Can I Say No to Pot in My Apartments When it is Legal in my State? – by John Triplett

With permission from AOA (Apartment Owners Association)

California just became the world’s largest legal marijuana market. When pot is legal in a state, what issues does this present to property managers and landlords of rental properties? Property managers are often confused and seeking to better understand how to handle the issues of legal marijuana and medical marijuana when it comes to tenants and rental housing in their states.

Laws are changing all the time in many states, just as California did on January 1, 2018, as voters approve different levels of permission when it comes to marijuana. This leaves property managers trying to figure out what should be in their leases around the issue.

You may be able to ban smoking, but do you really know what your tenants are eating or growing in their apartments? Do you really want to know if they are good paying tenants?

Rental Housing Journal did a recent interview with Seattle, Washington attorney Bret Sachter, an expert in tracking the progression and transformation of marijuana laws, to discuss some common questions property managers have about marijuana and tenants.

“I’ve been asked this a lot,” Sachter said, “but it does not come up as often as you might think. The overarching issue here is that, with few exceptions, people can do what they want to protect their property, even if the prohibited behavior is not illegal. You can prohibit smoking, prohibit pets, but with marijuana it’s much easier because it is federally illegal. So you can pretty much prohibit it if you want to no matter what, even medical marijuana,” Sachter said.

4 Questions About Pot, Tenants and Apartment Leases

Sachter says in terms of Fair Housing issues, and the U.S. Department of Housing and Urban Development (HUD) it is a situation where HUD wants it in the lease that marijuana is illegal but enforcement is another issue, he said. It is not so much that HUD wants landlords to evict over marijuana, but that you have something in the lease language that allows for eviction in the instance of marijuana use on the property. “So it is pretty clear as far as HUD is concerned,” he said. Here are his answers to four questions on pot and apartments.

  1. 1.     Tenants With a Disability and Medical Marijuana

Question: If a tenant comes in and says I have a disability, here is a note from my doctor, I use medical marijuana, which is legal in this state, and I want to rent your apartment. Can a landlord prohibit that?

Answer: “A landlord can absolutely prohibit that because marijuana is illegal under federal law.” The landlord can say, “I understand our state allows medical marijuana but it is still a Schedule 1 drug and I prohibit it on my premises.”

  1. 2.     Marijuana is Legal in My State – But What Does the Lease Say?

Question: What if a tenant says marijuana is legal and they should be allowed to use it?

Answer: “If your lease prohibits smoking and prohibits use of illegal drugs, then the legality of marijuana at the state level is irrelevant because under federal law marijuana is illegal. If your lease does not have those types of clauses, you should talk to an attorney in your state or city to find the best solution for your lease.” There is no law about reasonable accommodation for marijuana users, federal laws do not require it. As far as the federal government is concerned it is not ok.

“One thing I would say, and it is important, I would encourage landlords just to make everything clear,” in the leases, he said. “Clarify in a lease that you must abide by all laws both state and federal.” That is the case in residential. He said it can be different in commercial.

“But in residential it is not as tricky, and I am speaking very generally here,” Sachter said. “The states may have their own thing going on with legal marijuana laws, but it is still federally illegal. Make it crystal clear in your leases is my best advice,” he said. “How can you attract tenants in a state where it is legal yet protect the owners of the property? You cannot have it both ways.”

“I know in Seattle there are Airbnb bed and breakfasts that specifically market themselves accordingly, as part of marijuana tourism to come and stay in our place where it is legal.” But if a property manager doesn’t want that going on, then they have to be up front in the lease.

“If your tenant is Airbnbing to a tenant who is then using marijuana – well if you can’t catch them you cannot do anything about it. You have to prove they are doing this.  They are going to be using marijuana regardless of what the lease says.”

  1. 3.     What if the Tenant Using Marijuana is a Well-Paying, Good Tenant?

“Landlords can certainly put a no-waiver clause in the lease. If I say, ‘Here is a list of prohibited things’ and if you do these prohibited things in the lease, you are subject to eviction,” he said.

