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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.

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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.

Progressives and environmentalists are increasingly coming around to the reality that new housing will advance their agenda.

Meaningful housing policy changes will be shaped by those who show up, but the composition of who is now showing up to support housing construction is refreshing. We were buoyed by an Op-Ed by Maya Rosas, a self-proclaimed idealistic, progressive urbanist and founder of the YIMBY Democratic Club in the San Diego region.

This identity wouldn’t ordinarily be associated with pro-housing policies, but Millennials like her represent the new faces of the “Yes In My Backyard” movement.

If you ask Maya, the YIMBY has a pretty succinct philosophy: more homes are good. Recognizing that the people most affected by a housing deficit are people with the least means, she says that supporting housing construction inexorably furthers progressive values and that land issues don’t always fall cleanly down partisan lines. Many forward-thinking progressives agree that affordable and equitable housing is achievable only through more housing, and these now include a growing chorus of environmentalists.

“You can’t legitimately call yourself an environmentalist unless you support dense housing in walkable neighborhoods with public transportation.”, observes Senator Scott Wiener (D-San Francisco), an unlikely architect of SB 35. The 2017 bill mandates municipalities to build more to keep up with demand or risk temporarily losing control of much of their entitlements process and is a lynch-pin in a prolific package of bills passed aimed to spur new housing in the Bay Area and beyond.

Wiener is an environmentalist and like Maya, a professed urbanist that seems to get that if development in cities is slowed down, houses will sprawl out over farmland and people will wind up making longer commutes and add to the carbon footprint. The Senator is spearheading another piece of legislation, SB 827, that would all but require that new housing near major transit hubs be mid-rise construction of at least four stories.

Read more about his transit zoning bill here →

Enviros and developers are odd bedfellows, but a new generation of environmentalists are joining Senator Wiener in challenging the green’s status quo of opposing new development. As a testament to this, Sierra Magazine wrote an article that says housing – dense, near transit and green – can be a climate solution.

Although California has been a laboratory of archaic rent control laws, there is some evidence that the torch of sensible housing policy is being passed to a young and savvy group that can think on their feet. These energized groups stand to reshape the law and create experiments of their own, in favor of new housing and a pivot from the failed policy of rent control.

Landlords can use all hands on deck.

 

The legal saga of Airbnb and other short-term rental platforms has been anything but transitory, but it seems that things are settling down and order restored.

September 14 sets a milestone in the storied history of Airbnb with its hometown city. That was the drop-dead deadline for Airbnb and other modern-day iterations of the temporary flop to bring their platforms up to compliance with the San Francisco Office of Short Term Rentals (OSTR). And this time, the City was not kidding.

Largely shrugged off at the time, in 2015 the Short-Term Rental Ordinance was enacted (Chapter 41A of the San Francisco Administrative Code). The ordinance legalized short-term rental activity for hosts within San Francisco that are permanent residents of their dwelling unit. The hosts were to obtain a business registration and jump through some administrative hoops, but few did.

When it became clear that the honor system wasn’t working, The Board of Supervisors stepped in August 2016, adding several requirements for hosting platforms that provide booking services. Some key demands:

  • Platforms must verify that any residential unit offered for short-term rental is lawfully registered with OSTR before the platform may provide, or collect a fee for, booking services for that unit. The Guidance attached to this letter details how to comply with this requirement.
  • Platforms must submit a monthly affidavit to OSTR affirming that they have exercised reasonable care to verify that hosts utilizing their service are lawfully registered with OSTR.
  • Platforms must maintain business records for no less than the prior three years for each of their hosts and short-term rental transactions and must provide this information to OSTR upon request.

Airbnb and HomeAway responded with a lawsuit. Fast forward to a settlement in which the hosting platforms agreed to more transparency about its hosts. Of course, there were some kinks, but they got ironed out. On July 31, OSTR sent a friendly but stern letter to short-term rental platforms reminding them of their obligations. The OSTR became more than a potted pot – it meant business.

We uploaded the game-changing letter to our website, but warn it’s not an easy read. With the new rules and regulations impacting short-term rental agreements and the City’s newfound ability to enforce them, it is imperative to consult with an attorney to avoid being banned as a host and incur other liabilities that will be much costlier than a weekend stay.

Our conclusion? Rather than penalizing landlords, we should come together to focus on solutions. Of course, that’s easier said than done. Our area is world-renowned for its innovation. If we conjure up the same level of creativity, perhaps we can finally address the endemic problems.

When city leadership, government leaders, and nonprofits get creative and serious about tackling the issues, solutions can take shape. Certainly, there is no silver bullet to solve one of today’s trickiest urban issues, and it requires a holistic approach. This involves inclusionary zoning, removing parking minimums, changing building codes to make it easier to rehab older buildings and new funding models.

Fortunately, we can draw upon the examples of other cities such as Denver, Cleveland, Minneapolis, Philadelphia, and Salt Lake City. It’s also instructive to study our neighbors to the North – although affordable housing is a local issue, Canada’s well-conceived national policy and funding has made a huge difference there.

This article takes a sampling of other cities to find out what creative solutions they are employing to address the very same problems we are facing in the Bay Area.

Finding creative solutions to landlord-tenant disputes is what the San Francisco real estate attorneys at Bornstein Law have been doing for over 23 years and it is with the same win-win and outside-the-box mentality that we approach the aggregate housing issues that affect our region. But all parties should lower the temperature of the debate and realize that this is not a zero-sum game.

