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San Francisco’s mayoral race has become charged in a very Bay Area way in an epic battle between progressives and moderates. This New Yorker article says the fractious contest will define the future of the left and will serve as a litmus test for the way it is thinking as a collective.

No matter what your ideology may be, whoever inherits the final 18 months of the late Mayor Ed Lee’s second term will have to tackle housing issues and shape policies that are consequential to rental property owners in a strong-Mayor town.

We wanted to put a pulse on where our industry partners stand, and the report card is in. The San Francisco Association of Realtors, Small Property Owners of SF and the San Francisco Apartment Association all endorse lifetime renter and moderate Board of Supervisors President London Breed. Breed is both pro-tenant and pro-developer who believes the affordability crisis is driven primarily by a lack of housing supply.

“The housing crisis has grown visibly worse recently, but it is — at its core — the result of decades of bad housing policy in San Francisco and the Bay Area.” ~ London Breed

This sentiment and balanced approach seems to resonate well with owner advocacy groups, who are also in agreement in opposing Mark Leno or Jane Kim. Predictably, all are in unison by opposing Proposition F, dubbed the “No eviction without representation Act of 2018,” which would establish a City-run and funded program to provide free legal representation for all tenants in the city who are facing eviction, regardless of the underlying cause.

Sitting Superior Court Judges Andrew Y.S. Cheng, Curtis E.A. Karnow, Cynthia Ming-mei Lee, and Jeffrey S. Ross are viewed to be more moderate than the progressive candidates vying for the bench and so anyone tethered to the rental housing industry may be advised to leave all enough alone.

We’ve noted before that the fraternity of rental property owners and the professionals who service them can band together to defeat repeal efforts of the Costa-Hawkins Rental Act, and in the same spirit, urge you to get out to the polls on Tuesday to assert your voice.

Even as we continue to keep an eye on the big picture and follow legislative/regulatory changes and the influencers that shape policy, you can count on Bornstein Law to handle the more mundane legal issues and landlord-tenant disputes that arise in your rental business. Contact us for informed advice.

In the vast majority of cases of strained landlord-tenant relationships that cross our desk, a tenant’s alleged transgression is “curable,” meaning the tenant can fix whatever problem has incurred the angst of the landlord.

Whether the resident is late on his or her rent, the tenant keeps pets in violation of a no-pet policy, plays loud music at all hours, or are in breach of other covenants contained in the lease, they more often than not have an opportunity to pay the rent or correct the underlying behavior.

On behalf of our clients, we commonly serve notices instructing tenants to either pay the rent or move within three days, or similarly, to move within three days if the tenant does not cure another rental agreement violation. Yet illegal activity constitutes a violation that is not curable — so egregious is illegal activity on the premises, the tenant is not afforded the opportunity to remedy the unlawful behavior.

Recognizing that certain types of conduct pose extreme risks to the well-being of residents, Code of Civil Procedure (CCP) section 1161(4) provides rental property owners a vehicle to commence an unlawful detainer action when:

Any tenant, subtenant, or executor or administrator of his or her estate heretofore qualified and now acting, or hereafter to be qualified and act, assigning or subletting or committing waste upon the demised premises, contrary to the conditions or covenants of his or her lease, or maintaining, committing, or permitting the maintenance or commission of a nuisance upon the demised premises or using the premises for an unlawful purpose, thereby terminates the lease, and the landlord, or his or her successor in estate, shall upon service of three days’ notice to quit upon the person or persons in possession, be entitled to restitution of possession of the demised premises under this chapter. For purposes of this subdivision, a person who commits or maintains a public nuisance as described in Section 3482.8 of the Civil Code, or who commits an offense described in subdivision of Section 3485 of the Civil Code, or subdivision (c) of Section 3486 of the Civil Code, or uses the premises to further the purpose of that offense shall be deemed to have committed a nuisance upon the premises.

Dogfighting and cockfighting, prostitution, unlawful weapons or ammunition offenses, and in some instances, gang activity are some examples of illegal activity, but the bulk of these actions are related to narcotics trafficking. Clearly, though, weapons offences often go hand-in-hand with selling drugs.

Of course, prevailing in an unlawful detainer action on the basis of illegal activity transpiring in a rental unit is considerably different than a non-payment of rent case — you will need proof of the illegal activity.

We were intrigued to come across this video from a news outlet that reported how one police department trained landlords to identify illicit activity taking place.

We hasten to say that before the rental property owner plays detective, the owner needs to be aware that in California, landlords are permitted to enter the dwelling only in a limited set of circumstances, and the mere suspicion that something nefarious is going on is not one of them. Inquisitive owners may find activity that raises their eye brawls, only to also find snooping violates the “implied covenant of quiet enjoyment.”

We do agree with the sentiment that landlords must be the “eyes and ears” of their rental unit. While this is the first venue in which we’ve addressed illegal conduct in units, we’ve talked about how landlords need to know what is going on in their property when it comes to unauthorized Airbnb and short-term rental arrangements. This analogy is quite fitting, because under CCP 1161(4), unauthorized subletting is a cause for this form of hybrid eviction where the tenant cannot get back in good graces with the landlord.

Although the law provides a legal basis for a landlord to terminate the tenancy by giving only three days written notice if the tenant has used the apartment for an unlawful purpose, the illegal activity must be proved in the eventuality of a trial.

Of course, the purpose of an unlawful detainer trial is not to determine the guilt or innocence of a criminal defendant. In criminal law, the accused is afforded much more rigorous protections and the State must prove guilt “beyond a reasonable doubt.”

In unlawful detainer trials, the landlord must prove more than 50% of the evidence points to illegal activity, a much lower burden of proof but nonetheless a tall order for the owner to prove the facts stated in his or her complaint. Independent witnesses, police officer testimony, and other evidence to sustain the landlord’s case should be carefully reviewed with an attorney.

Although these types of actions may seem less formal than other Superior Court trials, there are many evidentiary and procedural issues, unforgiving deadlines and specialized documentation that make it imperative to seek proper legal counsel to remove tenants that who are engaging in illegal activity.

Until recently, San Francisco was the only major Bay Area city with rent-control laws to allow landlords to pass on portions of property taxes and mortgage loans, but it no longer stands alone.

The San Francisco Board of Supervisors has passed an ordinance that blunts the ability of rental property owners to increase rents by up to 7 percent on top of the annual allowable increases, to pay down rising property taxes and debt services.

A landlord may still petition the Rent Board to pass through to tenants the costs of certain renovations to the property, which are considered capital improvements — new windows, a roof replacement, or exterior painting, for example.

In deciding whether to nix these pass-throughs, the Board of Supervisors received no shortage of input from a phalanx of tenant advocacy groups and predictably, the rhetoric against “greed-fueled displacement” and “outside speculators” was barbed, falling squarely on the side of tenant advocates.

Although debt service and property tax pass-throughs have been utilized by large corporate landlords and property management companies, they also are used by “mom-and-pop” owners who rely on the pass-throughs to keep themselves solvent. The new law, then, disproportionally impacts these smaller rental businesses owned by predominately responsible, studious landlords who are being saddled with rising costs.

The East Bay Rental Housing Association put human faces on these engaged, positive and compassionate members by profiling several private rental properties owners here, noting they are the providers of the community’s largest segment of safe, clean and affordable housing.

Back when efforts to scuttle debt service and property tax pass-throughs first captured our attention in December 2017, Charley Goss, government affairs managers for the San Francisco Apartment Association, noted that tenants facing financial hardship may apply for an exemption to a pass-through rent hike.

“You want to protect tenants who need protection with hardship petitions, but there has to be a give-and-take with the ability to recoup costs and investments in the property.”

By not engaging in this compromise and instituting a blanket prohibition against rising expenses, the city has dealt a blow not only to Goliath landlords who can absorb rising costs and huge mortgages with less discomfort, but to smaller rental businesses that are already struggling to keep afloat.

As we noted earlier, landlords can still petition the Rent Board for rent increases in other circumstances, but oftentimes, owners are uninformed about their respective rights under the law. Having made regular appearances before rent bodies throughout the Bay Area for over 20 years, Bornstein Law has become well-versed in this nuanced area of law.

As a backdrop, visit our practice page that takes a trip around rent-controlled jurisdictions, or contact our law offices for informed advice.

 

 

As proud East Bay residents, we encouragingly watched Oakland become an emerging force throughout the Bay Area. Yet Bornstein Law has always maintained that the propulsion of rent control measures has moved the needle of progress in the opposite direction and unnecessarily penalizes studious “mom and pop” landlords that are the bedrock of the community and the biggest engine of affordable housing.

Oakland City Hall disagreed with our assessment.

Oakland renters that occupy dwellings subject to Measure EE will now be entitled to relocation payments when an owner attempts to recover possession of a tenant-occupied unit for use as their primary place of residence or a relative’s use where the landlord already lives in another unit in the building. Those payments are compliments of the Uniform Residential Tenant Relocation Ordinance and apply not only to owner move-in evictions but to instances where a tenant is displaced because of the owner’s desire to effectuate a condo conversion.

A fundamental question we have been fielding from Oakland landlords is whether the new relocation rules apply to them, or if their properties are exempt. This calls for a careful review of your unique circumstances, but for the purposes of this discussion, we will assume that tenant relocation assistance is obligatory.

The effect of the ordinance is to extend relocation payments to all no-fault evictions – there were existing laws on the book that mandated relocation payments for only Ellis Act and code compliance evictions. The measure is one of many designed to make Oakland’s rent stabilization more closely mirror the policies of its sister rent-controlled cities in San Francisco and Berkeley.

How much the landlord must doll out will depend on the number of bedrooms that are in the unit.

  • $6500 for studios and 1 bedrooms
  • $8000 for 2 bedrooms
  • $9,875 for 3+ bedrooms

These are the “base rates”, if you will, but owners are required to dig deeper into the wallets if there are any tenants in the household who have low income, are elderly, disabled, or have minor children. One additional, lump sum payment of $2,500 per unit is due when any member of these vulnerable groups inhabit the dwelling.

Half of the standard relocation payment must be made when the eviction notice is served, with the balance due when the tenant vacates. The lump sum of $2,500, if applicable, must be paid within 15 days of when the tenant notifies the landlord of the tenant’s eligibility for the additional payment.

If a recalcitrant landlord does not make the required relocation payment, the tenant or their attorney cannot use the failure to pay a defense to an unlawful detainer action, but we hasten to say many other penalties await a landlord that does not comply with the law. Suffice it to say you don’t want to defend against them.

Of course, like most other matters that cross our desks, the law is cleaner on the page than in real life, with Oakland home to some of the most onerous and highly regulated rent control laws in the country. This minefield is best journeyed with the Oakland landlord lawyers at Bornstein Law.