“However, any time I waive any of these things does not constitute an overall waiver. It basically means you should not ever do it again,” he said. “Just because you get away with it once, does not mean you get away with it every time,” Sachter said.

  1. 4.     Can I say ‘no pot in my apartment

“Usually if you say, ‘No pot in my apartment’ and you find a tenant using marijuana and you haul them into court, more than likely the judge is going to say, ‘Have you stopped?’ to the tenant and ‘Are you going to do it again?’ and the tenant is going to say ‘No.”  And then judge will say, ‘Ok, dismissed.”

To put a more legalistic term on it, usually a court will be in favor of “allowing the tenant to cure the defect,” rather than evict for most things like that, Sachter said.

Technically, in Washington, a landlord would serve a 10-Day notice to comply or vacate with the terms of the lease.  This process, therefore, gives the tenant a chance to “cure” the violation before the landlord can evict. Check your local state laws on this.

 

What One Experienced Property Manager Says About Pot

Sam Driver, Product Director for Buildium.com, and an experienced property manager, said as far as marijuana use in apartments, due to the newness of the legislation, the federal laws that supersede state and county laws, and liability concerns, it is not a topic that comes up a lot – yet.

“Generally, the safest solution is to choose the most conservative path-impose a no-smoking policy, which can in some cased cover outside areas, and a crime provision that includes local, state and federal laws. In many states, there are setbacks from doors, and it is particularly important if the building is a place of work which a multi-unit apartment building certainly is. So your lease should contain a provision explicitly banning smoking and illegal activity. Because the feds still outlaw it, this should be sufficient,” Driver said.

“This of course only covers the smoking angle. If a resident consumes it in another way, you’d likely never know,” he said.

 

Growing Marijuana Could Put a Power Load on Your Apartments

“As for growing, that’s less clear. But in general, unless the electrical system is designed for it, the loads grow lights put on the apartment unit could be excessive. I’d consider a reasonable use clause that specifies all high load equipment, including lights, air conditioners and any kind of pump be approved by you.

“This would put you in a position to take action if they are putting too much load, without specifically calling out the use of the equipment. Pumps are a good area for monitoring, because of the intermittent load, they trip breakers, and anyone who is using a hydroponic system would need several,” Driver said.

 

What if I Want to Market My Apartment to Marijuana Users?

“If, however, you wanted to roll the dice and market to this crowd assuming your state laws allow it, remember that the federal laws would cover any bank deposits from proceeds,” Driver said.

“In this case, you’d be able to do it, assuming no federal intervention, in compliance with local laws. No insurer would provide EO&E (errors and omissions excepted) insurance to you, and you wouldn’t be able to deposit any funds into a federally-accredited bank. So you’d have to self-insure, and run an entirely cash business, but you could do it, risking only federal enforcement.

“The big question is, ‘Would the premium rents be worth the risk of forfeiture?’ If you run afoul of the federal drug laws, the asset seizure possibility is a huge risk. You could lose the building.
“If you’re managing other owners’ properties, then you’d be risking their assets even if you used different leases, unless you kept fully separate books, bank accounts, and co-mingled nothing. So I’d say it would be all-or-nothing,” he said.

“The timing is tricky, too. Leases contain a provision that stipulates that the contract is in force in a specific jurisdiction. If they change the laws rendering your lease out of compliance, what happens during the remaining time of the lease? Is it invalidated? Or does the contract remain in force until it expires? “Good questions for your lawyer,” Driver said.

Rich Triplett is a writer for the RentalHousingJournal.com which is an interactive community of multifamliy investors, independent rental home owners, residential property management professionals and other rental housing and real estate professionals. It is the most comprehensive source for news and information for the rental housing industry. Their 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.  

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

Legal Corner

WRITTEN BY MICHAEL A BRENNAN, EVICTION ATTORNEY 

Question: I just received a phone call from one of my tenants asking me whether she can pay her rent for this month in two payments. I don’t like doing it, but she has been a great tenant over many years and this is the first time she has made such a request. While I want to help her, I don’t want to create any legal problems for myself. What are your thoughts on this situation?