In that venue, we noted that while the law is clear that a rental property need not be a palace, it must be safe, sanitary and secure. Apparently, Ms. Mendoza and Mr. Paredes were not kept in the loop or did not heed our strong advice.

Sometimes, there is a blur between what is legal and what is right, but there is no quandary here. Both the ethical and legal breaches in the case at hand are atrocious. Although this story represents an extreme case of depravity, it should put rental property owners on notice that they have an obligation to provide livable quarters for their tenants. Failure to do so is both immoral and illegal.

Although the housing conditions on Mission Street, like that of the Oakland fire, are clearly avoidable and shocking to the conscience of anyone, our hard-won experience at Bornstein Law has shown that most habitability issues arise out of less-known, overlooked violations such as an exposed outlet where children are playing or other mundane violations not so clear-cut. Whether your rental unit passes all of the habitability checks is a subject best reviewed with competent real estate lawyers.

With proper counsel, habitability issues can be avoided and resolved, rectified and liabilities reduced. 

 

If you’ve been following us for any length of time, we’re probably preaching to the choir now when we say that tenant rights advocates have sometimes mischaracterized the overwhelming majority of responsible rental property owners. In framing the conversation on how to solve the Bay Area housing crisis, we believe it’s not productive to put an inordinate amount of blame or burden on any one group.

In our last post, we reported that Silicon Valley has been urged to do more to house its burgeoning workforce, and it is doing its part. If it is difficult for high-tech companies to put a dent in the housing shortage, it is that much more difficult for mom-and-pop landlords to solve the intractable problem of affordable housing. These predominantly responsible, studious rental unit owners are being saddled with rising costs, just like everyone else.

Our conclusion? Rather than penalizing landlords, we should come together to focus on solutions. Of course, that’s easier said than done. Our area is world-renowned for its innovation. If we conjure up the same level of creativity, perhaps we can finally address the endemic problems.

When city leadership, government leaders and nonprofits get creative and serious about tackling the issues, solutions can take shape. Certainly, there is no silver bullet to solve one of today’s trickiest urban issues, and it requires a holistic approach. This involves inclusionary zoning, removing parking minimums, changing building codes to make it easier to rehab older buildings and new funding models.

Fortunately, we can draw upon the examples of other cities such as Denver, Cleveland, Minneapolis, Philadelphia, and Salt Lake City. It’s also instructive to study our neighbors to the North – although affordable housing is a local issue, Canada’s well-conceived national policy and funding has made a huge difference there.

This article takes a sampling of other cities to find out what creative solutions they are employing to address the very same problems we are facing in the Bay Area.

Finding creative solutions to landlord-tenant disputes is what the San Francisco real estate attorneys at Bornstein Law have been doing for over 23 years and it is with the same win-win and outside-the-box mentality that we approach the aggregate housing issues that affect our region. But all parties should lower the temperature of the debate and realize that this is not a zero-sum game.

 

In an earlier post, we stressed the importance of property owners and managers to take care in screening prospective tenants in a complete, deliberate process. The front-end work is especially important in light of a bill which went into effect January 2017, effectively cloaking a tenant’s eviction action history. In other words, unsuspecting landlords can now unknowingly turn the keys over to a tenant that has had a troublesome history of unlawful detainer actions that are sealed from the public view.

Thanks to the efforts of the California Apartment Association and other voices for property owners, there are safeguards for landlords, but rather than getting bogged down in this law or the merits of the bill, we wanted to shift gears.

While we highly advise a thorough vetting process of a prospective tenant’s rental history, financials and employment, an applicant’s criminal history is a topic that is a little more unwieldy, from a legal perspective. First, some backdrop.

There are thousands of California prisoners released on a monthly basis, all of whom need housing. Everyone can change, including ex-offenders, but as a landlord, taking a leap of faith and hoping a prospective tenant will change can be a risky proposition.

For this reason, landlords understandably use criminal record screening to manage their risk. There is a nebulous line, however, between protecting your investment and having a blanket policy of denying housing to all ex-offenders, and so the law attempts to strike a balance between the converging interests of property owners and the societal interest of transitioning stigmatized ex-offenders into normal life.

Enter the racial makeup of arrest and imprisonment – a disproportionate number of minorities are in the criminal justice system – and this has all of the elements of a potential discrimination claim against a landlord that categorically denies housing to anyone with a record.

“No American should ever be discriminated against because of their race or ethnicity, even if that discrimination results from a policy that appears neutral on its face. Black and Latino Americans are unfairly arrested at significantly higher rates than white Americans.”

~ Former HUD Secretary Julián Castro

The issue of housing discrimination against ex-offenders made its way to the U.S. Supreme Court, which allows plaintiffs to challenge housing practices that have a discriminatory effect without having to show discriminatory intent. The ruling lowers the burden for plaintiffs to show instead that the practices both have a “disparate impact” on racial groups and are not justified. Since Blacks and Latinos disproportionately enter the criminal justice system, ex-offenders meet this test.

Against the heels of that Supreme Court Decision, HUD issued sweeping guidelines for landlords and property managers to follow. While acknowledging that people with criminal records aren’t a “protected class” under the Fair Housing Act and in some cases, turning down a tenant because of their record can be legally justified, blanket bans on ex-offenders amount to de facto discrimination.