Section 8 housing has been the subject of some controversy and conflict lately. With a good deal of misinformation floating around, widespread landlord bias against Section 8 tenancies and a potential legal minefield for landlords, we felt obligated to chime in on the housing choice voucher program.

Spawned by 42 U.S.C. §1437, Section 8 aims to assist low-income families, the elderly and disabled to afford decent, safe and sanitary housing in the private market, but like most other matters that cross our desk, the law is much cleaner on the page than in real life application.

Rental property owners seem to have a love-hate relationship with Section 8. Their participation in the program has always been a trade-off between rent security through guaranteed subsidies, shorter vacancies and lower turnover, among other perks, and the unique challenges landlords face when renting to a tenant with a Section 8 voucher. Less endearing aspects of the program include frequent inspections, a labyrinth of regulations, ceilings on amounts the government will pay, concerns over possible property damage and the collection of security deposits, to name a few.

Getting the elephant out of the room

There is a pervasive belief held by many landlords that Section 8 tenants are destructive, with no shortage of horror stories that beset owners can tell to back up their claim – we will resist the temptation to recount the details of these tales. We hasten to say that excessive wear and tear can be afflicted by any tenant, regardless of their income source.

At Bornstein Law, we always operate under the presumption that there are good tenants and bad tenants. By the same token, there are good landlords and bad landlords, so it’s our belief that no group should be painted with a broad brush.

Some landlords do not share our sentiment and have a bias against Section 8 rental applicants. We have always maintained that the wholesale exclusions of any group expose landlords to liability, and a categorical policy of refusing to rent to recipients of Section 8 vouchers is no exception.

What the law says, and where it is mute

The Fair Housing Act (FHA) a federal law, doesn’t bar landlords from discriminating based on Section 8, but some states and municipalities do, oftentimes as part of a larger contextual ban on “source of income” or “public assistance status.” We’ve noted that California defines discrimination much broader than federal law, with the envelope of protected classes constantly being pushed.

Unique protections in the Bay Area

As one of the greatest enclaves of tenant protections anywhere, it’s with little surprise that some Bay Area municipalities have led the charge in discouraging the rejection of Section 8 applicants and codifying this disfavor into law.

Berkeley is one bastion of protective measures for low-income renters – if you say “no” to a Section 8 applicant, it may be tantamount to housing discrimination, as part of Ordinance No. 7568.

The Oakland Housing Authority is dangling financial incentives to landlords who rent to Section 8 participants, but in an earlier article, we related the frustration of many Oakland landlords who experience hurdles in exiting the program – owners who want to divorce Section 8 may find that it’s until death do us part, so a careful cost/benefit analysis is recommended before opting in.

In San Francisco, a longstanding argument over a law that prevents landlords from rejecting Section 8 has been settled for now, as the First District Court of Appeal ruled in favor of the city and affirmed protections for voucher recipients. But with further appeals in the offing, it is likely that we haven’t heard the last of this.

Parting thoughts

We note that there are unique documentation and unforgiving deadlines with the termination of tenancies and rent increases with Section 8 participants and the rules must be followed to the letter.

We also stress that when there is a failed relationship, Section 8 evictions are highly nuanced. The tenant can only be evicted for repeatedly violating the lease agreement, breaking the law in connection with the property, or another “good cause,” an ambiguous term best journeyed with an attorney.

In the vast majority of the cases we handle, tenants violate the lease agreement by failing to pay rent, but there are more nebulous reasons such as violations of the occupancy standards or nuisance violations.

For proper counsel, contact our office for experienced driven, informed advice on the Section 8 program and any other orbits of your real estate business.

 

When rental relationships sour, even the most studious investment property owners can be slapped with a lawsuit that may cost tens of thousands of dollars to defend against, regardless of the merits of the case.

In our 23+ years at Bornstein Law, we have seen some reprehensible conduct by landlords that invite litigation, and the menagerie of shocking abuses inevitably finds its way into the headlines. When investment property owners house tenants in squalid firetraps, bully elderly residents, or relegate vulnerable tenants to a subterranean dungeon, such lawsuits are indefensible.

Responsible landlords who have a sound moral compass tend to look at these egregious cases and develop a misplaced sense of confidence, reasoning that because they treat their tenants well and are good stewards of the property, they will not be exposed to financial and legal liability.

In fact, most of the tenant lawsuits we encounter at Bornstein Law arise from a multitude of simple oversights, a naivety of rent control laws, or an overzealousness of landlords to take matters into their own hands with “self help” evictions or menacing behavior that serves to harass problematic tenants.

We constantly remind owners that while the rental unit is their property, it is the tenant’s home, and when a landlord crosses this nebulous line, the conditions are rife for a tenant lawsuit.

Given the potential spoils of victories, there is no shortage of enterprising tenant attorneys wanting to assist disgruntled residents in evening the score. This is especially true when the tenant is displaced, and the stakes are ratcheted up if the high-pitched tenant is in a rent-controlled jurisdiction, where rent boards are all too willing to right a perceived wrong.

We have been ambassadors for wrongful eviction coverage, noting that tenant lawsuits are proliferating throughout the Bay Area. We would be remiss not to qualify that statement with a summary of potential suits that a landlord can face in a failed tenant relationship, so we outline some common ones here.

Wrongful eviction

When a tenant claims that he or she is displaced through the improper conduct of the landlord, this can be a costly endeavor. The tenant often seeks rent differential damages, the difference between the former tenant’s monthly rent and the actual rental value of the unit. For example, let’s say a tenant who is paying $2,500 in a rent-controlled apartment is wrongfully evicted. Assuming the current monthly rental value is $4,500, there is a rent differential of $2,000. A tenant can argue that if it was not for the improper conduct of the landlord, he or she would have remained in the apartment for five years and, doing the arithmetic, the differential damages are $120,000. Other potential damages may include moving costs, statutory relocation fees, and compensation for the emotional distress of being uprooted.

Breach of covenant of quiet enjoyment

Implied in every lease is a covenant of quiet enjoyment, guaranteeing that tenants will be able to peacefully enjoy their homes, and this has been codified in Civil Code § 1927. Essentially, the tenant has a right to reasonably occupy the dwelling peacefully and without recurring disruption, but ‘quiet enjoyment’ also includes the right to exclude others from the premises, the right to clean premises, and the right to basic services such as heat and hot water. When a tenant claims that the landlord has interfered with these rights, action can be brought against the landlord for breach of the covenant of quiet enjoyment. The tenant may elect to stay in the unit and sue the landlord.

That’s not all

The tenant may also commence a lawsuit for emotional distress suffered because of a landlord’s misconduct or harassing behavior, whether the infliction of anguish was intentional or a result of negligence. In cities that have implemented rent control policies of varying degrees, landlords may also be liable for damages that occur from violations of the respective ordinances.

Triple the trouble?

Enter treble damages in certain locales that triple the damages in a punitive measure to discourage improper landlord conduct and the potential liability is amplified, not to mention attorney’s fees that a landlord can be on the hook for.

At Bornstein Law, we believe that an ounce of prevention is worth a pound of cure, and our overarching goal is to avoid or resolve conflict so that your rental business does not have to defend against lawsuits. Managing a landlord-tenant dispute is like a knot – the harder each side tries to win, the less likely the knot is untangled. We are firm believers in untangling the matter so that the conflict is not enlarged.

Of course, you can count on our advocacy in the courtroom or in front of local rent boards as a last resort. In an era when political rhetoric and tenant protections neglect the rights of property owners, you can rely on our staunch advocacy to level the playing field.

As its name implies, a tenant buy-out agreement (or in Oakland’s vernacular, a move-out agreement) is an arrangement whereby the tenant voluntarily vacates the rental unit, in exchange for compensation. Move-out agreements are particularly attractive when there are no convenient legal grounds to compel a tenant to leave or to avoid the cumbersome legal process.

The prerequisite to any agreement, of course, is to initiate a conversation and negotiate what dollar amount makes sense to both parties, but this dialog will soon be subjected to regulations that the city passed on March 20th, which adds to Chapter 8.22 of the Oakland Municipal Code.

Free speech assailed

A landlord’s prerogative to approach tenants with the offer of buying them out of the residence is constitutionally protected free speech under the First Amendment, a right that after scrutiny, has been upheld by courts.

It is well grounded that private parties can enter into a voluntary agreement and that agreement is legally enforceable if certain elements are met, namely offer acceptance and consideration. A properly negotiated tenant move-out agreement passes the muster.

While it is a rarity for Big Brother to have a say in covenants that are forged between consenting parties, Oakland has joined San Francisco in an exclusive club that regulates buyout negotiations between landlords and tenants. Just as courts have affirmed a landlord’s right to free speech, so too, has it upheld a San Francisco ordinance that constrains this speech.

By passing the Tenant Move Out Agreement Ordinance, Oakland ushered in a sweeping law that creates disclosure and reporting stipulations that must be issued before a landlord can even broach the topic of a buyout.

So as to let owners know that Oakland is serious about the ordinance, the law imposes hefty penalties for landlords that take short cuts by ignoring the procedural requirements and starting an informal chat with a tenant on their own.

The ordinance dictates the choreographed procedures that rental property owners must follow and adds teeth to the measure, and here is the Reader’s Digest version. Owners must:

  • Provide tenant with a written pre-negotiation disclosure on a form prescribed by the City.
  • Inform tenants of their right to consult with a lawyer.
  • Provide tenants with a statement allowing them to rescind the move-out agreement for up to 25 days after execution.

We’ve uploaded the long-form version of the ordinance on our website. Download it here…

These ordinance procedures only apply if an owner and tenant are negotiating a tenant buyout. This move-out ordinance should not be confused with owner move-in relocation fees. For more information on owner-move ins and relocation fees, consult our earlier article on this subject.

Learn more about owner move-in relocation fees →

Mimicking San Francisco

We notice stark similarities between Oakland’s ordinance and that of San Francisco’s, with an exception that jumps off the page – if all of the T’s are crossed and the tenant enters into a proper move-out agreement, only to later change their mind, Oakland residents have 25 days to rescind the agreement, while San Franciscans are afforded a full 45 days to make an about face.

Our take

Bornstein Law laments the passage of the ordinance because it adds new layers of red tape to an already obstructive process that burdens small rental property owners. The new restrictions in communication drive a deeper wedge between landlords and tenants, which will likely result in clogging the court system with cases that could be averted if open communication were not trampled upon.

More fluid dialog, we believe, would increase the number of instances of “win-win” situations, where both parties would negotiate mutually agreeable terms. Being dragged into court is a lose-lose situation for landlords and tenants alike but seems inevitable for a city whose policies have trudged ever closer to the heavy-handed rent control policies of San Francisco.

Constraining communication between consenting parties all but guarantees a pathway to the costly judicial system that adds further expenses to property owners already saddled with high costs of doing business and may very well lead to evictions that would be avoided if there were no stumbling blocks to two parties coming to the table.