Answer: Generally, I’m not a fan of allowing tenants to make partial payments, as it sets up expectations that you will do so in the future. However, in your case, the tenant has been there quite a while and actually took the time to notify you in advance that she is short on rent. Based on her responsible behavior (which seems to be more and more rare these days), you might decide to allow her to pay rent in payments. Before you make that decision, be sure to check your rental agreement for a “nonwaiver” provision which states your decision to accept rent in two payments does not waive your right to insist on the entire amount on its due date in the future.

Assuming your rental agreement has such a provision (most modern agreements do), you can allow her to pay rent in payments without worrying about waiving your rights. Additionally, avoid putting anything in writing indicating the payment is for any specific period. Instead, simply provide her with a receipt (if you provide receipts) indicating the payment is a “partial payment” for the entire amount owed with a “balance due” for the unpaid amount. You can either issue a three day notice at the time she makes the partial payment, with a promise you won’t file eviction until the day after the date on which she has agreed to pay the balance (provided she fails to do so) or you can wait to serve the three-day notice until after the date on which she agreed to pay.

Either way, you are able to accept the partial payment without creating legal problems for yourself, keep control over the situation, and keep the relationship intact by accommodating her needs this month.

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 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

Repeal Costa-Hawkins? Assembly Bill 1506 seeks to kill this bedrock California property rights law

In February 17, 2017, Assembly Members Chiu, Bonta, and Bloom introduced AB 1506, an effort to repeal the Costa-Hawkins Rental Housing Act—a state law that places strict limits on a city’s ability to impose rent control on housing. Prior to Costa-Hawkins, rent control ordinances had long been held to be a valid exercise of a city’s “police power”—the ability to regulate the health and safety of their residents—and five California cities (Berkeley, Santa Monica, Cotati, East Palo Alto, and West Hollywood) had “strict” rent control ordinances, imposing what is known as “vacancy control” on empty units even after a tenant voluntarily vacated. In 1995, State Assembly Member Hawkins introduced AB 1164 (with State Senate Member Costa as a co-author), advancing what they saw as a “moderate approach to overturn extreme vacancy control ordinances [that] unduly and unfairly interfere with the free market.”

Costa-Hawkins achieves several forms of decontrol on local price ceiling regulations. It prohibits rent control on new construction and on single-family homes and condos (subject to certain conditions and limitations). It also prevents vacancy control by prohibiting cities from setting prices on vacant units and by allowing landlords to impose market-rate increases on subsequent occupants, once the last “original occupant” has vacated.

While Costa-Hawkins seeks a middle ground between inflexible price controls, on the one hand, and “rent-gouging” and displacement on the other, some lawmakers have expressed concern about the consequences of vacancy decontrol in tough situations. (For instance, Supervisor Jane Kim has proposed a “compassion clause” to protect the surviving spouses/partners of recently deceased, rent-controlled original occupants.) However, Costa-Hawkins has now been on the books for over two decades, and a sudden repeal would wash away the existing case law and local regulation that navigate between these competing interests.

As with the recent proposed legislation by Assembly Members Chiu and Bloom to amend the Ellis Act (AB 982), the purpose of AB 1506 is unclear. Costa-Hawkins expressly allows cities to impose limits on evictions. Local real estate blogs, like SocketSite.com, have recently reported that rental rates in San Francisco are dipping back down to 2014 levels. So, rather than ward off climbing prices, this kind of gesture would merely seem to further cement protections for incumbent tenants, as compared to anyone else in the market for a rental unit. It may also have unintended consequences, where landlords rush to invoke the Ellis Act, which allows its own form of vacancy decontrol if a property goes back onto the rental market.