What this means is that if your rental policy excludes ex-offenders across the board, it is most likely in violation of housing laws, exposing you to liability. If you use criminal records to screen tenants, the policy must be narrowly tailored.

Landlords need to better scrutinize whether the perspective was arrested and if they were also convicted. Even if this distinction is made and the rental applicant was in fact convicted, property owners must weigh the nature and severity of the crime and conviction when deciding whether or not to rent to that person.

In parting thoughts, Bornstein Law stresses the importance that background check and screening criteria consistently to each and every rental applicant. So, if you deny one prospective tenant away because of a blemish on a criminal background check, but welcome another ex-offender as a tenant, you are exposing yourself to liability under fair housing laws. Landlords also need the tenant’s explicit permission and signature prior to running the criminal check. If you state that you’re going to conduct a criminal record check, you must do so uniformly for every applicant. You can, however, narrow the field by screening only those applicants that survive other checks, such as a credit report.

We hope you found this series to be informative, and as always, Daniel Bornstein is happy to engage in any questions you may have. Email him today.

 

Under ordinary circumstances, tenants do not have the right to terminate their lease early because of a new job or job relocation. One exception is military personnel who can end their leases if certain criteria is met.

If a tenant enters the military after inking the lease and they receive permanent change of station orders, or if their expected deployment will be 90+ days, the tenant has the right to terminate the lease with 30 days’ notice, without penalty.

That according to the Servicemembers Civil Relief Act (SCRA), which broadened and tweaked the Sailors’ Civil Relief Act (SSCRA). The aim of the legislation is to provide protections for men and women in uniform that are called to active duty, essentially postponing or suspending certain civil obligations to allow military personnel to devote their full attention to duty and alleviate stress on their families.

When duty calls, service members must deliver formalized notice to the landlord – oral notice is not sufficient. Pay close attention to the effective date of termination – this is a big deal. Reach out to Bornstein Law if you have any questions in this regard.

Bornstein Law pays homage to our service members and urges Bay Area landlords to be deferential in cases when a tenant must serve a larger purpose. Moreover, it’s the law.

While military deployments are a justifiable exit to a lease, more commonly at Bornstein Law, we encounter what we dub “runaway tenants.”. Broken leases and abandonments are an unfortunate reality of doing business for Bay Area landlords.

Understanding the permissible purposes for terminating a lease and knowing what you can or cannot do when a tenant runs away is crucial information for landlords, but these weighty subjects are best approached with the seasoned real estate attorneys of Bornstein Law.

There’s never a dull moment with Silicon Valley’s most prized unicorn. Airbnb made the national spotlight again, this time for the blatantly racist text message of one of its hosts.

Dyne Suh, a law student from California, tried to book a cabin through Airbnb and minutes after arriving, the host canceled the reservation. “One word says it all. Asian” was the explanation given for the cancellation, which left Suh’s group stranded in a snow storm near Big Bear. Airbnb promptly banned the host and issued a strongly-worded statement condemning the behavior.

For their racial bias, the ex-host will now pay $5,000 and go back to school. They are required to take a college-level Asian American studies course, volunteer at a civil rights organization and participate in a community education panel.

“This is a development in restorative justice, which means that people can make mistakes, people can do bad things, but they’re not irredeemable”

~ Jon Ichinaga, chief counsel of the Department of Fair Employment and Housing

For more background on the story, visit this CNN Article.

While the educational component of the ex-host’s penalty is unprecedented, this is not the first time racial discrimination by Airbnb hosts has been under fire. Watch this video from CBS This Morning which chronicled the endemic problem and Airbnb’s efforts to address the issue head-on in a “zero tolerance” policy.

The most recent story of Dyne Suh’s harrowing experience has some shock value because the offensive statement was so blatant for the world to see, but at Bornstein Law, we must warn Bay Area property owners that 99.9% of housing discrimination lawsuits are due to less obvious forms of discrimination. You do not have to make overt racial slurs in order to be in trouble, folks.

In fact, housing discrimination comes in many unsuspecting, less clear-cut forms. For example, in an earlier post, we explained that landlords and property managers must exercise caution in using criminal background screening when selecting tenants. We’ve also pointed out that service animals are not considered pets and so denying housing to a visually impaired person because they have a service dog, for example, can give rise to a discrimination action.

Under California law, a landlord cannot refuse to rent to a tenant, or engage in any other type of discrimination, on the basis of group characteristics specified by law that are not closely related to the landlord’s business needs. Race and religion are examples of “group characteristics”, but it doesn’t end there. Ancestry, childbirth, sexual orientation, marital status, source of income, disability or medical conditions are some of the many dizzying factors that landlords need to consider.

You do not need an attorney to tell you it’s not ok to send a racist text message to a would-be tenant, but for other nuanced areas, Bornstein Law can help you understand the rules and regulations related to housing discrimination.

More than ever, the law supports strict enforcement of any actions that suggest discriminatory intent with real estate activity, making it imperative for property owners to take notice. Stay tuned for future posts that address these and many other weighty issues affecting Bay Area landlords today, or subscribe to get the latest updates delivered to your inbox.

