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In California, the citizen is the legislator if they pay $200 and manage to get a few hundred thousand signatures with a clipboard to qualify their idea for the ballot. There have been some crackpot initiatives – the state will not secede from the United States, and eating shellfish will not earn you a $666,000 fine per consumption or an imprisonment of up to six years – yet there are measures that usher in far-reaching changes.

One of the winners of last night’s election are hens, who will now enjoy more room to peck as voters said yes to the Proposition 12 chicken cage ban, but what about landlord rights? We are still digesting the election results, but here are some early observations that have jumped off the page.

Proposition 10 is rejected

In a blow to tenant activists and a win for landlords, Proposition 10 has failed at the ballot box, leaving California’s limits on rent control intact. There is no indication that tenant advocates have been deflated, as they look for the next fight and take their calls for expanded rent control in cities throughout the state. For the time being, rental property owners have dodged a bullet after voters overwhelmingly agreed that repealing Costa Hawkins would only exacerbate the dearth of affordable housing.

Proposition 5 shot down

Championed by the California Association of Realtors, this initiative would allow homeowners age 55 or older and those with a severe disability to take their property tax savings with them when buying a new residence, no matter the value of the new home, its location or how many times the buyer has moved. The argument that seniors can move to a home better suited to their needs without facing higher property taxes was rejected at the polls.

The current law remains on the books, and so eligible buyers can transfer a tax assessment if their new home is of equal or lesser value of their old home and only once per lifetime.

Oakland continues its trek down a slippery slope

As proud East Bay residents, we have been elated to witness Oakland’s growth but alarmed that it has become the latest bastion of tenant protections. Election night did little to reverse this trend and made further dents into owner rights.

The biggest newsflash for Oakland landlords is the passage of Measure Y, which removes the owner-occupied exemption from just cause evictions and allows the addition of eviction defenses. We have strongly opposed the measure to peel back landlord protections of an eviction ordinance passed 15 years ago, but the voters have now ushered in additional regulations for small owners who rely on rental income for their subsistence.

If you own a vacant property in Oakland, you will now get a hefty tax under Measure W, an initiative that aims to incentivize owners to put land and housing into use. Empty lots or buildings and condos that are used less than 50 days out of the year will be levied with a $3,000 to $6,000 parcel tax. There are exemptions for low-income seniors but for the rest of owners sitting on empty properties, they will be funding homeless services and illegal dumping cleanup.

The voters have also infused an estimated $9 million a year in new revenue for the city by passing Measure X, a progressive real estate transfer tax that is similar to the one San Francisco has. Most Oaklanders will won’t be affected because the transfer tax rate will remain at 1.5 percent, but land and buildings that sell for between $2 million and $5 million, the tax rate will bump up to 1.75 percent. More expensive properties that sell north of $5 million will be taxed 2.5 percent.

By saying no to Measure AA, Oaklanders stopped short of amending the city charter to establish a parcel tax – a kind of property tax based on units of property rather than assessed value – at the rate of $198 per parcel for 30 years to fund education services for pre-K through college students and career readiness.

San Francisco’s Proposition A sails through

Voters approved Proposition A by a comfortable margin, authorizing the city and county of San Francisco to issue up to $425 million in bonds at an estimated tax rate of $0.013 per $100 of assessed value to fund repairs and improvements the Embarcadero Seawall and Embarcadero infrastructure and utilities for earthquake and flood safety.
Landlords are authorized to pass-through 50% of the property tax increase to residential tenants, in accordance with Administrative Code, Chapter 37.

Pivoting to Berkeley

We noted in an earlier post that forward-thinking municipalities were taking a hard look at their rent control ordinances and how to modify them in the event that Proposition 10 passed. In Berkeley, Measure Q was mostly designed to position the city for a post-Costa-Hawkins world. Although Proposition 10 was scuttled, a provision of Measure Q exempting accessory dwelling units from rent control will become the law of the land.

The exemption does not apply for tenancies created before November 7, 2018 and portions contingent on the passage of Proposition 10 are preempted.

While we applaud Measure Q, we regret to inform owners that by passing Measure P, the voters have increased the tax on the transfer of real property from 1.5 percent to 2.5 percent for property sales and transfers over $1.5 million to fund general city purposes and the establishment of a homeless services panel.