Help defeat AB 1506
AB 1506 will remain in print for 30 days (until March 21, 2017) before it goes to committee. In the meantime, you can help build political pressure by expressing your opposition to this legislation directly—make the four calls suggested in the Call to Action. (Information listed below)

CALL TO ACTION

Say “No” To AB 1506!!
AB 1506 must be defeated. Please phone both offices of
our two California State AssemblyMembers David Chiu and
Phil Ting. Each office tallies the number of calls on any bill,
so calling both will have the greatest impact.

  • Assembly member David Chiu
    Sacramento: (916) 319-2017
    San Francisco: (415) 557-3013
  • Assembly member Phil Ting
    Sacramento: (916) 319-2019
    San Francisco: (415) 557-2312

Also, please consider traveling with us to Sacramento in the
next few weeks to show up in numbers at the Assembly’s
Housing Committee hearing on AB 1506.We’ll let you know
when we have a definite hearing date.

The membership of SPOSFI has been instrumental in protecting the rights of small property owners in the past. In 2014 and again in 2015, Senator Leno introduced successive efforts to stifle San Francisco property owners’ use of the Ellis Act (in SB 1439 and SB 364, respectively). Members voiced their opposition (and even got on buses to Sacramento) to apply the necessary political pressure to preserve property rights. A repeal of Costa-Hawkins would take away the ability of property owners to decide the price at which they will enter the market (or to continue renting to a stranger), giving those rights to tenants and city bureaucrats instead.

Via https://www.smallprop.org/

Is Pot the New Pets?

Donald Davidoff is an industry thought leader and can be reached by emailing Donald@d2demand.com

(Warning: Don’t read this if you’re not interested in hearing a provocative point of view)

I was meeting with a client of mine who has communities in California, and they shared a letter they were sending their residents. The letter was informing residents that, while California had passed a recreational marijuana initiative, the law gave apartment owners the right to declare their property to be marijuana free. The letter went on to inform residents that this company was exercising that right and that any use of marijuana in their apartments would be a violation of their lease and could result in eviction.

As a resident of Colorado (one of the earliest states to approve recreational use in homes) and a demand management modeler, this got me thinking. I wasn’t surprised that my client exercised their right; in fact, I expect that virtually all professionally managed communities will do or have done so already.

But is that really the right business answer? Perhaps the continued disconnect between these state laws and federal laws makes it the right answer. Perhaps there are indirect liabilities I’m not fully aware of (though not a lawyer, I would struggle to understand how liabilities surrounding marijuana would be any different than what already exists with alcohol consumption)? Or perhaps there are legitimate concerns related to managing issues like the potential for, shall we say earthy, aromas to permeate a building and annoy other residents (more on that later)?

All of which reminded me of pets and the late 1990s. Those of you in the industry long enough may remember that few mainstream operators allowed pets (excluding fish and maybe birds). There were legitimate concerns: noise, increased wear and tear on the unit and common area issues like damage to landscaping and owners not responsibly picking up pets’ solid waste.

I remember that the company I was with at the time was one of the earlier operators to introduce pet friendly policies (with accompanying pet rent). I was particularly convinced of the validity of our policy when I visited one of our communities. Archstone South Market was right on the edge of San Francisco’s financial district and attracted many professionals in its resident base. As I toured, I noticed a lot of pets. It seemed as if half the residents or more were walking a dog.

I asked the community manager about this, and she told me we were the only community in or near the financial district that accepted pets. In fact, our competitors would refer prospects with pets to us because their company policies (at the time) forbade pets. Imagine that, I thought…by allowing pets (while getting paid for it), we had turned our comps into one of our better sources of leads!

Of course, today virtually everyone accepts pets for at least part of their community (if not all). So the competitive advantage no longer exists; but it was sure nice while it lasted!

Which brings me to the title of this blog. Could marijuana be an opportunity, like pets, for innovative, early adopters to have a meaningful point of differentiation versus their comps? Sure, there are issues; but there were issues with pets that got solved. Maybe, for example, we start with allowing recreational use limited to a single building (in a garden community) or a single wing (in a high-rise community)? Analogous to pet rent (or for that matter south facing units), we could put a premium on those units and thus get paid for this. As a demand management modeler, I love the idea of this as a possible premium rent segment (just like pet owners); and it doesn’t even have to be as explicit a charge since a unit amenity rolls into the overall rent.