Buyout agreements are nothing to be trifled with

Structuring a tenant buyout agreement was already a legally consequential undertaking, but Oakland’s Tenant Move-Out Ordinance adds new layers of complexity that must be journeyed with an attorney versed in landlord-tenant law.

 

 

Airbnb may have won many people’s choice awards, but it hasn’t gotten many points with its hometown. Now, the city seems to have tamed the beast and emerged as the undisputed enforcer of the modern-day iteration of the temporary flop. San Francisco’s newly fanged Office of Short-Term Rentals no longer has to plea with billion-dollar platforms to remove hosts that flout the rules – they merely tell them to remove these bad actors.

In a nanosecond, thousands of straggling, unregistered Airbnb hosts got their listings deactivated, nixing nearly half of Airbnb’s listings overnight. That’s because when the clock struck midnight on Wednesday, January 17, a new law kicked in requiring hosts to register their property went into effect.

In that moment of reckoning, the rules become clearer. A short-term rental host that shows compliance with San Francisco’s laws and earns a license issued by the city is legal, and those who don’t follow the law are illegal and excommunicated – not open for debate or discussion. As part of the long-promised crackdown, 2,000 units were pulled off the site last Tuesday alone, ending an era when not having a license was no bar to ranking in cash.

The data is fresh and we are still analyzing it, but it appears that at least 6,000 short-term rental listings were removed through this process…. For Airbnb alone, around 4,760 listings were removed.”

~ Kevin Guy, director of S.F’s Office of Short Term Rentals

Joe Eskenazi has a riveting behind-the-scenes glance of the final countdown to the Airbnb registration at the Office of Short Term rentals.

San Francisco stands alone in putting such a dent in Airbnb’s listings, but who, exactly, is responsible for this dramatic turnaround? Their capitulation to demands is not owed to Airbnb itself or the city attorney, but to an “only in San Francisco coalition” that united odd bellows to organize, run campaigns, educate, and eventually support the Goliath to quit posting illegal listings, submits this article.

Regardless of the forces behind Airbnb’s about face, Bornstein Law has seen this day long in the making and feel somewhat validated by our predictions very early on in the parade that the law would catch up with technology.

Airbnb wins a lawsuit that threatened its entire business model

In a victory for profiteering renters that improperly sublet their units for extra cash, a federal judge has tossed out a lawsuit that sought to crack down on hosts using the Airbnb website without landlord permission. Denver-based Aimco took the fight to Airbnb in dual lawsuits in Florida and California, claiming that Airbnb was deliberately incentivizing people to break their leases. A judge rejected this argument, ruling that Airbnb was not responsible for any havoc that was wrecked by guests. That according to the Communications Decency Act, a federal law that gives internet companies immunity for content that users or random people post on their sites.

The takeaway for landlords? Don’t wear blinders, and some personal sleuthing may be in order to determine what is going on in their rental units. Owners can and must take corrective action if improper subletting is detected.

If history is any indication, we’re sure that it won’t be too long before Airbnb graces itself in the news again, but you can count on the landlord lawyers of Bornstein Law to help stay in the know.

 

At Bornstein Law, we marvel at California’s scenery and are the first to recognize that all of us must be good stewards of the environment, but we also tout new construction as the most sensible solution to the housing deficit. We think that enviros and YIMBYs that say “build baby, build” can not only co-exist but experience synergy in their mutual goals.

In a January Facebook post, we noted that the California Environmental Quality Act may be aggravating the state’s housing crisis and that it may be time to review a 1970 law that requires public agencies to put a finger on the environmental impacts of projects within their jurisdiction.

However well-intentioned, CEQA has become a tool to deny, obstruct or delay residential construction, irrespective of whether there are significant or legitimate environmental concerns. With the housing crisis upon us, the climate seems ripe to re-examine the legislation and so it was only a matter of time before legislators acted to restore a sense of equilibrium between environmental protections and the need for increased housing in the 21st century.

Sen. Steve Glazer took the charge by introducing SB 1340 and SB 1341, bills that recognize that the frivolous lawsuits will halt new affordable housing developments in the Bay Area and beyond.

Glazer takes a two-pronged approach. SB 1340 attempts to break the logjam of litigation – courts would have 270 days to rule on lawsuits that challenge housing projects. Simultaneously, SB 1341 would add a level of transparency to actions by requiring plaintiffs that initiate CEQA-based lawsuits to come out of the shadows and disclose their identities.

The latter point is not that radical of a concept – it is helpful to know exactly who you are being sued by, but a departure from the status quo of anonymous litigants. SB 1341 would also eliminate the wasteful duplication of multiple lawsuits lodged against individual projects that face similar claims.

While Glazer’s pair of bills are flagship pieces of legislation that stand to knock down the walls of CEQA, there are other measures incubating to reform the way CEQA lawsuits are handled, and we will cover these in future posts.

The new face of YIMBYism

Environmentalists would ordinarily be up in arms over any initiatives to curtail protections, but it seems that the torch has passed to a new generation.

As we noted in an earlier article, enviros are joining the ranks of the YIMBY movement, as a growing throng of progressives and Millennials are recognizing that more homes are good and denser housing would reduce the carbon footprint.

Bornstein Law applauds reasonable efforts to remove barriers to much-needed construction and even as we attempt to help shape the larger debate on housing policy, our landlord attorneys are ready to help investment property owners avoid friction within their rental units and manage landlord-tenant relationships – contact our office today.

 

We came across an intriguing case of a couple that sought court intervention to force their 30-year old son to move out after overwhelming his welcome. After repeated entreaties from his parents to leave their home and refusing money to find new living arrangements, Michael Rotondo was adamant about staying until a judge gave him the boot.

The case gathered wide attention and on Wednesday, even became the butt of jokes on the Jimmy Fallon show. Though the displaced Mr. Rotondo was an easy target after being belligerent in court and giving an animated interview with the media, rest assured this is not a humorous subject for a great number of property owners whose residences are being manipulated by adult children, friends or caregivers.

It’s an unfortunate dilemma when owners invite a trusted individual into their residence, perhaps out of a sense of obligation, only for the unappreciative guest to exert an inordinate amount of control over the dwelling, refuse to leave when asked to and worse yet, take advantage of the owner.

Largely overlooked in the media buzz and late-night banter is Justice Donald Greenwood’s instruction to an adult protective services agency to investigate the case further. That body is responsible for overseeing the suspected abuse, neglect or exploitation of older adults and adults with disabilities. The Justice’s concern bespeaks alarming abuse of vulnerable property owners that are not ensnarled by the typical fraudsters, but by family members, friends, caregivers and other trusted advisors within their circles. We’ve encountered this all too often at Bornstein Law and take great solace in halting these extended stays, if not averting abuse of the owner.

The law provides an answer to regain control

When an owner opens the door and invites someone into their residence, they essentially create a license to occupy the premises. It doesn’t mean their guest (in legalese terms, the licensee) can stay indefinitely.

If the owner invites someone over to dinner, their guest has the license to stay until the meal ends or until such time the owner asks them to leave. Clearly, the dinner guest cannot maintain possession of the unit and start “camping out” without the owner’s permission. This simple analogy is instructive – when a tenancy was never established, the owner can ask whoever occupies their premises to exit.

Although this is readily understood in most occupancy arrangements, some overly reliant, opportunistic or predatory residents insist on staying planted. When these incalcitrant guests cannot be nudged out of the residence, the owner can turn to the courts to commence a forcible detainer action.

Although a forcible detainer action is a different legal creature from an unlawful detainer action, it is similar in many respects and the end goal is for a landlord to regain possession of their unit. Of course, efforts to remove any resident brings into focus many legal issues best journeyed with an attorney.

When family members or other confidants are the subjects of a contemplated eviction, it is even more vital to seek proper counsel removed from the emotional fray.

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Immigration was a divisive topic in 2017, but California has been the capital of democratic resistance in the Trump era, making a concerted effort to protect immigrants from the rhetoric and anticipated changes coming down the pike.

One example is the passage of AB 291, or the Immigrant Tenant Protection Act, which prevents rental housing providers from using an individual’s immigration status against tenants.

Under existing California Law, it is not permissible for landlords to inquire as to a tenant’s immigration status, but AB 291 was designed to address the unfortunate acts of intimidation some owners have used to influence tenants to vacate the unit or face being reported to immigration authorities. It adds greater teeth to anti-discrimination laws for renters that are already on the books. Specifically, AB 291:

  • Prohibits landlords from threatening to report tenants to immigration authorities, whether in retaliation for engaging in legally-protected activities or to influence them to vacate.
  • Bars landlords from disclosing information related to tenants’ immigration status.
  • Provides tenants the right to sue landlords who report them to immigration authorities.
  • Codifies an existing defense to unlawful evictions based on immigration status.
  • Prohibits questions about tenants’ immigration status in discovery or at trial.
  • Prohibits attorneys from reporting, or threatening to report, the immigration status of persons involved in housing cases.

Watch David Chiu (D-San Francisco make his case for the Bill on the Assembly floor.

The new law isolates the few bad apples, and so it will not affect the day-to-day operations of most law-abiding rental businesses; however, it does highlight the duty of care that landlords must use with the information they glean from their relationship with tenants.

This includes their social security numbers, native languages, the times they are home, the identity of their families among other sensitive information, and so landlords must use caution to make sure that any information is not misused.

We have always acknowledged the crucially important and difficult role of teachers, so Bornstein Law was encouraged to see that their toil in their classroom is being increasingly rewarded with a better prospect of home ownership “If you work at a school, we’ll help you buy a home”, is the tagline for Landed, a San-Francisco-based startup that assists teachers with their down payments. It’s a nice uplift, but with its services reaching 10,000 educators in eight school districts, it is a drop in the bucket.

In San Francisco and throughout the Bay Area, cash-strapped educators have struggled to keep pace with rising housing costs, and municipalities have heard their struggles. San Francisco has recognized that 20 percent down payments are hard to come by on a teacher’s salary, leaving many no choice but to rent indefinitely, endure grueling commutes, or seek greener pastures in cheaper school districts, with young minds hanging in the balance.

In recognizing the plight of these educators, along with the upheaval of students being implanted during the school year or severing ties with a displaced school employee, the San Francisco Board of Supervisors unanimously approved Ordinance No. 55-16. In 2016, the ordinance catapulted school staff to a newly protected class, prohibiting their displacement through a no-fault eviction during the academic year.

The ordinance lasted all five months before Judge Ronald Quidachay sided with the San Francisco Apartment Association and the Small Property Owners of San Francisco Institute. These groups sought judicial review of the ordinance, claiming that the law “is facially invalid because it is preempted by State laws governing landlord-tenant notification procedures and timetables governing the parties’ respective rights and obligations, including the timing of the right to terminate tenancies where the landlord has otherwise complied with all state and local substantive requirements necessary to terminate the tenancy.”