Santa Cruz landlords score a major victory

Santa Cruz rent control advocates couldn’t sell Measure M to voters. With a total of $850,000 raised, the campaign was one of the most expensive in the city’s history but in the end, voters rejected the measure, which would restrict evictions, limit rent increases and create a board to enforce the rules.

When Senator Bill Dodd was forced to evacuate his NAPA home around midnight on the first night of the October fires, he couldn’t open his heavy wooden garage doors to use as an escape route. With widespread power outages, the garage door motor wasn’t working, but thankfully, a good neighbor came to his aide. One trapped neighbor encountering the same problem was actually forced to drive through his garage door.

“This isn’t a problem most people have thought of,” the Senator says in a news release, but he brought it to the forefront by introducing SB 969, co-authored by Assemblywoman Cecilia Aguiar-Curry, D-Winters and supported by the Consumer Federation of California.

Under the new law, landlords and other property owners will no longer be able to install automatic garage doors unless they have a battery backup function designed to operate during an electoral outage. The bill’s requirements will be enforceable next summer.

For Dodd, the fire season exposed several vulnerabilities and underscored the need to be proactive in adopting policies that make communities safer in the wake of a disaster. Ensuring battery backups for garage doors is “a small step that can literally save lives,” he goes onto say.

At least five of the 40 people who died in the North Bay during the fires did not or could manually open their garages, The Press Democrat reported in December. Seniors and those with heavy wooden doors are especially at risk.

What the law means for rental property owners

Landlords are not required to proactively install new automatic garage doors, but any replacement door installed on or after July 1, 2019, must have the battery backup feature. Owners face a $1,000 civil penalty for failure to comply.

We applaud the bill and have always maintained that owners should develop an emergency preparedness plan before a disaster strikes, to protect, life, limb, and property.

A perennial issue we’ve had at Bornstein Law has been communicating the law when it sometimes has the shelf life of a banana peel. When it comes to police presence at a rental unit, our earlier article stands to be upended.

In that venue on domestic violence, we noted among other things that when discord spills into other units and interferes with other tenants’ quiet enjoyment of the premises, a landlord should give deference to a tenant when they are victims of “domestic violence, sexual assault, stalking, human trafficking, or elder or dependent adult abuse.”

California Code of Civil Procedure §§ 1161 & 1161.3, prohibits a landlord from terminating a tenancy or refusing to renew the tenancy based solely upon acts of aggression, and so the law attempts to ensure that those preyed upon are not victimized twice by being evicted.

In other words, landlords cannot penalize residents if they call law enforcement to report domestic abuse or other crimes or emergency situations at the rental property. By merely calling for help, a tenant cannot be labeled a “nuisance.”

This sentiment remains, but under a bill which has been passed by the legislature and has now landed on the Governor’s desk, it will be easier for tenants to assert their victim status and thus, be entitled to legal protections.

People should be able to call for help without fear of losing their home

~ Assemblyman David Chiu

AB 2413 would loosen documentation requirements, which previously required that abusive acts be documented by protection orders or police reports. It also extends protections to tenants who are victims of other crimes, not necessarily domestic violence. 

The measure received nary opposition and was endorsed by the California Apartment Association. We applaud the legislation and wholeheartedly believe that tenants should not be punished for calling the police when they are a victim of a crime.

Not a blank check

We would be remiss not to point out that the law does not preclude an unlawful detainer action when repeated 911 calls are part and parcel of illegal activities or a larger pattern of behavior which indeed, creates a nuisance. To qualify that statement, it’s instructive to examine how the law defines this term. Under California Civil Code Section 3479, a nuisance is:

“Anything which is injurious to health, including, but not limited to, the illegal sale of controlled substances, or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property, or unlawfully obstructs the free passage or use, in the customary manner, of any navigable lake, or river, bay, stream, canal, or basin, or any public park, square, street, or highway, is a nuisance.”

Of course, disruptive behavior and 911calls often go hand and hand.

While tenants cannot (and should not) be evicted for seeking police assistance, perhaps these calls are indicative of underlying conduct that is, in fact, injurious or interfering with the quiet enjoyment of other tenants. Put differently, a 911 call in itself is no reason to evict, but the activities that precipitated the emergency call can rise to the level of a nuisance.

When there are recurring disruptions in a rental unit, the tenants should be afforded the opportunity to correct the behavior. We noted in an earlier article, however, that illegal activity is not “curable,” and with our assistance, an unlawful detainer action may be accelerated.

