court call service has made it easier on attorneys to avoid a personal appearance on routine matters.   Still, the phone call hold times can be as much as one hour in busy courtrooms.   Small claims and unlawful detainer calendars are huge, and judges are on a tight time schedule to complete these calendars.

Judges Are Less Accountable Because No Court Reporters Are Present Unless You “Retain One” 

It is unfortunate that judges may be less accountable and scrutinized for their decisions, behavior, and demeanor, as they used to be. That is because in courtrooms, the courthouse administrative staff does not provide free court reporters to take write down a transcript of what happens and what is said in court. The days of the free court reporter are over!!  Court reporters are only available if parties pay for the court reporters.  The end result is that some judges may be less thorough on the record since there is no court reporter taking down the judge’s statements. So if a judge abuses an attorney or berates a witness or bad mouths a party or makes a poor, unsupported legal decision, the verbatim language spoken by the judge is not recorded unless a court reporter is hired to be present. If a judge makes a mistake on ruling on the admissibility of evidence, an oral ruling is not recorded unless a court reporter is hired by the parties to be present.  Court reporters are expensive and charge by the word.  Having a court reported record is very important for a case on appeal- the appellate attorneys and the Court of appeal can review the record, and determine if the court has made an error.  Judges make “minute orders” about their proceedings and their rulings- they write down their decision, note the appearances, but the minute order does not report the verbatim words of the judge – only the final ruling.

During lunch time if you visit the cafeteria on the 10th floor- the cafeteria is packed with attorneys and parties who share a common theme- their cases have not settled and they are waiting for their trial to start or a trial to continue.   The cafeteria and its 100 tables acts as a makeshift  non private conference room for attorneys and parties who are discussing cases, documents, and strategies. Some judges may order the attorneys and the parties to gravitate to the cafeteria to try to work out a settlement or to try to resolve a discovery dispute. Cafeterians also have to tolerate the cafeteria food at the courthouse, which on some days is at most “average,” and on other days is “lousy.” If you don’t like the cafeteria- there is a Starbucks café next door with limited indoor seating taken up by at least one local derelict.

Due to budgetary cuts, court clerks only have limited phone hours, such as 10:00 a.m. to 12:00 p.m. only – if you don’t make the call at the right time, you have to wait until the next day to speak to a clerk and get your question answered.  Courtrooms are closed from 12:00 p.m. to 1:30 p.m. – judges may be able to get nine golf holes in or take a cycle ride before the afternoon trial calendar begins.    In the afternoon, judges generally hear trials and a discovery dispute or two – the trials may be bench trials or jury trials. For jury trials, judges have to deal with the attitudes, behavior, and schedules of jurors.  Jury selection and the process that goes along with it are very “political” in nature. Attorneys are obviously trying to manipulate the jury system to get favorable jurors from the jury pool.  Judges spend energy and resources protecting and buffering jurors from the aggressive attorneys in the courtroom, and trying to keep the jurors relatively happy in the process.  Since jurors are registered voters- and voters tend to vote in judicial election, judges try to keep jurors happy and want to get them in and out of the system as rapidly as possible with the least amount of scar tissue. This is difficult, and judges always want to appear that they are moving matters forward, and not letting jurors wait around.

The Inner Workings of the Judicial Decision Making Process

If your case or law and motion matter does not settle, you run the gauntlet and risk of having a judge decide the issue before the court. This is how they do it, but first, a few words about how court chambers function in this warzone environment that has difficult working conditions.

It is important to understand that judges are overworked, and by some standards under paid for their long hours.  Judges are human beings, and are not paper pushing robots.  Because they see issues over and over again, they are bored with the mundane, and like to hear interesting issues- such as a products liability case where the air bags failed to deploy.   Judges rely on their staff research attorneys a great deal to complete research and decide legal issues. The court also may have volunteer law school interns work on some matters assigned by the research attorneys- these interns work without pay, but may get law school credit in exchange for their service. The research attorneys will do extensive research, will work up the matter, and make recommendations to the judge. The judge may not have time and resources to read all or some of the papers that you file in court for a hearing- it may not be humanly possible to ready 15 motions in limine before trial starts.