In plain English, Judge Ronald Quidachay agreed that state laws on evictions and property rights prevented cities from passing their own laws covering evictions and property rights.

The First District Court of Appeal in San Francisco took issue with this logic and on Wednesday, said that the city acted within its authority. The appellate court asserted the city’s ability to provide a permissible limitation upon a landlord’s property rights, without meddling with the overall right to evict under state law. The cerebral types can read the full case law here.

Perhaps with the exception of  Social Studies teachers that are fascinated by the abstract concept of preemption, the takeaway for jubilant teachers is that if a landlord attempts to evict them through no fault of their own, the eviction has to wait till the summer.

It begs the question: what takeaways are there for landlords? The lawyer for the SFAA and Small Property Owners of San Francisco offers his premonition.

“For property owners in San Francisco, what this ruling means, if upheld, is that if a property owner needs to access a piece of property to make repairs — let’s say a boiler breaks in November — they won’t have any way to get access until the summer months…. It’s a problem that the city created. We hope the Supreme Court will consider the importance of the issue.”, attorney Andrew Zacks says.

Zacks vows to appeal to the state Supreme Court and given the constitutional gravity of the matter – a clash between local and state law – the matter is almost certain to be heard. As always, you can count on Bornstein Law to keep you abreast of the developments.

To which we might add that in today’s climate, no-fault evictions are met with increased scrutiny, regulations, and tenant lawsuits, making it more imperative for landlords to consult with an attorney when they are contemplated.

At Bornstein Law, we have children (Daniel has five), and we love teachers. We also love protecting the rights of landlords. Our job is to not pass judgment,  but to protect the rights of clients no matter where they fall on the spectrum.

 

A little bit off the mark?

“After weeks of political wrangling, San Francisco is poised today to approve legislation that would allow the creation of tens of thousands of in-law units within existing buildings.” That was the intro to this 2016 article on the day the Board of Supervisors voted to alleviate barriers to construction of accessory dwelling units (ADUs), known colloquially as in-in-law units, granny flats, and other terms.

It was estimated that upwards of 30,000 affordable housing units would be carved out in privately owned buildings, but this goal was a tad ambitious – with 23 units built, there are 29,977 more to go.

There has been a romance lately with ADUs and even we were guilty of touting the benefits of new incentives to building a residential unit in an underutilized area of a property. But recent numbers have soured the love affair.

Although a lot of lip service has been paid to the benefits of ADUs, this San Francisco Business Times article reports that the number of units that have sprouted up are in the double digits.

In 2016, the gravity of the housing shortage was beginning to register for San Francisco. Recognizing this deficit and understanding that many properties have space that is not being used to its highest potential, the city passed Ordinance No. 162-16 in September of 2016 to allow their construction citywide.

In an oldie but goody, take a look at this San Francisco Planning Department’s video that rolled out the program, noting the unique and important role that ADUs play in a neighborhood’s housing supply. It was a good sales pitch, but many San Franciscans are experiencing buyer’s remorse.

After the law was ushered in, we assisted several clients in evaluating the risks and rewards of building a residential unit in an underutilized area of the property. Exuberant owners looking to take advantage of laxed Planning Code requirement found that building codes were still maddening to a lesser extent, as they jumped from the fire into the frying pan.

There’s plenty of finger pointing to go around. Although frustrated owners balk over the approval process and run into obstacles when it comes to passing fire code and other requirements, San Francisco Fire Department Fire Marshal Dan de Cossio told the Building Inspection Commission that “the onus to meet code and the requirements falls on the design professional, falls on the architect of record, engineer of record, etcetera.”

Marcelle Boudreaux heads the Planning Department’s accessory dwelling program and related to the same Commission stories of vexed architects that do not know how to properly advise their clients in the absence of guidance from city agencies, notably the Fire Department tasked with overseeing rescue windows and egress requirements. All agencies involved are hashing out the details on accelerating the approval process and breaking the logjam, so we will watch to see if the pace is picked up.

While only 23 ADU’s have been built among the 109 permits issued for new construction, the legalization of once illegal units stacks up a little better. With tens of thousands of illegal ADU’s estimated to be in the shadows, the City has received 658 permit applications of owner volunteering to legalize these units, of which 163 have completed the process.

Although these numbers are discouraging, property owners should not abandon their endeavor to build a backyard cottage but proceed with proper counsel. With a 23-year tradition of advocating for owners, coupled with tentacles in the property management industry and access to reliable contractors, Bornstein Law is best equipped to assist you in erecting an ADU or legalize an illegal unit that is eligible for proper permitting.

 

As heavy consumers of Bay Area housing news, we came across this article chronicling the plight of Cindy Chau, a tenant who thought she found a gem in a $1,200 a month apartment in pricey San Francisco. The bargain came with a caveat not included in the lease – lewd text messages and sexual entreaties. However disturbed we were by this occurrence at Bornstein Law, we were encouraged that the little-spoken about issue of sexual harassment within rental units was brought to light.

It’s difficult to turn a hashtag campaign into long-lasting change, but in short order, the #MeToo movement has upended the landscape of a number of industries, exposing sexual harassment where it has reared its ugly head. Whether in the hallowed halls of the Capitol, California’s technology sector, the good ole’ boy network of the entertainment industry, and just about every other facet of society, this issue has been in the forefront. It was only a matter of time that this endemic problem trickled its way down to the rental housing industry.

Related: Tenant lawsuits are proliferating throughout the Bay Area…

More women are breaking the silence, making this no longer a taboo subject – it’s a topic being discussed at nine o’clock in the morning. Watch this edition of the TODAY show.

As a guest on the TODAY show, Shark Tank’s Kevin O’Leary – a man no stranger to real estate and running businesses – offers some tutelage by saying that an enforceable policy of ‘zero tolerance’ must be set from the top, a message that must be heeded by landlords and property management companies, lest they face costly litigation or become a radioactive waste business.

Landlords can be held liable for the harassing behavior of their managers and other agents, making it vital to set and enforce policies from the top down.

Many people who infamously made headlines have seemed to become intoxicated with power, and the heavy-handed exertion of influence over other people, unfortunately, extends to a small group of Bay Area housing providers. In our pricey housing market, renters dealing with harassment are in a bind. In the words of one attorney cited in the East Bay Times article, “tenants basically are captive because they can’t afford to move out.”

We noted in an earlier article on permissible reasons for a landlord to enter an occupied residence that the tenant’s right to privacy is sacrosanct and that unknowing owners may be held liable for the actions of their property managers or agents. Cindy Chau’s case serves as an exclamation point. The understandably aggrieved tenant (shown below) is suing not only her property manager Gregg Molyneaux, but also Mr. Molyneaux’s parents, who are her landlords, on the grounds of harassment and wrongful evictions.

One of the greatest takeaways at Bornstein Law, then, is that it is imperative for any rental business to instill a culture of zero tolerance and an awareness of laws surrounding harassment and discrimination. With a high attrition rate, property management companies are especially susceptible to liability by the actions of employees that are not versed in basic tenets of law. Aside from harassment and discrimination, we add rent control regulations to the list of must-know subjects for property management employees to study.

It should be common sense, good business and human decency for the rental property industry to avoid crossing a red line, but if this is not reason enough, the romantic fascination of tenants or rental applicants can be quickly soured by the Unruh Civil Rights Act or Fair Employment Act and numerous cases where the courts have frowned upon the sexually-based transgressions of landlords with hefty financial consequences. Brown v. Smith and DiCenso v. Cisneros, are just a couple cases that roll off our tongues.

Most rental businesses are small shops, and they are well advised to consult the laws surrounding harassment. Harassment training isn’t optional for larger groups with more than 50 or more employees – under AB 1825, it is mandated.

In parting thoughts, we want to emphasize that in today’s scandal-laden and litigious era, any perceived acts of impropriety may be put under a microscope, with potentially severe repercussions to landlords and property managers. The writing is on the wall.

To understand your legal obligations and avoid or resolve problematic claims of harassment and cauterize risk, contact the landlord lawyers of Bornstein Law.

 

Calvin Coolidge once said that “advertising is the life of trade.” For the rental property industry, we might also add that advertising is the life of discrimination lawsuits that are proliferating in the Bay Area and beyond.

We see a built-in collision between good advertising and federal housing laws. Clearly, effective advertising is warmly and immediately human. It deals with human needs, wants, dreams and hopes, and coddles a sense of belonging. To win the hearts and minds of people, advertising aligns the core values of people by painting a broad brush with words and images that matter. What is intuitive for advertisers, then, may not be advisable for investment property owners.

In achieving its purpose, advertising can easily cross a line with buzzwords that indicate a preference, discrimination, or limitation based on color, race, sex, religion, handicap, national origin, sexual orientation, or familial status.

For its part, Craigslist has a page dedicated to the Fair Housing Act and instructions here.

Being warmly welcomed in a Hispanic community may be good advertising. Living within walking distance of a synagogue may be appealing to a Jewish family, just as a well-to-do household may enjoy being within proximity to a country club, but these representations also create discriminatory preferences that fair housing organizations, testers, aggrieved tenants and their attorneys are all too willing to enlarge. This short video explains these semantics.

Such blatant use of words, phrases, symbols, or visual aids that convey a preference are easy enough to avoid, but HUD peels the onion deeper by prohibiting advertising that selectively uses media, human models, logos, and locations that may signal a preference or limitation.

At Bornstein Law, we advise the industry to include persons with disabilities and ethnically diverse models in its advertising campaign and verbiage that highlights fair housing compliance policies.

We hasten to say that advertising is more than the traditional staples of billboards, commercials, newspaper ads and postings on Craigslist. It also encompasses flyers, banners, leaflets, brochures, deeds, applications, and the like.

It extends even further to anything the landlord or staff members verbally say or imply to prospective tenants. These statements might be uttered in person, sent in an email, condensed in writing, or made during a phone call.

An extended phone conversation is a particularly insidious breeding ground for housing discrimination claims, as the landlord or property manager attempts to conduct a full-blown interview to weed out undesirable applicants. No matter how scripted or conscious of fair housing laws the interviewer is, these types of open-ended calls give plenty of rope for landlords to hang themselves, which leads us to advise against them.

In parting, we want to stress that staying in compliance with fair housing laws is not limited to ads in print or on the web. The key is to instill a culture where words matter, and one that places compliance with fair housing laws over attraction.

Toward that end, education is key. With high employee attrition, property management companies are especially vulnerable to a culture of ignorance, when new employees do not have a solid understanding of the law and need to be trained in the many nuances of housing discrimination.

For those of you who have followed us for any length of time, we were going to say that we are preaching to the choir. But even that would be exclusionary under fair housing laws.