Tenants in a position to bow out of the lease

Although most of the chatter about this law relates to a landlord’s inability to transition a tenant out of the rental unit, an overlooked fact is that a tenant may prematurely break the lease. In an era where political rhetoric often falls squarely on the side of tenant advocates, much of the discussion is about removing tenants when in fact, a landlord may want to maintain the status quo and desire that the survivor of domestic violence stays in the rental unit. The law, however, affords the victim the ability to exit the unit without penalty if certain conditions are met.

Contrary to popularized belief, then, a vacancy is not the goal of a landlord, but to the detriment of him or her in most cases.

In conclusion, the law is sure to be signed by the Governor and is good in theory, but like most other matters that cross our desk, the law is cleaner on the page than it is in real life. You can rely on Bornstein Law to translate how it impacts your rental business. 

 

Tuesday, July 24th is a consequential day for property owners in both Oakland and Berkeley. With November marching closer, these two cities will be convening special council meetings to decide what ballot measures will be headed to the voters in the November 2018 election, and the stakes are particularly high for East Bay landlords who are already saddled with some of the Bay Area’s most stringent and complex rent control rules.

Among some ominous proposals, we’ve picked up the most chatter about Oakland’s ill-conceived idea to peel back a 2002 ballot measure passed into law which exempts small landlords from Oakland’s “just cause” eviction protections, a subject we chimed in on here. For still more context, watch this video – the initial July 17th hearing has obviously passed, but the threat to owner-occupied duplexes and triplexes are still a concern and even more so now.

What you can do

We urge our fraternity not to be apathetic and kick the can down the road by waiting for the November election – please weigh in on critical measures coming before Oakland and Berkeley lawmakers and ultimately before the voters at the ballot box. The Oakland Berkeley Association of Realtors urges you to show up, call or write your elected officials.

We’ve noted that all politics are local, but some are more local than others. Although the statewide repeal of the Costa Hawkins Rental Housing Act will make for one of the most contentious debates about housing in California in decades, we should not let this main event eclipse local ordinances that can have more impact on the day-to-day activities of rental property owners. Notably and at hand in Tuesday’s agenda, Berkeley Item 64 is designed to put a plan in place for the eventuality that Costa Hawkins is repealed.

Our friends at OBAR have the best handle on all of the initiatives being discussed and articulate arguments for and against them more eloquently than us, so we include their analysis below.

**City of Oakland**

Item 16 Repeal of Duplex/Triplex Just- Cause Exemption

OPPOSE

City Council will move this to the November election unless you act.
The amendment would force many homeowners in duplexes/triplexes to live with their tenants for life.

We would like to thank all of the REALTORS who showed up to city council on 7/17! Unfortunately, Council may still decide to put this on for the November election. However, we still may have a chance in this.

Other Major Concerns:

– Amendments to the ordinance will ensure that homeowners do not build Accessory Dwelling Units, secondary units or otherwise add more rental housing on their properties.
– Tenants are already protected. Laws and mechanisms currently in place ensure that rents cannot be raised in newly owner-occupied duplexes/triplexes for at least a year regardless of whether a new tenant is moved into a unit.
– Amending the just-cause ordinance will irreparably harm homeowners, their families and the tenants that currently live in the approximately 4,000 or more owner-occupied duplexes and triplexes by hand-cuffing homeowners from removing tenants that pose a health or safety risk to the homeowner or the other tenants living on the property.
– Adding more risk for homeowners that live with their tenants will ensure that homeowners are more stringent when deciding who to rent to when a unit becomes available or may force a decision not to rent the unit at all. The long-term effects of this will be gentrification as has been seen in San Francisco and Berkeley. This law works against its intended purpose.

Please show up at City Council meeting to tell your story or email/call your Councilmembers and the Mayor and oppose this measure by clicking HERE

Item 11: Transfer Tax

OPPOSE

This proposal from Dan Kalb will make the transfer tax on homes the highest in the State of California. The tax is a money grab designed to alleviate the City’s inability to balance its own budget.

There has been no independent economic analysis done of this tax. This could prove hazardous because of the volatile nature of the market. The City of Oakland had to lay off half of it’s workforce the last time the market took a tumble. For that reason, We believe that it is of utmost importance that a thorough economic analysis is done regarding the possible effects such a tax would have on Oakland’s economy before moving forward on such a proposal. We are informed and believe that that is what SF did before moving on their graduated RETT. We would also like to point out that SF’s RETT graduates up at 5 million dollars and that RETT for properties below 5 million is half of our current rate (0.75% as opposed to 1.5%).