In our last post, we urged landlords and property managers to take immediate steps to correct hoarding behavior when it is discovered. The tenant should be reminded of their statutory and contractual obligations to keep the rental unit clean, safe and sanitary.

Documentation is key – the more photos, videos, or notes, the better for your case in the eventuality of litigation.

Since the hoarder can easily become a subject of sympathy, it is prudent for the landlord to exhaust all available services and remedies before enlarging the seriousness of the situation. When it comes time for Bornstein Law to advocate for your case, the narrative we want to recount is that the property owner took proactive but compassionate steps to address the behavior, doing everything reasonably possible.

In a perfect world, the hoarding tenant will turn over a new leaf, but when the hoarding continues, your remedy is generally an eviction, which may be based on the tenant’s breach of a term in the lease, or a nuisance. This is best approached with the guidance of an attorney, as there may be multiple grounds for eviction.

Generally speaking, it is not helpful to judge the tenant, but focus instead on the legitimate health and safety concerns the hoarding is causing. While you can’t evict the tenant for hoarding per se, you can proceed for other reasons.

  • Direct damage to the property
  • Blocking emergency exits
  • Interfering with ventilation or sprinkler systems
  • Storing potentially explosive or other unsafe materials
  • Keeping perishable goods in a manner that could attract mold or rodents
  • Housing animals in a way that violates the law or lease agreement

If you’ve documented the conditions, put the tenant on notice, and afforded them an opportunity to cure the breach of any applicable lease conditions and/or code violations, and the hoarding continues unabated, you may pursue an unlawful detainer, the act of retaining possession of property without legal right. Whatever the merits of your case and reason for the eviction, there are numerous procedural requirements to follow when commencing an unlawful detainer action. For more info and the common reasons why unlawful detainers fail, visit our page dedicated to this topic.

A very common reaction to an unlawful detainer action we see at Bornstein Law is the tenant’s attorney requesting a “reasonable” accommodation because the tenant alleges protections under Federal and State disability laws. This argument is routinely made by the tenant’s counsel because as of May 1, 2013, hoarding has been officially recognized as a mental disorder by the American Psychiatric Association, catapulting tenant hoarders to a newly protected class. We’ll reserve that topic for our next post. Follow us on Facebook to stay in the know.

It’s been said that home is where the heart is. But what happens when the heart is broken, and an aggressor poses a foreseeable threat to other tenants, or the discord spills into other rental units and interferes with other tenants’ quiet enjoyment of the premises? Clearly, a rental property owner cannot be a social architect or mend broken relationships, but the owner does have certain duties and rights that may not be immediately clear when under the pressure of strife within their dwelling.

When a landlord encounters domestic violence in the property, the law prescribes what can and cannot be done to address this difficult topic and restore harmony to the dwelling. While it affords a great deal of tenant protections to domestic violence victims, the law also outlines tenant responsibilities to the landlord in a balancing act that recognizes the interests of both parties. First, some backdrop.

Long gone are the days of “don’t ask, don’t tell,” when domestic violence was a whispering subject of taboo. There’s been a seismic shift in public policy and the way law enforcement respond to domestic disturbances. Unlike the protocols of yesteryear when it was presumed that whoever raced to the phone first was the victim, determining who the aggressor is, is a factually complex and emotionally-charged decision that the police are tasked to make.

In tandem with the changing posture on domestic violence, more than ever, landlords must be aware of what is going on within their rental units and cannot turn a blind eye to infighting that can quickly reach a boiling point.

What is domestic violence, anyway?

California law seeks to prevent violence in familial or “intimate relationships,” a definition that has been expanded with shifting values and demographics. Domestic violence occurs when a spouse or former spouse, cohabitant or former cohabitant, an individual who is a parent of a child in common, or a dating partner, commits a criminal act of abuse. Aside from the “traditional” domestic charge against an intimate partner that is prohibited in California Penal Code Section 273.5, a host of other charges can arise, such as Simple Battery, Criminal Threats, Stalking, Sexual Battery, and more.

The legal definition of domestic violence can be found in a myriad of provisions within the Civil Code, Penal Code, or the Welfare and Institutions Code, and are broadly defined as “the act or acts of domestic violence, sexual assault, stalking, human trafficking, or abuse of an elder or a dependent adult.” For the purposes of this article, we’ll use the term domestic violence to encompass all forms of abuse.

Keep in mind, domestic violence can take many forms and it need not be the stereotypical slapping around — many times, an abuser uses more discreet methods of exerting control over the victim, through spoken, emotional or psychological means. For example, an utterance of, “I want to kill you” can potentially trigger domestic abuse, as well as stalking tactics after a relationship ends. While many acts of domestic abuse go unseen, let’s assume for the purposes of this discussion that the landlord knows there is something wrong.

However it rears its ugly head, domestic violence must be met with decisive action by owners. Failing to address these conflicts head-on can expose landlords to liability, due to the fundamental responsibility of rental housing providers to provide a safe and secure dwelling. When there is a foreseeable threat to tenants and the owner does not undertake proper measures to correct the abusive behavior of the aggressor or remove the person from the premises, and someone is later injured from the foreseeable threat, the landlord is partially culpable for turning the other cheek, in the eyes of the law.