 

Although tenant screening is critically important in any rental business, it seems that the law and a culture of forgiveness stand to obstruct housing providers that look to connect the dots and mitigate risk.

Efforts to reform tenant screening practices have percolated to the federal level, with legislation endeavoring to reform the Fair Credit Reporting Act to make so-called “tenant-rating” agencies more accountable and afford additional protections to tenants.

Landlords are on solid grounds in denying tenancy to an applicant that has a prior eviction history. But U.S. Senator Cory Booker (D-NJ) says the reports that landlords rely on having limited details and don’t always provide context behind the eviction case.

Booker notes that unlike credit reporting agencies, whose practices are highly regulated, tenant rating agencies have little oversight and are prone to inaccurate or unfair conclusions. The proposed bill would:

• Prohibit a consumer reporting agency from making a consumer report containing information from a landlord-tenant court or other housing court record unless the case to which the record pertains resulted in a judgment of possession in favor of the landlord;

• Prohibit a consumer reporting agency from making a consumer report containing information from a landlord-tenant court or other housing court record unless the case to which the record pertains occurred less than three years before the report is created;

• Require the creator of a consumer report that contains tenant-landlord information to make reasonable attempts to assure the accuracy of the record;

• Require any person who takes an adverse action with respect to a consumer report to provide the consumer with a free copy of the report;

• Require the Consumer Financial Protection Bureau (CFPB) to create a centralized clearinghouse through which consumer may annually obtain a copy of their report from each tenant rating agency free of charge and correct any inaccuracies, and;

• Require the CFPB to conduct a study and submit to Congress a report on tenant rating agencies and their compliance under FCRA.

The rental housing industry is wedged between a rock and a hard place. On one hand, a tenant’s checkered past can be concealed. But overzealous screening exposes landlords to a perilous housing discrimination lawsuit.

Just one spoke in the wheel

This plan is part and parcel of what we see as a larger cultural shift that is tipping the scale in favor of tenant amnesty, over a landlord’s interest in protecting their rental investment by making informed decisions as to who occupies their units. The “eyes and ears” of rental property owners are slowly being handicapped by initiatives that conceal rental risks.

In an earlier article, we highlighted the National Consumer Assistance Plan, a cooperative initiative between the three credit bureaus to purge certain alarming notations on the prospective tenant’s credit report, including civil judgments lodged against them. In effect, the plan leaves the rental property industry blinded.

Ditto for Assembly Bill 2819, which cloaks a rental applicant’s prior unlawful detainer history under certain circumstances, a topic we chimed in on in this video.

In a digital age, sometimes common sense prevails

It seems that now more than ever, landlords and property managers cannot use technology and reports as a crutch – some old-fashioned personal sleuthing is in order. For example, calling previous landlords and asking a pointed question to get to the heart of the matter: “would you rent to them again?” This simple question will be telling and usually will ferret out any concerns.

If the tenant drives up to view the rental listing in a vehicle with hamburger wrappers strewn in the backseat of their car, perhaps it’s a sign that they will treat the apartment in the same fashion. Don’t mention the clutter because in today’s climate, it may invite litigation from fast food connoisseurs.

Housing Discrimination Always Looms Nearby

In all seriousness, while hygiene and other first impressions can go a long way in making an informed decision, we admonish landlords and property managers to keep their observations to themselves. The Unruh Civil Rights Act, and the California Fair Employment and Housing Act prohibit landlords from discriminating between would-be tenants on the grounds of their sex, race, color, religion, sexual orientation, marital status, ancestry, national origin, source of income, disability or medical condition.

However, in the case of Marina Point v. Wolfson, the California Supreme Court decided that the Unruh protections are not necessarily restricted to these characteristics. The envelope is constantly being pushed with newly protected classes being carved out, and so arbitrary discrimination of any kind may get rental housing providers in trouble.

When it comes to communication with a prospective tenant, then, less is more.

Our parting advice – be smart. Be aware. Be diligent. But when your “gut feel” isn’t enough and you have questions, contact our office. Bornstein Law will ensure that your tenant selection does not cry afoul of the law and that you make the most educated decisions when it comes to your rental business.

For more thoughts, follow us on Facebook.

“We print buildings” is the motto of Apis Cor, a Russian based company that has a unique mobile 3D building printer that is capable of printing an entire house on site. Their engineers, managers, builders, inventors have a lofty goal: to change the construction industry and improve the housing conditions of millions in urban areas, underdeveloped countries, and people affected by disasters.

This visionary company posted a promotional video of the world’s first printed house being constructed in Stupino, just outside of Moscow. They claim the 400-foot structure was built in 24 hours, with the total cost for the project ringing up at just $10,134. Take a look.

The machine spits out layer upon layer of a concrete mixture using a giant printing machine that looks more like a crane, but hasn’t yet eliminated the human factor. The roof, insulation, windows, and other components were all added later by humans.

“I hope that the construction industry once will become as globally widespread as smart apps in social network, and building a house will be as easy as pressing a like button.” ~Nikita Chen jun-tai, Apis Cor founder

In addressing the Bay Area’s housing shortage and homelessness epidemic, we’ve seen a bit of innovation, such as factory-built, multi-unit housing projects, as well as turnkey services for Accessory Dwelling Units and tiny homes, but the advent of technology to print homes opens up a new round of evolution.

New construction isn’t necessarily about return on investment, but a return on creativity.

With Facebook embroiled in controversy as of late, it’s gone from bad to worse. Now is the perfect time for landlords and property managers to heed this lesson: brush up on fair housing laws.

If you’ve ever posted photos on Facebook of your kids at soccer practice, talked about being a stay-at-home mom or a disabled veteran, “liked” Telemundo or wrote about learning English as a second language, Facebook advertisers may have been able to target you – or exclude you – from viewing housing ads.

That was the claim by a recently filed federal lawsuit lodged by civil rights groups that don’t “like” the “egregious and shocking” discrimination perpetrated by the social media giant that has been allegedly serving up ads that fly in the face of the Fair Housing Act.

The $440 billion advertising company has built its success around the ease by which marketers can finitely target audiences, but now the magic of transmogrifying every like, status update and mouse click into a detailed consumer profile has the potential to enable marketers to exclude groups based on “ethnic affinities,” from seeing ads.

“Facebook’s platform is the virtual equivalent of posting a for-rent sign that says ‘No families with young kids’ or ‘No women’… But it does so in an insidious and stealth manner so that people have no clue they have been excluded on the basis of family status or sex.” 

~ Fred Freiberg, executive director of Fair Housing Justice Center and a plaintiff in the lawsuit

The lawsuit comes in the wake of Facebook’s loose handling of data, the likes of which the company has never seen in its 14-year history of addressing privacy concerns.

It’s been said that the Internet is the largest experiment in anarchy that humans have ever had, but Bornstein Law predicted early in the Airbnb phenomena that the law will eventually catch up with technology and restore order to the anarchism. Sure enough, regulators reined in the laissez-faire nature of unregistered short-term rental units and now have the upper hand. There is no reason to believe that lawmakers and regulators will not restore a similar equilibrium with Facebook and ensure the real estate industry will not use the platform as a proxy to minorities.

We have always preached that rental housing providers should couch their words carefully when using Craigslist and other online portals when adverting their rentals. Seemingly innocuous language can easily cross the lines into fair housing law violations.

Defending these type of discrimination lawsuits can be a hugely expensive undertaking, and unlike tech giants, owners and property managers do not have the vast legal resources and billions of dollars in their coffers.

Avoiding perilous discrimination suits begins with an education of all employees. With a high attrition rate, property managers are especially vulnerable to exposing themselves to discrimination claims through the actions of employees that have not familiarized themselves with what is permissible and what is not.

Some time ago, we wrote an article on ‘fake’ emotional support animals and cited proposed legislation aimed at making it more difficult for a tenant to feign a disability in order to bring Fluffy home.

This turned out to be an emotionally charged subject and so with comments continuing to trickle in on a handful of LinkedIn groups, we wanted to re-visit the viral topic and give an update.

Assembly Bill 1569 died on the vine, but concerns over ‘fake’ comfort animals remain

As a refresher, Assembly Bill 1569 would have required third-party verification when a prospective or current tenant requests the “reasonable accommodation” of allowing an emotional support animal into the rental unit. The bill had a short life, but the underlying concerns remain and are sure to be aired out in other venues. Some background.

The Judiciary Committee and bill sponsors decided to put AB 1569 on ice until the fall of 2017, allowing time for the governing regulatory agency – the California Department of Fair Employment and Housing – to revise current regulations that cover emotional support animals cohabiting rental units. Read the minutes of a September 6 meeting when this body began hashing out the details.

After noting the agency’s progress in tackling landlord concerns of unnecessary comfort animals, lawmakers seemed to have lost oomph and decided to kick the can to California’s top cop in housing accommodations and discrimination. The Fair Employment and Housing Council is about to start the rulemaking process on that proposed regulatory text. It contains, among other things, rules regarding emotional support animals.

How does this rulemaking process work? Download a flowchart (PDF)

The chief architect of the fallen proposal – Assemblymember Anna Caballero – takes credit for bringing this topic to the forefront, noting that without the introduction of AB 1569, the issues of frivolous emotional support animals would go unaddressed by the agency.

The concerns of rental property owners get air support

We were intrigued to see the lofty issue of emotional support animals make its way to air travelers, who may find themselves sitting next to dogs, ducks, squirrels, spiders, turkeys and even disruptive pigs.

Increasingly, the friendly skies are frowning upon unnecessary animals, as Delta has recently tightened its rules. The carrier reports in-flight animal incidents have risen 84% since 2016, and they attribute the strife to a lack of regulation. In the absence of rules, the airline is requiring more documentation and in some cases, promises of good conduct for creatures that may cause raucous and not be able to find the lavatory.

Back on the ground, many landlords share the call for regulation in an age when tenants can obtain a badge and harness with a few points and clicks.

A disconnect in the law?

Under California’s Penal Code 365.7, it is a misdemeanor for someone to knowingly and fraudulently represent themselves to be the owner or trainer of a service dog. To date, however, there is little disincentive for tenants to cry wolf when it comes to an emotional support animal, which need not be a dog and unlike a service animal, is not trained to perform a specific task like fetching dropped items, pulling a wheelchair, guiding the blind and the like.

We suspect that the increased attention will eventually lead to increased regulations. Until this gap is closed, however, landlords should tread lightly, ever mindful of Unruh Civil Rights Act, the California Disabled Persons Act (CDPA), and the Fair Employment and Housing Act (FEHA).If a dog is a man’s best friend, a lawsuit is an owner’s worst enemy.