Please show up at City Council meeting to tell your story or email/call your Councilmembers and the Mayor and oppose this measure by clicking HERE

Item S9.6: Vacant Land Property Tax

OPPOSE

Introduced by Councilmember Kaplan, this ballot measure proposes to tax vacant properties $6000 per parcel to fund homeless programs and illegal dumping remediation. This measure has not been properly vetted or analyzed. There are major concerns about equity in enforcement, fairness in the levy, and the financial projections for the stated purpose. Poor property owners that do not have money to develop their property will be forced to sell to corporations.

Voters are being misled. This tax will not provide a sustained revenue source for homelessness. If the tax works to force development, there will be no new revenues for homelessness and blight. If the real purpose of this measure is to force property owners to put their land to use, then incentives should be offered in lieu of this punitive scheme. The tax will unfairly target homeowners that are leaving properties vacant for family members or caregivers to occupy at a future date.

Please show up at City Council meeting to tell your story or email/call your Councilmembers and the Mayor by clicking HERE


**City of Berkeley**

Item 63: Transfer Tax

OPPOSE

This Tax will NOT fund Homelessness Services. You are being misled. This tax was proposed by the Mayor, and sold to the public for months, as a special tax. That would mean it would be dedicated to homelessness services. The city has since quietly changed, without discussion or explanation, the language to make it a general fund tax. That means the money can be used for anything, and we know that the city does not know how to spend your hard-earned tax dollars.

The Association stands in complete opposition to this tax. Raising the tax by one percent for properties sold over $1 million will effectively make Berkeley’s transfer tax the highest in the state of California. The median and average price of a home in Berkeley is approximately $1.2 million. The tax would affect every residential transaction in the city and push the overall cost of housing even higher than it already is.

Because of inflation and the appreciation levels of property in the city of Berkeley, many long term property owners in Berkeley may face significant tax implications if they decide to transfer title to their grandchildren or other third parties. Generational wealth can be sharply impacted if heirs of homeowners are faced with large tax bills that they cannot pay. The city of Berkeley has been recording large numbers of transfer tax liens on properties that used to belong to families with long standing ties to South Berkeley. Those people have since been displaced or forced to sell their property under duress because of the increasingly high burden of owning property in Berkeley.

We believe that it is of utmost importance that a thorough economic analysis is done regarding the possible effects such a tax would have on Berkeley’s economy before moving forward on such a proposal. We are informed and believe that that is what SF did before moving on their graduated RETT. We would also like to point out that SF’s RETT graduates up at 5 million dollars and that RETT for properties below 5 million is half of our current rate (0.75% as opposed to 1.5%).

Please show up at City Council meeting to tell your story or email/call your Councilmembers and the Mayor by clicking HERE

Item 64: Amending Rent Ordinance

OPPOSE in Part

In the event that Costa Hawkins is repealed, this measure will cap rents on rent controlled units at their current rate and impose rent control on new construction after a timeframe between 12 and 15 years. It will also guarantee exemptions for ADUs from Rent Control and Just-Cause.
Though some exemptions have been written into the measure for ADUs, which we support, placing the other amendments on the ballot at this time may prove to be a waste of hundreds of thousands of dollars paid for by Berkeley Resident’s tax dollars. If the effort to repeal Costa-Hawkins on the state level fails, a significant amount of money will have been spent for no reason.

Please show up at City Council meeting to tell your story or email/call your Councilmembers and the Mayor by clicking HERE

THE ONLY WAY TO STOP THIS IS IF YOU ACT

What: Special City Council Meetings in Oakland and Berkeley.

When and Where:

Oakland
Tuesday, July 24th @ 3:00 P.M.
City Council Chamber, 3rd floor at 1 Frank H. Ogawa Plaza Oakland

Berkeley
Tuesday, July 24th @ 6:00 P.M.
Council Chambers, 2134 Martin Luther King Jr. Way, Berkeley

If you can’t make it to either City Council meeting, please email or call your elected officials. Click HERE

Please email OBAR’s Government Affairs Director with questions or concerns:

Kiran Shenoy
kiran@theobaor.org

 

 

At Bornstein Law, we love teachers. As parents, we are the first to acknowledge the toils of educators and the indispensable role they have in the classroom. We also love protecting the rights of property owners, and it’s not our call to take sides, but to educate the industry on laws on the books that have been decided by legislators and the courts. One such matter has played itself out in the judicial process and is now resolved.