This is an interesting phenomenon- you retain counsel, spend money on attorney’s fees and costs, and you come to court and the judge has not some read or read all of your papers!  Some judges may be good actors, or may admit “this matter will have to be continued so I can provide further review of the briefs- I will continue the hearing and take it under submission.”  Some judges are honest about not having the time to read the papers, but other judges may fudge it.    Other judges have read the papers thoroughly, discussed the issues with their staff attorneys, and may have certain additional questions about the evidence or the law.  Other judges are concerned about new case authority that has just come out that may impact the result in the case because the authority is on point.

Judges also rely on their courtroom deputies- or calendar clerks a great deal to manage the busy court calendar.  Now in Superior Court, for unlimited jurisdiction cases,  calendar matters are set through a computerized reservation system so courtroom deputies have to coordinate with the on line system to get matters on calendar.  The days of calling the courtroom deputy and reserving a law and motion hearing date are gone- it’s all done through a computer reservation system that spits out a confirmation.  Some superior courts (like Orange County) also require that documents for motions and trial be filed and uploaded on line, but downtown Los Angeles courthouse has not yet implemented that type of filing system.

In addition, judges rely a great deal on the attorneys before them for presentation of legal authorities and factual information.  Attorneys are both officers of the court and advocates for their clients. When a judge asks for information or legal briefing from the attorneys, this is a great opportunity for a skilled attorney to persuade the judge on an important issue in the case.    Judges may ask for a “letter brief” on a particular issue. For example, a judge once asked me for a short brief on whether a trustee of a private trust can appear in court without an attorney – I researched the issue and provided the judge with an answer – she appreciated my efforts.

(Part two next month – How Judges Decide on Issues Before Them.)

 

Nate Bernstein, Esq., is the Managing Counsel of LA Real Estate Law Group, and a member of the State Bar of California and his practice concentrates in the areas of complex real estate litigation, commercial litigation, employment law, and bankruptcy matters.  He is a 22 year veteran Los Angeles real estate and business attorney and trial lawyer.   Mr. Bernstein also has expertise on bankruptcy law, the federal bankruptcy court system, creditor’s rights and debtor’s bankruptcy options and created www.laquiettitleattorney.com, a leading educational resource on quiet title real estate litigation.   For more information, call (818) 383-5759, or email natebernstein44@gmail.com.

Los Angeles Imposes Further Restraints on Landlords! – by Sheri Swist

Reprinted with permission from AOA.

On April 19, 2017 the L.A. City Council voted 12-0 to make changes to portions of the Los Angeles Municipal Code governing the Ellis Act.  Of course, as anyone who knows how the city operates would guess, these changes further hinder landlords’ property rights.

The Old Law

Under the old law, when a landlord withdrew a building from the residential rental market pursuant to the Ellis Act and demolished the building, any new replacement rental units constructed within five years would be subject to the Rent Stabilization Ordinance (RSO).  In other words, the new units would be rent controlled.  However, if a landlord wanted to avoid having an entire new building be subject to rent control, they could either dedicate the same number of units that had been under the RSO that were withdrawn from the rental market to being affordable units, or they could dedicate 20% of the units in the new construction to being affordable units, whichever was less.

The NEW Law

Under the newly voted on changes, the replacement units in this type of scenario must be a one for one replacement of affordable units or 20% of the new building, whichever is greater.  While in some instances this change may not make much of a difference if any at all, in others the difference is drastic.

For example, a landlord who demolishes a smaller building that is under the RSO and replaces it with a much larger building that provides many more units for the community of Los Angeles could end up having a substantially higher number of units that must be affordable housing units subject to the RSO.

In addition, the new law clearly states that even if a building is completely vacant, a landlord must remove it from the housing market pursuant to the Ellis Act, with all of its requirements and limitations before demolishing it.  This goes against the purpose of the Ellis Act, since the purpose was to allow landlords who had tenants to go out of business.  If there are no tenants, there is no need to go out of business, because no residential rental business is being done.

Once again, the City of Los Angeles is attempting to thwart your rights as property owners and so far … getting away with it.  As was stated, the new law was passed already, but will not take effect until it is published and all other requirements for enactment are complete.   So, if you are thinking about going out of the residential rental business pursuant to the Ellis Act, be aware that these changes will be in effect very soon.

For more information, please call Sheri Swist at the Housing Reform Coalition of Los Angeles at 310-869-5153.