Taking Proactive Measures

California Code of Civil Procedure §1161(3) allows the landlord to serve a 3-Day Notice to Quit when there are breaches to the rental agreement for something other than non-payment of rent, and this notice may be appropriate when a tenant commits domestic violence or sexual assault against another tenant or subtenant on the premises. Although perpetrating domestic violence is a permissible ground for serving the 3-Day notice, it must be properly served upon the tenant. A common theme we see at Bornstein Law is the improper service of notices that triggers a potential counterclaim of procedural missteps which could be avoided with the guidance of a real estate attorney.

Tenant Protections

A prevailing sentiment among lawmakers and regulators is that domestic violence victims should not lose their housing because of abuse or calling 911. This has been codified in California Code of Civil Procedure §§ 1161 & ,1161.3, which, with certain exceptions, prohibit a landlord from terminating a tenancy or refusing to renew the tenancy based solely upon acts of aggression that constitute domestic violence. This specific protection applies when the aggressor does not live in the same rental unit as the victim, perhaps an intimate partner who comes around but is not named in the lease.

A tenant’s mere assertion that he or she is a victim of domestic violence is not enough to invoke protections. The acts of domestic violence must be documented, as evidenced by one of the following ways.

  • A temporary restraining order or emergency protective order lawfully issued within the last 180 days.
  • A copy of a report, written within the last 180 days, by a peace officer employed by a state or local law enforcement agency acting in his or her official capacity, stating that the tenant or household member has filed a report alleging that he or she or the household member is a victim of domestic violence, sexual assault, or stalking.

Protection from Eviction & Exceptions

Although a landlord generally may not sever a tenancy or fail to renew the tenancy based only on acts of domestic violence perpetrated against the tenant, two notable exceptions apply. The law seems to recognize that protections should be given to genuine victims who need help, but not to those who have an “open door” policy of inviting the aggressor back into the rental unit. It also empowers the landlord to protect others within their rental unit. Thus, the delineated exceptions are:

  • The tenant allows the person against whom the protective order has been issued or who was named in the police report as having committed the act or acts of domestic violence, sexual assault, stalking, human trafficking, or abuse of an elder or a dependent adult to visit the property.
  • The landlord reasonably believes that the presence of the person against whom the protective order has been issued or who was named in the police report as having committed the act or acts of domestic violence, sexual assault, stalking, human trafficking, or abuse of an elder or dependent adult poses a physical threat to other tenants, guests, invitees, or licensees, or to a tenant’s right to quiet possession pursuant to Section 1927 of the Civil Code.

Still, the landlord must have previously given at least three days’ notice to the tenant to correct the violation.

Tenant’s Right To Terminate The Lease

Although in ordinary circumstances, the tenant may not prematurely end the tenancy, the law considers domestic violence an exigent circumstance. Civil Code Section 1946.7, then, allows the victim of domestic abuse to break the lease without penalty, though several caveats apply.

The survivor of domestic violence can provide the landlord a 14-day written notice of the intent to vacate, but must provide proper documentation that substantiates the incident. As indicated, it can be

“a copy of a lawfully issued temporary restraining order or emergency protective order that protects the tenant from further domestic violence, sexual assault, or stalking, or a copy of a written report by a peace officer employed by a state or local law enforcement agency acting in his or her official capacity, stating that the tenant or household member has filed a report alleging that he or she is a victim of domestic violence, sexual assault, or stalking.”

The underlying documents must have been generated within the past 180 days.

The Tenant’s obligation to pay rent

Provided that the proper and timely notice of the early lease termination is made with supporting documentation, the victim of domestic violence can move out without incurring the penalties incurred by other runaway tenants, but they are still obligated to pay the rent for no more than 14 days following the notice. If there are other tenants in the unit, their obligation to pay the rent continues unabated until the lease expires.

The laws surrounding domestic violence do not meddle with security deposit laws; the owner is not obligated to return any portion of the security deposit until the owner regains possession of the unit.

A few parting thoughts

We’ve only scratched the surface here, but we would be remiss not to remind landlords that given the sensitivity and volatile nature of domestic violence, they cannot disclose to a third party any information provided by the tenant unless the tenant consents in writing or is directed to do so by a court. The landlord may also have an obligation under the law to change the locks of the victims’ dwelling, a topic we will reserve for a future post. Although a landlord can evict the victim of domestic violence under only limited circumstances, these exceptions exist.

Finally, as if this area of law is not complicated enough, it can be muddled by issues that arise in terms of protective orders and court instructions, which may stipulate that the aggressor move out of the residence. Landlords are not expected to fully understand this morass in the normal scope of their rental business, making it imperative to consult with an attorney to navigate these perilous waters.

In over 23 years of managing landlord-tenant disputes, Bornstein Law been inserted into thousands of troublesome legal issues and domestic violence ranks amongst the most challenging. To equalize the situation and protect your rights as a property owner, contact our office today.

 

It is well established that void contracts cannot be enforced by law. Clearly, drug dealers cannot enforce an agreement with narcotics buyers. Robbers may not enter into a legally binding agreement on how to divvy up the proceeds of a bank heist, no more than a parent can contract to sell their child.

But what happens when disputes arise between landlords and tenants that occupy an ‘illegal’ unit like a converted garage or bootlegged duplex? When permits are not properly pulled and there is no certificate of occupancy issued, case law suggests that the landlord has no more enforceable contract rights than a drug trafficker.