I’m sure there are other logistical and/or legal concerns to work out. That’s beyond the scope of this initial blog on the subject. My point is that some enterprising operator is going to take the new law and find opportunity in it rather than the easy, somewhat knee-jerk reaction of simply keeping the rules the same as they have always been. What will you do?

Via https://www.multifamilyinsiders.com

By Donald Davidoff.

7 Action Steps Apartment Owners and Managers Need to Do to Prepare and Get Ready for an Unlawful Detainer Trial

INTRODUCTION

Many landlords/ property managers have been involved in unlawful detainer/ eviction cases in one form or another.   Eviction cases take many forms and factual circumstances.   Some cases go smoother than others !    Some of the most common scenarios are either a tenant was not paying rent on time, or a tenant is being a problem and a nuisance and is disturbing the quiet enjoyment of neighbors in the apartment building.

When unlawful detainer cases are filed, under state law, they receive “trial setting” priority in the courthouse- usually are set quickly within 21 days after a Memorandum to Set for trial is filed by the plaintiff landlord in Court.    If your property is in a rent control jurisdiction like the City of Los Angeles, the grounds for unlawful detainer are set forth in the local rent stabilization ordinance, which is part of the municipal code.     If your property is not in a rent control city- lucky you !  You have more flexibility in terms of serving a notice to terminate the tenancy, although you must comply with state law notice requirements, case law, and the local rules of court.

To get you through the process of being a party in an unlawful detainer action with a level of comfort and confidence, there are a few things that you should do to prepare for the unlawful detainer trial so you are organized and mentally prepared for the process and the trial.  Here is a useful checklist to review with your attorney:

 

  1. REVIEW THE COMPLAINT AND ANSWER:   Review the complaint, summons, and defendant’s answer, and all the exhibits. Does your complaint need amending ?    The tenant’s answer sets forth affirmative defenses that the tenant may try to argue at trial to win the case.    Make a list of what facts and exhibits you can present to counter and defeat the tenant’s affirmative defenses.

 

  1. REVIEW THE EXHIBITS:    Review your Notice to Terminate the tenancy, the proof of service of the Notice to Terminate the tenancy, the rental agreement,  rental payment history, and the calculations to determine how much rent, daily damages, and costs is due on the date of trial.   It is a good practice to bring to court as an exhibit your business license, and proof of registration with the local city housing department if you are in a rent control city because a tenant may argue as a defense that you are not registered with these agencies.  If you are running your business as a corporation or LLC, you should confirm that your entity is in good standing with the Secretary of State.  Your attorney should bring a sufficient amount of exhibit copies to court.  

 

  1. WITNESSES SHOULD BE READY TO TESTIFY:    Compile a witness list, and have your attorney serve subpoenas if necessary to third party witnesses.  Review the case and the complaint with your attorney and primary trial witness.     If you are involved in an unlawful detainer situation where the tenant is alleged to be a nuisance- you should serve trial subpoenas to any neighbors who will testify in your favor to help prove the nuisance allegations.  You have the burden of proof.  If the tenant is contesting proper service of the notice to terminate the tenancy, please have your process server or the person who served the notice to terminate the tenancy appear in court as your witness to counter these allegations. 

 

  1. JURY TRIAL:   Check to see if the tenant has posted jury fees, and filed a counter memorandum to request a jury trial.    If so, you should have your attorney prepare appropriate jury instructions and special verdict forms to bring to the trial so you are prepared for a jury trial.   If you have time, you may want to file a Motion for Summary Judgment against the tenant to try to get an early judgment, and avoid a jury trial.  