Los Angeles City Rent Stabilization – Reminders and Updates – by Patricia A. Harris

Hopefully, if you own apartments in the City of Los Angeles and are under the L.A. Rent Stabilization Ordinance, you have already paid your building’s registration fees of $24.51 per unit which was due by February 29, 2017.  Serving a timely notice, you may collect one half of those fees from your tenants.  Note:  You used to collect this fee in the month of June, but for 2017, it has been changed to August. 

Collect $12.25 Registration Fees in AUGUST

The Los Angeles Rent Stabilization Division allows owners to pass-through one half of these fees ($12.25) with a 30-day notice, collectible in the month of August only.  That means you MUST serve the notice of the one time annual rent increase (found on the following page) in the month of July in order to collect this annual fee from your tenants.  AOA recommends you serve the notice on July 1st to collect this fee along with the rent due on August 1st.

IMPORTANT NOTE:  The notice of the one-time annual charge must be accompanied with a copy of your Rent Stabilization registration certificate to show that you paid the fees.

Code-Enforcement Pass-Through Fees

The SCEP fee of $43.32 per unit charge for the Housing Department’s code-enforcement inspection fee may also be passed through to your tenants.  This fee, however, must be amortized over a 12 month period and is collectible at a monthly rate of $3.61.  A 30-Day Notice of Change of Terms of Tenancy must be served to each tenant after you pay your bill before you can collect this fee.  That means with proper service, you can legally raise your rents (as long as you paid your bill!), $3.61 per month. Every little bit helps!  Your tenant may elect to pay this fee all at once, however they will not be awarded a refund should they move before the end of the year.  Also, if your building IS NOT under rent control, you may request and collect the fee in its entirety after serving the 30 day notice.

Other Los Angeles Rent Stabilization Updates

  • SECURITY DEPOSIT INTEREST:  Please note that the required 2017 interest that must be paid on security deposits for units in L.A. City is 0.12 percent. A landlord may pay tenants the actual rate of interest earned if security deposits are kept in a separate account by providing a copy of the bank statement showing the actual interest rate earned for the year.
  • ALLOWABLE ANNUAL RENT INCREASE:  The Los Angeles Rent Control’s annual rent increase is currently 3% through June 30, 2017.  As of this printing, the July 2017 rental increase percent was not yet determined but we were told it will most likely remain the same.  The actual amount should be made available to us in June. 

Via https://www.aoausa.com/

New Landlord Requirements Regarding Bed Bugs – by Patricia A. Harris

AB551 prescribes the duties of landlords and tenants with regard to the treatment and control of bed bugs.  The below describes in general, a landlord’s responsibilities.

What Must a Landlord Do?

  • On and after July 1, 2017, prior to creating a new tenancy for a dwelling unit, a landlord shall provide a written bedbug notice to the prospective tenant. [Note: Tenant acknowledgement of this notice is now included in the revised AOA Rental Agreements – please download and use the new rental agreements for new tenancies.]
  • This same notice shall be provided to all other tenants by January 1, 2018.
  • The notice shall be in at least 10-point type and shall include, but is not limited to, the following: General information about bed bug identification, behavior and biology, the importance of cooperation for prevention and treatment, and the importance of and for prompt written reporting of suspected infestations to the landlord. (AOA Members may download the form “Information About Bedbugs” for FREE in the forms alphabetical listings at www.aoausa.com.)
  • The landlord shall notify the tenants of those units inspected by the pest control operator pursuant to Section 1954.604 of the pest control operator’s findings. The notification shall be in writing and made within two business days of receipt of the pest control operator’s findings. For confirmed infestations in common areas, all tenants shall be provided notice of the pest control operator’s findings.
  • Entry to inspect a tenant’s dwelling unit shall comply with Section 1954(2) – (to make necessary or agreed repairs …) with a 24-hour notice to enter the premises. Entry to inspect any unit selected by the pest control operator and to conduct follow-up inspections of surrounding units until bed bugs are eliminated is a necessary service for the purpose of Section 1954. Tenants shall cooperate with the inspection to facilitate the detection and treatment of bed bugs, including providing requested information that is necessary to facilitate the detection and treatment of bed bugs to the pest control operator.
  • A landlord shall not show, rent, or lease to a prospective tenant any vacant dwelling unit that the landlord knows has a current bed bug infestation.

For more information, visit http://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201520160AB551

Via https://www.aoausa.com