Although the ruling long eclipsed California’s housing crisis and surge in tenant protections, Gruzen v. Henry remains the law of the land. This is a landmark case where the court took on the subject of illegal structures, concluding that the landlord is not entitled to collect or request any rent if the structure does not match the Certificate of Occupancy or equivalent issued by the city. The wonky types can read the full case here.

This issue graced itself decades ago but enter a housing shortage that spawned thousands of makeshift living environments that do not satisfy code requirements, and many owners are pressed to decide whether to rent their illegal units. We regretfully inform this group that the law is not on their side and the news is grimmer if the clandestine unit is in a city that has implemented rent control. In rent-controlled jurisdictions, the scales seem to be tipped heavily in favor of tenants.

In rent-controlled jurisdiction, dwellers of illegal units get the best of both worlds – they are afforded a range of protections while being absolved of rent obligations.

These informal agreements can go along just fine. But when it goes bad, it is awful.

When a disgruntled tenant becomes contentious, they may be entitled to relocation assistance and seek other damages too numerous to name here. Suffice it to say that you don’t want to defend against these claims.

We were intrigued to read a more recent case, North 7th Street Associates v. Constante. There, the landlord of an illegal unit attempted to use a three-day notice to pay rent or quit as a basis for eviction, and the Court struck down the notice as invalid. The court’s reasoning was that when the purpose of the lease is to rent an illegal unit, the lease is void and by extension, the 3-Day Notice.

This case was notable because it further eroded landlord rights in illegal dwelling situations while propelling those of tenants. Although Gruzen held that landlords were not entitled to rent, the Court nonetheless recognized the sacrosanct right of the landlord to recover possession of the unit.

Although North 7th Street Associates v. Constante was aired out in Southern California and is not binding in Bay Area courts, its underlying logic can insidiously make its way here and be persuasive to judges closer to home. The case is the darling of tenant rights advocates, who are milking it for all it’s worth.

Given a rash of tenant lawsuits including those instigated by illegal unit occupants, it is prudent to ensure you are protected by wrongful eviction coverage, a subject we harped about before.

If there is any bright spot for the owners of illegal units, it is that municipalities are increasingly open to amnesty. With growing pressure to bridge the housing deficit and statewide mandates to get out of the way of new development, many cities are removing the obstacles to legalize illegal units.

Make no mistake, it remains a complex endeavor to bring these dwellings up to code, but there has been a shift in attitude, one that morphed from a posture of penalizing landlords that rented illegal units, to policies of cooperation and forgiveness.

It should be clear by this point that this is a weighty issue that is best approached with the guidance of an attorney that is versed in the many complexities of landlord-tenant law. If you find yourself embroiled in a conflict within an illegal unit, are considering whether to rent an illegal unit, or are looking to bring an illegal unit code compliant, we are here to assist – contact our office today.

 

Whoever came up with the clever phrase that a rising tide lifts all ships clearly did not have Section 8 housing in mind.

In the currently red-hot East Bay real estate market, we’ve seen a growing number of Oakland landlords that want to opt-out of Section 8 housing. When buyer’s remorse sets in and rental property owners want to jump ship, these owners get discouraged to learn that it’s not so easy to part ways.

A landlord’s participation in Section 8 has always been a trade-off between the appeal of rent security through guaranteed subsidies, shorter vacancies and lower turnover, among other benefits, and less endearing aspects of the program such as onerous regulations and oversight. The calculus changes in rising real estate markets, when the bad outweighs the good.

Take a look at one landlord’s harrowing experience with subsidized housing. Although this video is from Omaha, the frustrations of this owner should resonate with rental housing providers everywhere.

Closer to home, Oakland landlords cannot unilaterally opt-out of the Section 8 program. The Oakland Housing Authority (OHA) will only sever ties when the lease has been terminated, and this begs the question how to terminate the tenancy. The answers are found in Oakland’s Measure EE, the Just Cause for Eviction Ordinance that delineates the legally recognized grounds for eviction.

As the foremost practitioners in just cause evictions and managing landlord-tenant relationships, Bornstein Law is happy to engage and answer any questions related to Section 8 and assist Oakland rental housing providers transition away from the program if permissible reasons exist.

We’ve seen an uptick in lawsuits by tenants and their attorneys as of late, and a common denominator? Many of these suits could have been avoided if the landlord or property manager had some rudimentary knowledge of the law. One common action is wrongful eviction lawsuits, which can easily rack up tens of thousands in attorney’s fees and so we have admonished rental housing providers to have wrongful eviction coverage, but today, we’ll talk about potential lawsuits that may be lurking around the corner for landlords that lack proper knowledge surrounding disability-related accommodations.

As we noted in an earlier post on service and comfort animals, California law adopts a more inclusive list of disabilities than Federal law, catapulting tenants with mental impairments to a protected class.

As defined by California’s Fair Employment and Housing Act (FEHA), a disability is a condition that, if left untreated, limits a major life activity, while the American Disabilities Act (ADA) is a federal law that views disability more narrowly; to be afforded protections under the ADA, the disability must substantially limit a major life function if left untreated. Major illness that is manageable with medication are not likely to be grouped in this category.

So, for instance, HIV clearly affects day-to-day life. But its impact on the individual may differ. Either the condition limits their daily activity or substantially limits it. Let’s assume for the time being that the tenant is in fact disabled. The disability triggers a new set of obligations for landlords to make reasonable accommodations.