We would be remiss not to note how moved we were by comments of those who had a loved one that was impaired and related their heartfelt story to argue against any effort to scale back protections against comfort animals. We’ve heard you and agree that animals are a source of healing and have a proven ability to ease the suffering from emotional challenges.

Many people that are opposed to clamping down on emotional support animals nonetheless concede that some tenants are abusing the system. Our role at Bornstein Law is not to legislate, but to protect the rights of property owners who by and large would agree with our sentiment that emotional support animals serve an essential purpose when they are needed. There are bad-faith actors, however, that have no genuine need for accommodation and manipulate a system that is designed to give help to those that truly need it.
In parting, the definition of a ‘service animal’ is much more convoluted today than the traditional image of a seeing-eye dog guiding a blind person. Societal values and medical advancements have identified many disabilities that are not readily apparent, such as PTSD, depression and other ailments that are aided by animals. Coupled with a proliferation of housing discrimination lawsuits, it is well advised for rental property owners to consult with an attorney.

 

We’ve all seen and heard the inspirational home improvement commercials about doing and saving. It goes something like, “we’ve got this, look what we’ve done, sit back and enjoy the view.” But what if the alterations are made by a tenant without the permission of the owner, and the landlord does not like the view?

Of course, there are studious tenants who wish to make their abode their home and attempt to make cosmetic changes and improvements such as replacing carpeting, changing out light fixtures, painting the walls, swapping out appliances, and the like. Often, there is an amicable relationship in place and when the tenant asks the landlord for permission to make improvements, it is granted.

Yet we have seen countless acts of tenants taking it upon themselves to make major reconfigurations to a rental unit, and this becomes problematic. It is not rare for landlords to discover the kitchen has been renovated, or a new living quarters has been erected in the garage.

With a housing shortage upon us, we’ve seen an alarming number of cases where inventive tenants make material alterations to carve out new living environments for housemates. These material changes expose the landlord to significant liability, especially when the work is unpermitted and the city finds out about it.

Most leases contain, and should contain, a provision that expressly prohibits alterations to the premises without the prior written consent of the owner. When an illicit alteration is discovered, it should be documented by taking photographs. Armed with evidence of an alteration, a notice can be served upon the tenant to restore the unit back to its original condition, at the tenant’s own expense. If the tenant does not remove the alteration, the landlord can commence an unlawful detainer action.

As sticklers for documentation, Bornstein Law can always review your written lease agreement to ensure there is in fact a provision that prohibits tenants from making alterations without the owner’s consent. All too often, there is no such protection because the lease is deficient.

In the absence of a written prohibition against alterations, the tenant may be able to make changes without the landlord’s permission, though it is still illegal to do anything that wantonly or willfully destroys, defaces or damages the property.

Another common alteration we encounter is the unauthorized changing of locks, a topic we broached in this post.

If you discover illicit alterations, the personal and financial liability that can ensue demands immediate action that can be done properly with the landlord lawyers at Bornstein Law.

Related post: Tenants improperly using commercial space for residential use

 

Since its debut on 60 Minutes, we wanted to circle back to the “leaning tower” of San Francisco to see if any progress has been made in the luxury residential high-rise that has sunk 17 inches and tilted 14 inches since it was completed in 2008.

City inspectors say it’s safe for occupation, but residents aren’t so encouraged. The saga is responsible for an exodus from the luxury high-rise and legal bills that can rise 58-stories high. Now, Business Insider reports that the well-heeled residents are taking a haircut, selling their embattled condos for losses in the millions.

Engineers have not offered a better prognosis for the Millennium Tower, which is expected to sink at the rate of roughly one-inch per year.

There may be a fix in the works, we’re told, as a phalanx of engineers explore drilling 50 to 100 new piles 200 feet down to bedrock from the building’s basement. After a litany of proposed solutions, though, skeptics are not buying it.

At Bornstein Law, we have been more than casual observers of this towering debacle. As we noted in a news release, we successfully represented the owners of the Millennium Tower in an eviction suit. The tenant refused to pay rent for six months, claiming the building’s sinking made it uninhabitable and breached the rental agreement. The tenant’s attorney argued that “the leaning and sinking of the building is a structural issue in breach of the implied warranty of habitability.”

The court rejected this argument, and we were able to win a monetary judgment of $42,716 for the client and allow them to take back possession of the apartment.

Whether in the rows of skyscrapers that have lined San Francisco streets, in Section 8 housing, the backyards of ‘granny flats’ and everything in between, you can count on our advocacy for the rights of property owners.

Californians have felt the pain of the housing crunch, but perhaps no other group is more acutely affected by the shortfall than students scraping by. Landing an affordable abode for those pursuing higher education has proved futile for many students in the highest-rent cities in the nation. Some estimates, in fact, have pegged student homelessness in the double digits.

As this article vividly depicts, some of them are bunking in a cramped car, rationing food to save money, or cramming into the close quarters of a tiny apartment or garage. Campuses have evolved into social service agencies by instituting a patchwork of programs that provide emergency rent payment grants and reserving dorm beds for homeless students.

Legislation floated to address the problem

Amid a torrent of bills that attempt to ease the housing crisis, lawmakers are floating proposals to help these mightily struggling college students secure housing near campus without breaking their budgets.

Sen. Nancy Skinner, D-Berkeley, has led the charge with the introduction of SB 1227, a bill that hopes to spur the construction of affordable housing designed for students. She argues under existing California housing law, there is no clear path for students to prove they are eligible for subsidized apartments, regardless of need. In turn, developers cannot cash in on economic incentives they could realize by setting aside a portion of their development for low-income rental housing. Predictably, they don’t build.

“With the housing shortage that California now has, their costs can be so high that it can be prohibitive for them to go to school.”

~ Sen. Nancy Skinner

If the proposal comes to fruition, SB 1227 attacks the issue on dual fronts. It would allow students to submit financial aid documents to qualify for low-income living arrangements but would also explicitly extend state affordable housing incentives to developers that erect apartments for full-time students.

A developer that designates 20 percent of the units for lower-income students at a specified rent level will receive concessions like the inclusion of affordable units, thereby empowering developers to build more housing in a project that would not ordinarily be allowed.

Bornstein Law has always maintained that brisker construction is the answer to the housing shortage, so we applaud the bill to the extent that it gets at the root of the problem.

Enter SB 922, a bill sponsored by Sen. Janet Nguyen, R-Garden Grove, which focuses on optimizing surplus property near campuses – underutilized space near college campuses would be turned into desperately needed housing for college students. If passed, the California Department of General Services would be authorized to hand over unused real estate within two miles of universities or community colleges to local governments or nonprofits that can build.

Once again, we think this is good policy and as we noted in many other posts about accessory dwelling units, “tiny” homes, and other hybrid forms of living, the conversation around solving the housing deficit should be framed not only in terms of return on investment but return on creativity.

The lot of educators and faculty is not much better.

As California campuses confront the growing challenge of homeless students, school faculty find themselves in a similar bind of making ends meet on an educator’s salary. We came across this article that chronicles the tough times of educators in university housing who are staring down the barrel of rent increases, if not eviction, to make way for students.

While landlords who are subject to rent control ordinances are limited in the amount and frequency of rent increases, universities have no such constraints and have been availing the exemption, though San Francisco State officials are quick to point out that despite the rent hikes, faculty members enjoy below-market rents.

The opacity of these rent increases, however, has been called into question, with claims that the faculty is not given sufficient notice of changes coming down the pike.

Not limited to higher education

Teachers throughout the Bay Area’s public-school system are struggling to keep pace with rising housing costs. As we wrote about in this article, San Francisco teachers may feel some respite knowing that they may be firmly planted during the school year and not face eviction after an appellate court upheld Ordinance No. 55-16, a law that prohibits their displacement through a no-fault eviction. We hasten to say that this decision is “stayed” – awaiting further judicial review after the decision has been contested.

Our take

At Bornstein Law, we believe that awareness is half the solution, so we are encouraged to see the housing travails of educators and students be placed under a microscope. Educators serve a critically important role in inspiring young minds, and so there should be deference to these stewards of our community or the Bay Area risks losing them when they seek greener pastures. The same for students, who should not have to fret about where to lay their head or worry about other sustenance.

Clearly, this larger topic exposes a host of legal issues, whether it is rent control, proper notice, rent increases, and the adaptability to changing laws that are sure to come. On this front, Bornstein Law has you covered – contact our office for informed advice.

 

 

Law Surrounding Accessory Dwelling Units, Aka ‘Granny Flats’

Accessory Dwelling Units (ADUs), colloquially known as in-law units or granny flats, are gaining popularity throughout the Bay Area and beyond. Once vilified as a way of cramming more people into tighter spaces or deemed as a way for profiteering homeowners to make money without obtaining permits, these pint-sized units are back in vogue with the Golden State woefully behind on the home production needed to keep pace with a burgeoning population.

With construction on the upswing, there are still other illegal units that are eligible for proper permitting.

The ease of building in-law units become a newsworthy topic across many Bay Area locales lately. This SF Chronicle article shows the creativity of San Francisco Landlords in carving new apartments out of everything from garages and basements, to old boiler rooms.

While in-law units are commonly added to single-family homes in Bay Area cities, most of the activity in San Francisco is happening in larger apartment buildings. San Francisco is unique in creating an ADU program for multifamily buildings, rather than only single-family homes. “It’s a soft way to increase density in a dispersed fashion without changing the physical landscape very much”, says Kristy Want, policy director at the urban think tank SPUR. Other municipalities throughout California are removing roadblocks to in-law unit construction by enacting their own local ordinances, changing the shape of housing as we know it.

“Whether detached, attached, part of a residential cluster or in a multiunit building, more and more dwellings in coming decades will look less and less like the home you now inhabit or the home where your parents grew up”, submits this Washington Post Article. This shifting composition of housing is healthy, in our view, and at Bornstein Law, we are encouraged that long-standing, obsolete zoning ordinances that have stifled housing opportunities and impeded real estate development are finally being revisited or unstripped.

The sprout of in-law units are compliments of legislation signed by Gov. Jerry Brown designed to reforming building laws for in-law suites and help the housing crunch. The two-pronged set of bills, AB 2299 and SB 1069, put local municipalities on notice that onerous restrictions on building in-law units would be “null and void” and until such time local government adopts its own ordinance that aligns with State law, the standards of Government Code §65852.2 will be enforced.

State Law essentially puts local governments in check by revoking city-level ordinances that impede construction of in-law units — from parking restrictions to fire sprinkler requirements to exorbitant costs — making way for new and comparatively lenient, baseline criteria for approval. This has effectively tilted the balance of power in favor of in-law units and recognizes the role they can play in putting a dent in the housing shortage.