 

  1. IS POSSESSION OF THE PREMISES AT “ISSUE” ?: The primary issue in an unlawful detainer case is possession of the property.  Before the trial date, check to see if the tenant has “caved in” and has vacated the premises.  Please check with your property manager or neighbors to confirm whether possession is at issue.    If possession is no longer at issue- then you may convert the case into a collection case if the tenant owes back rent and other charges,  and is collectable.

 

  1. WHO WILL BE THE TRIAL JUDGE  ?:        On the day of trial you will have to face either a judge pro tem, a Court commissioner, or a fully credentialed  judge who will conduct your trial and will decide your case.    Certain judges or commissioners may have a bias that favor either tenants or landlords- you should discuss with your attorney whether you want be in front of a judge, commissioner, or a judge pro tem.   Ask your attorney whether your attorney has had a case with the proposed judge in the past, and what happened in that case.   You can also look up the judge or commissioner on line to see if there is any information on the person, and whether it is positive or negative.  If you want to have a fully credentialed judge try your case, then don’t agree to have a commission or judge pro tem hear the case- your case will be assigned to a judge.  You may have to wait in the hallway before a judge is available to hear your case !!

 

  1. WORK OUT A SETTLEMENT WITH THE TENANT IF POSSIBLE:

At Court when all parties are present, before the trial is about to commence,  is the perfect time to negotiate a settlement, and enter into a written and signed stipulation for entry of judgment with the tenant.   Perhaps you may need to give the tenant a few extra days to move out or a small rent concession.  You should have a well drafted, specific, and clear stipulation and  agreement that applies to all parties and all issues.    Having a well drafted stipulation for judgment and settlement with a “drop dead date” to vacate the premises, that binds all tenants in the unit, and that allows for a sheriff’s lock out after a date certain is truly in your best interest.    If the tenant does not have an attorney, ask the judge to make sure the tenant understands all of the terms of the stipulation, and make sure that the tenant personally signs and dates the stipulation, and make sure the Judge signs it as well.  

CONCLUSION- Be Prepared and Confident

This seven point list is not an exhaustive list for preparing for your day in eviction court, but is just a starting point to get you ready for an unlawful detainer trial.  You should consult with your attorney on all issues, questions, procedures, and dealing with uncertainties.   If you follow the steps on this checklist you should have a level of comfort going into the trial. When you let a judge or jury decide your case, there is no guaranty of victory. Try to settle the case in writing with your tenant if you can. If there is any problem, you can request a continuance from the Court, but for most garden variety non payment of rent eviction cases, you should be able to complete your business in the first go around !!  

The author of this article, 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. The contact number is (818) 383-5759, and email is natebernstein44@gmail.com.   Nate Bernstein 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.    He previously served as Vice President and In House trial counsel at Fidelity Title Insurance Company, a Fortune 500 company, and in house counsel at Denley Investment Management Company.      Nate Bernstein created www.laquiettitleattorney.com, a leading educational resource on quiet title real estate litigation.     Nate Bernstein is a local expert on real estate law and economic trends in the real estate and leasing market, business law, bankruptcy law.    Nate has personally litigated more than 40 major real estate trials, and has settled more than 200 complex real estate and business cases.

By  Nate  Bernstein, Esq.   –  Managing  Counsel, LA Real Estate Law Group

Important News Regarding Rent Control Legislation: Calif AB 1506

A California Assembly Bill, AB 1506 (BLOOM), was introduced three weeks ago and aims to repeal the Costa-Hawkins Act, which currently prevents cities and counties from adopting extremely restrictive rent control policies. The Costa-Hawkins Act was adopted in 1995 to curb extreme rent control, enabling property owners to raise rents on vacant units during a time where strict rent control laws were in place across California. If passed, this repeal would heavily affect the rental industry as it encourages local government to fiercely control rental rates and evictions.

I urge you to join us and organizations within the multifamily industry like the California Apartment Association, California Association of Realtors, Apartment Association of Orange County, and many others. Contact your local Assemblymember and ask them to vote NO on AB 1506 when it is taken up on the assembly floor.

Click here to find your California Representative.

Via CICReports.com