Cal. Gov’t. Code § 12927 enables a disabled tenant to request a reasonable accommodation so that they can use and enjoy housing in a way that is equal to a person without a disability. The Code goes on to say that the rental housing policy must be bent, altered or waived when necessary to accommodate a person with a disability when a request is made.

Under Cal. Civil Code § 54.1, a landlord must permit the tenant to make reasonable modifications at the tenant’s expense and may require the tenant to restore the property to its original condition after moving out.

If, for example, a tenant asks for a ramp to be built so that they can move freely in and out the unit using a wheelchair and states that the tenant’s insurance company would pay for installation and removal costs if the tenant moves out, you are hard pressed to deny the request if it could be built with appropriate permits and it would not unreasonably prevent other tenants from entering or leaving their units.

Pivoting back to federal law, the Fair Housing Amendments Act (FHAA) mandates that rental buildings built after March 13, 1991 with four or more units have at least one elevator to provide reasonable accommodations and modifications. Federal Courts have consistently upheld elevator modifications, laxed parking requirements for physically challenged tenants and otherwise have ruled against rental housing providers that are not pliable to the reasonable requests made by disabled tenants, when the impact on the property owner is insignificant.

Of course, “reasonable” is an ambiguous term, and every case is different. To use our above analogy of a wheelchair-bound tenant requesting to foot the bill for a ramp, one objection a landlord may make is that the ramp will “look bad”. If the landlord uses appearance as the lone reason for denying the construction of the ramp, this logic will likely not prevail in court.

The circumstances vary in each case, and rather than launching into hypotheticals, it is best to consult with an attorney that can evaluate the reasonableness of disability-related accommodation requests given your unique situation. It is far better to get it right the first time than to risk a perilous discrimination suit down the road.

Some rental housing providers have the guiding principle that if the accommodation can be made with licensed contractors and with requisite permits, it should be allowed. This approach is probably a safe bet, but again, there are nuances in each case best journeyed with Bornstein Law.

Habitability Issues Can Tank A Just Cause Eviction Action

Failing to provide a safe, sanitary and secure residence is an affirmative defense a tenant or their counsel can raise to contest rent obligations or just cause evictions.

When a tenant does not timely pay their rent, landlords can serve a three-day notice to pay rent or quit and if that is to no avail, commence an unlawful detainer action. Yet prevailing in what would initially appear as a clear-cut case is not guaranteed, if procedural notices are not followed to the letter, or if the rental unit is not code compliant.

It’s not uncommon for non-paying residents (especially if they are represented by a tenant attorney) to use the affirmative defense that the physical conditions and characteristics of the unit rendered them unfit or unsafe for human occupancy and habitation. Rental housing providers are obligated to provide livable conditions within their units and when they fail to do so, tenants can use the landlord’s neglect to contest an unlawful detainer for nonpayment of rent.

The landlord’s duty to provide a habitable dwelling is known as the warranty of habitability and is implied in every residential lease agreement throughout California. Adequate and safe heating, effective weatherproofing, plumbing and gas facilities, maintained stairs and common areas, hot and cold running water, and rodent, vermin-free common areas are just some of the many responsibilities that if breached, will compromise your unlawful detainer action.

What conditions create an untenantable dwelling can be spelled out in California Civil Code 1941.1, as well as local ordinances and building codes that have their own set of provisions. For example, San Francisco has their own set of rules that limit the number of occupants per room.

Landlords need to know everything regarding the maintenance trade, from floor to ceiling and everything in between, and if they don’t, they should hire someone that is able to navigate the myriad of codes, whether a licensed real estate broker, property management company or attorney. It’s been said that ignorance is no excuse for breaking the law and so code enforcement and courts seem to show little empathy for rental property owners that do not fulfill their responsibilities.

The takeaway? Before you serve a three-day notice to pay rent or quit, make sure there are no habitability concerns. Talk to your tenant and ask questions concerning the property’s condition, do so often, and document the condition so that the tenant cannot file an answer with the Court claiming that rent was withheld because the unit is uninhabitable due to a leaking roof, broken pipes, or any number of other issues that render the property unlivable. The landlord can claim they had no knowledge of the underlying defect, but in California, the landlord is imputed to have knowledge of major defects in their rental property.

So long as your units are livable, you may be able to breathe a sigh of relief.

Having defended many claims that allege habitability, we can attest that this claim is oftentimes without merit, and defects, whether real, perceived, reported or unreported, oftentimes do not rise to a level that justifies the nonpayment of rent, or staves off an eviction. By using an affirmative defense, the tenant has the burden of proof to show that there is a substantial breach of the warranty of habitability, evidenced by a substantial defect.

In a seminal case, Green v. Superior Court, the California Supreme Court defined “habitable” as a rental unit that is fit for occupation by human beings and that it substantially complies with state and local building and health codes that materially affect tenants’ health and safety. The Court drew a line between essentials and “amenities”, observing that landlords are under no obligation to provide the most aesthetically pleasing and pristine rental unit, and makes allowances for cosmetic defects and insubstantial departures from codes.

Of course, there will be competing narratives, one from the tenant or their counsel, and one from the landlord’s attorney, and whether any defects rise to the magnitude of inhabitability will be decided on a case-by-case basis. Suffice it to say that being represented by a firm that specializes in managing landlord-tenant disputes will improve your odds of prevailing.