Certain obstacles that were axed in the legislation include:

  • An ADU can be attached or detached from the primary residence;
  • An ADU cannot be required to have a clear passageway to the street;
  • Attached ADUs can be up to fifty percent (50%) of an existing living area with a maximum floor area of 1,200 square feet. Detached units are only subject to the 1,200 square foot maximum;
  • Parking requirements are reduced or eliminated;
  • Utility connection requirements and fees for certain units are reduced or eliminated;
  • Applications for ADUs within existing residences or accessory structures must be considered ministerially without the need for any discretionary hearing and within 120 days of submittal.

Although the state has issued guidance on what a municipality can and can’t do, it stops short of writing the city’s ordinance — that is the prerogative of local government. Ordinances vary widely throughout the Bay Area, and making sense of the planning and building regulations are best approached with a real estate attorney that is intimately familiar with the building codes and rules formally adopted in your locale.

In parting thoughts, there is a large rental housing stock throughout the Bay Area that is considered “illegal” for any number of reasons such as unpermitted construction or lack of a certificate of final completion or occupancy. These illegal units can incur the ire of building inspectors that demand their removal, tenancies may be subject to “just cause” eviction provisions, and even invite tenants to make the claim they are not legally obligated to pay rent.

Owners that want to come out of the shadows to legalize their illegal in-law unit should be buoyed by the fact that more often than not, cities prefer to legalize, versus remove, these illegal dwellings. Doing so can add value to the property and provide a level of certainty and security that is only enjoyed by a compliant landlord.

Whether you are contemplating the construction of an in-law unit or looking to bring your illegal in-law unit up to compliance, it’s of utmost importance for property owners to evaluate the law and its impact on your real estate. As the foremost experts in in-law planning, our goal is to educate you on the risks and potential rewards to make an informed decision as to whether these secondary units are right for you, given your unique circumstances.

As always, Bornstein Law is happy to engage any questions. Contact our office today.

Tenant Screening Becomes More Difficult As Concealing Checkered Pasts Become Easier

Clearly, tenant screening is one of the most important aspects of your rental business, but today’s climate makes this essential task more difficult as it becomes increasingly easier for prospective tenants to conceal any blemishes in their past.

At Bornstein Law, we understand that the past doesn’t equal the future, and we are all about second chances. Yet we are also about transparency and equipping rental property owners with the information they need to make informed decisions regarding their selection of tenants.

Let’s talk about a couple impediments to getting a clear glimpse into a tenant’s history, starting with the three major credit bureaus’ joint National Consumer Assistance Plan, which will eliminate the appearance of certain “red flags” on the prospective tenant’s credit report.

Rolled out over a 3-year period, NCAP established, among other things, new standards for personal identifying information, or PMI, for a record to appear on a credit report. These identifying factors include a consumer’s name, addresses, Social Security Number and Date of Birth. Experian estimated that about 96% of civil judgment data and as much as 50% of tax lien data would not be discernable from the tenant’s credit report.

TransUnion chimed in and though it stopped short of giving hard and fast numbers, claimed that there would be a “significant change” to civil judgment data, and at least 60% of public record tax lien data would evaporate from its database. The translation for landlords: The presence of a monetary eviction may not be readily ascertainable from the applicant’s credit report.

As a sidebar, we’ll say that depending on the credit scoring model used, some tenant applicants that are saddled with medical debt could potentially have their score boosted and enter the pool of eligible rental candidates, but we don’t want to get bogged down into the finite details of NCAP, merely forewarn landlords that credit reporting may not be a total portrayal of the incoming tenant’s history.

State law has an open mind, as well.

In the following video, Daniel Bornstein alludes to AB 2819, which will impact a landlord’s ability to obtain an applicant’s prior unlawful detainer (UD) history. The bill essentially seals an applicant’s prior unlawful detainer history under certain circumstances.

Another footnote is that one consequence of the law, in our view, is that it disincentives unlawful detainer defendants to speedily settle the case, as frivolous motions and other stalling tactics can ensure the judgment does not enter the public record.

We can’t help but draw a loose parallel to AB 1008, dubbed the “Fair Chance Hiring Bill” or “Ban The Box”. This Bill places severe restrictions on employers to pry into a job applicant’s criminal history, concerning for the rental housing industry because property management employees usually have close access to a tenant’s personal belongings and their children.

Rightly or wrongly, it seems that there is a forgiving culture that says we are all human, and that certain mistakes should be overlooked. Our job is not to evaluate people, but to offer informed and pragmatic advice in developing a framework for you to make your own calls.

In parting thoughts, do your due diligence when vetting tenants and employees, for that matter, but do so smartly, in compliance with the law. Don’t be over-exuberant or cross the nebulous line into discrimination.

We’ve only scratched the surface here and will continue our thread on a myriad of tenant screening issues in the near future — follow us on Facebook to stay in the know.

Perhaps one of the most thankless and trying, but necessary duties of a landlord is evicting tenants when the tenant violates one of the covenants of the lease.

At the risk of oversimplification, the eviction process involves serving the tenant with a notice, waiting for the notice to end, and filing an unlawful detainer action if the tenant fails to do what the notice asks. But like so many other areas of law, meticulous attention to detail is needed to ensure there are no procedural missteps.

Here are five ways that you are likely to use an unlawful detainer action.

Improper rent demand: One sure kink to a successful unlawful detainer action is demanding a higher amount of rent than is actually (and legally) due.

Drafting an improper 3-day notice to pay rent or quit: A recurring theme for our practice at Bornstein law is the epidemic of stale, outdated and bad documentation. Worse yet, some landlords have asked for late fees, which is prohibited under California law.

Failure to serve 3-day notice correctly: Assuming that the notice is otherwise proper, it must be served to the tenant correctly. Regardless of the merits of the case or the legality of the documentation, the 3-day notice must be served in accordance with the law.

Failure to correct habitability issues: Even if all other requirements are met, the tenant can claim that the unit is inhabitable. If the landlord fails to rectify any habitability issues of the premises, it will tank their ability to be successful in an eviction.

Mistakenly depositing a future rent payment: This is a cardinal sin for landlords, and by doing this, the landlord waives their right to proceed with the eviction.

As always, we are happy to engage and answer any questions — contact Bornstein Law to protect your real estate investments.

Finding a model tenant who pays rent on time, studiously cares for the rental unit, and is a good neighbor can be a challenging endeavor, driving landlords and property managers to be overzealous in the tenant screening process and stepping precariously close to crossing the lines of housing discrimination.

About the only thing worse than seeing a car parked on your lawn, a party on the porch, and your freshly-painted, well-kept apartment in shambles is being named in a housing discrimination lawsuit, the likes of which are proliferating here in the San Francisco Bay area and throughout California.

RELATED POST: Housing Discrimination Often Begins In The Tenant Application Process

It should go without saying that under State and Federal Law, it is illegal for rental housing providers to discriminate against a person because of the person’s race, color, religion, sex, marital status, national origin, ancestry, familial status, disability, sexual orientation, or source of income. Indeed, the California Legislature has declared that the opportunity to seek, obtain and hold housing without unlawful discrimination is a civil right, a proclamation codified in Government Code Section 12921(b) and in the Unruh Civil Rights Act, Civil Code Section 51.

Tenant hoarders, emotionally challenged people who require a comfort animal, even ex-offenders, are reshaping housing policy in California, which defines disability more broadly than Federal law, but today, the focal point is a tenant’s source of income.

Most rental property owners know that you can set income requirements as income requirements do not conflict with Fair Housing laws. It is common practice for landlords to require that income is 2 or 3 times the amount of rent to instill more confidence in the tenant’s ability to pay rent and meet other obligations such as car payments, insurance, utilities, and the like, and these parameters are entirely acceptable. In a pool of candidates, it is also legal to rent to the highest qualified income earner.

Although rental housing providers are on solid legal footing to set income guidelines, it is landlords’ balking at the source of income which exposes them to potential liability. Expressing a preference for one occupation over another is another pitfall we’ve seen all too often.

It doesn’t matter who signs the check.

California Government Code §12921 prohibits housing discrimination based on source of income as does §12955(d). Section 12955(p) defines “source of income” as “lawful, verifiable income paid directly to a tenant or paid to a representative of a tenant.” Since “source of income” is a protected class, it is illegal to dictate or selectively choose where the tenant’s income comes from. The law makes no distinction between income sources, so long as it is “legal.” These legal sources of income may include disability insurance, Social Security benefits, alimony, child support, pensions, veteran benefits, and the like. Many people sow their entrepreneurial oats and are self-employed, creating the infusion of legal income which can be documented through bank statement records or tax records to verify income.

The takeaway is that if the applicant’ income is legal and verifiable, it must be accepted.

When it comes to these type of communications, less is more.

As we noted in an earlier article on an Airbnb host’s blatant racial slur, most forms of housing discrimination are less recognizable and surface in extended conversations that attempt to weed out undesirable candidates or prying too much over the phone.

For instance, you tell an applicant, “I’m really looking for someone with a Google paycheck,” or a self-employed prospect is told, “Congratulations on starting your business, but we prefer someone who has a more stable income.” Maybe you encounter someone receiving government benefits and you say, “Thanks for your interest, but there is too much paperwork involved, and I don’t want the hassle,” or “I’ve found that there are other problems with people on welfare, so I really want to avoid these problems.” If someone has alimony or child support, some landlords may be inclined to utter something like, “That sounds like a messy process with the courts, I’m sorry but I’d rather not risk it.” If you make statements like any of the above, you have a discrimination lawsuit brewing, folks.

The best practice is to provide objective information about the rental unit and general criteria, encourage the applicant to visit the property and submit a written application.

A word about Section 8 housing

Section 8 Housing Choice Vouchers are not considered tenant income under California law, and thus, landlords are not required to accept a voucher, with exceptions. There are a handful of municipalities that have taken matters into their own hands by enacting local ordinances that require housing providers to accept Section 8 and other rental assistance.

One such city is Berkeley, which passed Ordinance №7,568-N.S., adding to the Berkeley Municipal Code Chapter 13.31. With a shortage of landlords enrolled in Berkeley’s Housing Voucher Programs and the city’s perceived discrimination to explain the lackluster participation, the city prohibits landlords from, among other things, discriminating against housing assistance payments. Read the full ordinance here (PDF)…

The overarching point is that if you say “no” to a tenant receiving Section 8 assistance, it may be tantamount to discrimination, and so it’s advisable to seek the guidance of an attorney before closing the door on Section 8 applicants.

Certainly, most affordable housing properties that are financed with federal funds and tax credits are required by law to accept Section 8 vouchers.

As always, Bornstein Law is happy to answer any questions and protect your rights as a rental property owner, a mission we continue after 23 years of practicing landlord-tenant law.

In a free society, everyone has the prerogative to do what they enjoy, so long as it is legal and does not interfere with the rights of others. To paraphrase the words of one Supreme Court justice, your right to swing your fist ends where someone else’s nose begins.

In an earlier article, we noted that marijuana use and cultivation can interfere with the enjoyment of other tenants and landlords can take proactive action to address the nuisance.

However, we know there are two sides of the coin and many rental property owners supported the efforts to legalize marijuana, and we wanted to write to this group. For landlords that are not concerned about tenants using or cultivating marijuana within your rental units, we want to remind you of yet another initiative, namely Proposition 65, also called the Safe Drinking Water and Toxic Enforcement Act. Enacted in 1986, it was designed to help Californians make informed decisions about protecting themselves from harmful chemicals.

Prop 65 requires businesses to warn about exposure to carcinogens, and marijuana is one such agent — in 2009, it was added to the list of chemicals that cause cancer.

If you are tolerant of marijuana smoking within your rental units, you face big time penalties if you do not give proper warnings under Prop 65. One tenant’s enjoyment of marijuana may be to the detriment of another tenant.

At Bornstein Law, we remain neutral on this topic. The democratic process has played itself out, but we want to remind landlords that there are checks on the legalization of marijuana and serious liability if nuisance issues go unaddressed.

We do not pass judgment on choices, nor is it our role to evaluate the merits of the Bill. Our job, rather, is to manage relationships and protect your rental business irrespective on your stance of legalized marijuana. With proper counsel, nuisance issues can be avoided and resolved, rectified and liabilities reduced.

If you found this article to be informative, follow us on Facebook for more insights affecting Bay Area landlords, property managers, and real estate investors.

About The Author

As the founding attorney of Bornstein Law, Broker of Record for Bay Property Group and expert witness, Daniel Bornstein is a foremost and well-respected expert in landlord-tenant disputes and other property management issues with over 23 years of experience in handling real estate and civil litigation related disputes in and throughout the Bay Area. More than a litigator, Daniel manages rental properties, assists in completing real estate transactions and is well known for his educational seminars. He is always eager to answer questions and engage with Bay Area landlords, property owners, and real estate professionals. Email him today.

The Chief Economist for Redfin predicts that rising prices, an uptick in rates, and higher property taxes will lead to more roommate arrangements due to a lack of affordability. Real estate startups like Nesterly and CoBuy have rode the wave of non-traditional home-buying and cohabitation by fostering technology to play matchmaker between housemates, some of whom are odd bedfellows. Read all of Redfin’s predictions in this report.

Given the necessity for many tenants in the Bay Area to find roommates to absorb some of the highest housing costs in the nation, landlords and real estate professionals should be aware of the law surrounding roommates.

In earlier posts on Airbnb and other subletting arrangements, we advised rental property owners they need to know who is occupying their premises. Some personal sleuthing may be advisable, to ascertain what is going on in your units.

In many cases, roommates can’t co-exist and this leads to a revolving door of swapping roommates, creating confusion as to who is responsible for what, when rent can be raised, and how to legally evict tenants/occupants. The stakes are particularly high and the subject matter more complex in rent controlled jurisdictions. First, let’s define a couple terms.

In California, roommate arrangements can be boiled down to two types of arrangements when the landlord does not live in the rental unit.

  1. Roommates as Co-Tenants: A co-tenant arrangement occurs when all roommates have a contractual relationship with the landlord. Both co-tenants directly and individually pay rent to the landlord.
  2. 2. Roommate as Subtenant: Subletting means that one tenant has a contractual arrangement with the landlord, hence the primary tenant is referred to as the “Master tenant”. After entering into a binding agreement with the landlord, the master tenant contracts with another person, a roommate or housemate called the Subtenant, who is responsible for paying rent to the master tenant. The master tenant retains all rights and obligations under the “master” lease, which includes, naturally, paying rent to the landlord.

Co-tenants cannot be evicted without “just cause”, meaning they can be evicted only for certain reasons, such as non-payment of rent or other violations of the lease terms. A co-tenant can, however, evict a subtenant. A subtenant is impotent and cannot evict anyone, while a landlord can evict all tenants from the premises, with caveats.

While the subtenant has no direct relationship with the landlord (the master tenant is essentially the subtenant’s landlord), we must caution that you can inadvertently establish a relationship with the subtenant by taking rent money. In other words, roommates who initially occupied your rental unit as a subtenant may be catapulted to the status of a co-tenant by your acceptance of rent, even if they are not named in the lease. This is a cardinal sin we see all too often at Bornstein Law.

Another unexpected and harrowing surprise landlords can face is a long-term guest that becomes a tenant because they stayed in the rental unit for 30 days or more, regardless if they entered into any formal tenancy agreement. Don’t wear blinders — if there is a guest that is staying in a unit for any prolonged period, you have a new tenant under the law, and if they do not leave on their own accord, they are entitled to due process when they are no longer welcome, meaning the guest-turned-tenant needs to be provided written notice to vacate.

Assignment of the lease

An assignment is an agreement to transfer the lease. It encompasses the transfer of rights held by one party — the assignor — to another party — the assignee. A common example is when a property is sold and the landlord assigns the lease to the new owner. In similar fashion, a tenant might assign his or her lease to a new tenant or occupant, which then begins the game of musical chairs and creates a quagmire where the rental property owner does not know who is living in their units.

Fortunately, a properly written lease may prohibit or restrict assignment, subletting and other changes in occupancy. If there is no written lease, or if the lease does not adequately address these issues, you have a problem that needs to be rectified with the guidance of a real estate attorney.

As shifting demographics and alternative living arrangements become the norm, there will be many blurred legal relationships between multiple parties, but Bornstein Law can provide clarity and restore order in Housing 2.0.

Airbnb’s steely legal team is no stranger to litigation, whether defending an array of lawsuits around the globe or bringing their own fight to municipalities that stand in way of their conquest, including their home turf of San Francisco. After some scrapes and bruises with both wins and losses in their column, the battle-tested leader in short-term rentals just beat a game-changing lawsuit in California that threatened its very business model.

Themselves a goliath with roughly 50,000 properties under its management, Denver-based Aimco brought dual lawsuits in Florida and California, claiming that Airbnb was deliberately incentivizing people to breach their leases. More than just passively providing a platform for property listings, Airbnb is complicit in lease violations as a broker of short-term rental agreements and a processor of payments, was the gist of Aimco’s argument.

After some legal wrangling and gambits that did not prevail, Airbnb said in essence, “it wasn’t me” and cited the Communications Decency Act, a federal law that gives internet companies immunity for content that users or random people post on their sites. The nine-year-old company was not responsible for any havoc that was wrecked by guests, they submitted, and a federal judge agreed.

In tossing out the lawsuit, U.S. District Judge Dolly Gee found that Airbnb is indeed shielded by federal law and is not liable for the content that third-parties post on their website.

“Airbnb hosts — not Airbnb — are responsible for providing the actual listing information… Airbnb ‘merely provide[s] a framework that could be utilized for proper or improper purposes.’”

Aimco spokeswoman Cindy Lempke didn’t couch any words in her response to the ruling.

“Aimco has made the deliberate choice to expressly prohibit short-term rentals to unaccountable Airbnb users who have not undergone our background screening, who cause disruption for our residents, and who are apt to treat our apartments like hotel rooms rather than homes. We will continue to do all we can to stand up for our residents, advocate for our private property rights, and address the upheaval caused by Airbnb.”

If history is any indication, Airbnb’s legal quagmires are far from over, but this does mark a major victory for the company and more ominously, profiteering renters who rely on Airbnb to make some extra cash.

Our takeaway is that landlords should not wear blinders and some personal sleuthing may be necessary for them to ascertain what is going on in their rental units. Leases should be reviewed to ensure subletting restrictions in the modern day era of the temporary flop. If any aberrations are found, they should met with legal vehicles that can end the game of musical chairs.

It’s been said that the Internet is the world’s biggest experiment in anarchy, but with the law catching up with technology, the guidance of an attorney can restore order.

More than a Johnny-come-lately, Bornstein Law has been pioneers in short-term rental laws on Airbnb’s home soil, long before this phenomena reached critical mass.

When resident managers feel aggrieved, the current climate is rife for costly litigation. These onsite managers are becoming more sophisticated in maneuvering the legal system to take advantage of wrongs inflicted by their employers, aided by no shortage of enterprising attorneys.

A throng of lawyers are all to willing to handle resident manager complaints on a contingency basis, taking a percentage of the recovery at the tail end of an action, as well as attorney’s fees tacked on to the wages and liquidated damages recovered.

Translation for the rental housing industry: the burden of paying the disgruntled resident manager’s legal bills is borne by the landlord or property management company.

We noted in an earlier article that the Private Attorneys General Act (PAGA), codified in California Labor Code Sections 2698 through 2699.5, essentially creates a class action lawsuit by empowering the resident manager to not only sue his or her employer to recover unpaid wages, but to enlarge the scope of their lawsuit by acting on behalf of other managers that are employed in other buildings. With statewide wage, hour and rent limitation laws that have been ushered into 2018, we wanted to continue this thread of making sure that your resident manager relationships are compliant with the shifting lay of the land.

As the law makes a distinction in the size of the workforce, for purposes of this discussion, we’ll focus on rental businesses with less than 26 employees.

Where do property managers fit in?

California Code of Regulations Title 25, Section 42 makes it incumbent for owners to have a live-in manager if a building has 16 or more units. This person is defined as a “manager, janitor, housekeeper, or other responsible person”. These caretakers are considered employees in the eyes of the law, not independent contractors, and entitled to the prevailing minimum wage.

Although California’s minimum wage is $10.50 per hour, several Bay Area locales have raised the bar. San Francisco, Oakland, Berkeley, and Emeryville, among other municipalities, have set their own minimum wages that rental housing providers must be aware of.

In addition to California’s Labor Code, the Industrial Welfare Commission peels the onion deeper with a number of “Wage Orders” that govern employment in specific industries and occupations. One such order — enumerated as Wage Order №5 — regulates wages, hours and working conditions in the public housekeeping industry, which includes “apartment houses” and thus, is germane to resident managers of apartment complexes. The Order mandates employers to pay the minimum wage to a resident manager for every hour worked, exempting time the manager spends on personal tasks outside the purview of the assigned duties.

Since resident managers are employees, they are afforded full protections that include the ability to make a claim for an amount equal to the wages unlawfully unpaid, plus interest, if the landlord does not pay the minimum wage. Labor Code section 1194.2. This is just one of the perilous consequences that may await owners that do not dutifully pay their property’s overseers.

Parting thoughts

We’ve only scratched the surface here, not giving justice to the myriad of other complicated issues that can color the relationship with resident managers. Managing relationships in Bay Area rent controlled jurisdictions raise unique concerns that require the guidance of an attorney to carefully navigate this minefield.

No matter your unique circumstances, documentation and bookkeeping is the key to staying compliant, and the hallmarks of our service at Bornstein Law.