Tenants have their own housekeeping responsibilities and it’s well established that the tenant’s own wanton neglect or damage, or failure to practice “ordinary care” will be frowned upon by the court and compromise the habitability defense. This, too, is a battle of narratives that is best articulated by the landlord lawyers of Bornstein Law.

Using habitability as a defense against an unlawful detainer action is more often than not, a shot in the dark for the tenant, perhaps a gambit to buy time or entice the landlord to enter into a settlement. But with proper counsel, landlords can debunk false claims and cast the circumstances in the most favorable light.

 

The jury is still out for the Tax Cuts and Jobs Act (H.R.1), more popularly known as tax reform or the GOP tax plan. For the purposes of this discussion, we’ll refer to it as the TCJA, a bill that has been a source of confusion and opposing viewpoints.

Regardless of your stance on tax policy, the law will have undeniable implications for Bay Area property homeowners. After fielding questions from owner-occupants and investment property owners alike, we wanted to chime in on how this may affect their bottom lines.

Deductions for homeowners

As part of the tax code restructuring, the TCJA includes a mortgage interest deduction for homes that cost $750,00 or less. If you throw a dart at a map of North America, it’s a huge amount of money, unless that dart lands in California’s largest metro areas. Alameda, Marin, Orange, San Francisco, San Mateo, Santa Clara and Santa Cruz counties all have average home prices north of $750,000, so the end result of the TCJA is a tax break for homeowners that prices out most Bay Area properties, even the teardowns.

Some would argue that for those buying $750,00 homes, the tax write off is not calamitous – people who are bent on buying are bent on buying – and that limiting the mortgage interest deduction would not dampen the search efforts and enthusiasm of aspiring homeowners. More backdrop here »

The California Association of Realtors takes issue with that sentiment. It was at the forefront in opposing the bill, arguing it dramatically weakens the tax incentives for new homeowners and that the lower mortgage interest deduction cap punishes homeownership in high-tax, Democrat-leaning states like California.

In a heartfelt message to members we published on our website, C.A.R. President Steve White lamented that the TCJA puts home values at risk and undercuts the incentive to own a home.

Redfin offered their take, claiming that, “pass-through tax cuts, combined with changes in the ability to deduct state and local taxes will continue to drive American migration, where people from coastal cities strike out for affordable places to live.”, in the words of chief economist Nela Richardson. They predict that the tax cut could limit the supply of homes on the market by reducing the landlord’s incentive to sell. The National Association of Home Builders went a step further by warning it could cause a national housing recession.

Rental property owners, on the other hand, are not seeing the sky fall.

A boon for the rental housing industry?

The National Apartment Association, in partnership with the National Multifamily Housing Council, has applauded the tax overhaul, touting it as a smart tax policy.

One of the most adorning centerpieces of the TCJA is the protection of flow-through entities. Not surprising, because three-quarters of apartment properties operate as flow-through entities, including residential landlords who own their rental property as sole proprietors, real estate investment trusts, LLCs, S corporations or partnerships.

Under these tax provisions, businesses avoid the double taxation of paying corporate and individual taxes. Instead, taxes are applied solely at the individual level. Unlike owner-occupants, rental property owners can write off expenses like mortgages, repair, and management costs. Since these costs of doing business are deducted from the income the property produces, investors are only taxed on that income, so by reducing it, the investment acts as a tax shelter.

The TCJA, however, creates a new tax deduction for individuals who realize income through pass-through entities under Section 199A, also known as the Qualified Business Income Deduction, which arose from the Tax Cuts & Jobs Act of 2017. If rental activity qualifies as a business for tax purposes, as most do, owners may be eligible to deduct an amount equal to 20% of their net rental income. This is in addition to all other rental-related deductions. If landlords qualify, they are effectively taxed on only 80% of rental income.

There are many rules and limitations, of course, and as with any major revisions to the tax code, there will be modifications and interpretations which will change how this creature can be used.

The rich get richer?

Although wealthy real estate investors will be beneficiaries of the new tax rules, anyone who invests in the rental real estate is likely to benefit. While critics note that Washington political figures emerge richer, perhaps they overlook the many small, mom-and-pop landlords. As we noted in this earlier post, these responsible landlords are stewards of the community, treat their tenants well, and are the driving force of affordable housing. They did not cause the housing crisis and indeed, have been adversely impacted by it with rising costs.

Pass-throughs are shrouded in mystery for many observers, with an accompanying undercurrent that they are an unseemly and arcane vehicle for corporations to avoid taxes or otherwise create some sort of mischief. In fact, roughly 95% of all businesses are categorized as pass-throughs, and they are very common for small business owners. In a pass through, profits are merely passed through to the owners of the business, who then report that income on their individual tax returns and pay tax on it, with the rest of their normal income and thus, there is nothing evasive.

Parting thoughts

Like most other matters we encounter at Bornstein Law, the law is cleaner on the page than it is in the real world, and many ambiguities need to be wrinkled out. Our job is not to legislate, but counsel property owners and protect their real estate investments given their unique circumstances. While there is no shortage of viewpoints on tax reform circulating around the web, it is strongly recommended that you muffle the noise and sit down with an attorney to discuss your unique circumstances and real estate goals.