San Francisco’s prohibition of no-fault evictions against school employees during the academic year has survived a final legal challenge and remains the law of the City by the Bay.

With several caveats, owners can evict a tenant when the owner or a close relative desires to live in the rental unit, but teachers and kids are nearly eviction-proof, at least during the school year. That’s because Ordinance No. 55-16, unanimously passed by the Board of Supervisors in 2016, catapulted school staff to a newly protected class, prohibiting their displacement through a no-fault eviction during the academic year. The law also bars condominium conversion, removal of the rental unit, capital improvement and “substantial rehabilitation” evictions for educators and students during that time.

Landlord groups successfully challenged the new protections in court, with Superior Court Judge Ronald Quidachav’s ruling that the law was “invalid on its face, pre-empted by state law and unenforceable.” However, an appellate court panel disagreed with this logic, and teachers rejoiced when the judge’s ruling was reversed.

When we first visited this topic, we predicted that given the constitutional gravity of the matter – a clash between state and local law – arguments for and against the ordinance would be heard by the state Supreme Court. California’s highest court aired out the issue and affirmed the city’s limitations on a landlord’s ability to effectuate no-fault evictions during the school year.

Bornstein Law has proudly represented aspiring homeowners who make their first purchase. But, with the vacancy rate so low in San Francisco, these buyers must use an owner move-in eviction as a vehicle to gain access to their property. Having stretched their finances for an astronomical mortgage to purchase a property, we’ve taken great pride in giving these buyers the ability to use the property.

A great number of these buyers themselves have children, and so while we recognize there is perhaps no other occupation that brings more value to our community than educators, taking a balanced approach, we maintain that the rights of homeowners should deserve some consideration and not be a casualty.

There is some misplaced sentiment propagated by tenant advocates that owner move-in evictions are overused by opportunistic landlords who attempt to raise rents for an incoming tenant willing to pay it. While there are always some bad apples, those cases are few and  far between, and you will get some argument from first-time homeowners who, without availing themselves of this highly regulated path to homeownership, would not be able to live in a property located in a city that is short of unoccupied units and, as it now stands, will have difficulty moving in during the school year.

While there has been a steady erosion of property owner rights, you can rely on Bornstein Law for proper counsel in achieving your real estate goals.

Tenant advocates are in a celebratory mood after Proposition F sailed to victory in Tuesday’s special election. In an only-in-San-Francisco moment, 56 percent of the voters passed the measure, which guarantees free legal representation to tenants facing an eviction, regardless of the underlying cause for the eviction.

Dubbed the “No Eviction Without Representation Act,” the measure also makes no distinction from poor tenants or the well-to-do – counsel is afforded to tenants of all income levels, including the wealthy, without means testing to determine if the person headed for eviction has a genuine need for free legal help. The city controller estimates this ambitious initiative will cost between $4.2 million and $5.6 million annually.

Bornstein Law joined the San Francisco Apartment Association and other industry partners in opposing the measure, but the people have spoken. With Proposition F the law of the land, we won’t dwell on the colorful storyline that led up to the law being minted, but instead, focus on what this means for rental property owners in the wake of its passage.

Rest assured, the newly appointed tenant attorney will make every effort to delay the unlawful detainer by using tactics and wedging obstacles that are beyond the sophistication of tenants who ordinarily would fend for themselves if not for the free legal aid.

Tenant attorneys are inventive

In an earlier post on California’s implied warranty of habitability, we noted that it is not uncommon for non-paying tenants to claim that the rental unit is unfit or unsafe for humans to occupy, a favorite gambit tenant attorneys use to drag on an unlawful detainer action. This affirmative defense is rarely successful, but clever smoke and mirrors are used to delay the inevitable eviction.

Other stalling tactics include any number of frivolous pre-trial motions, such as a “motion to quash service,” motion to strike, allegations of discrimination, and still more demurrers designed to put a monkey wrench into the court case and ratchet up the legal costs of owners, who have no legal entitlement to free legal counsel but are forced to pay attorneys fees to defend against assertions that oftentimes go unsupported by any evidence.

Don’t kick the can down the road

From our hard-won experience, many rental property owners are conflict avoiders and would rather kick the can down the road in hopes that a failed relationship will resolve itself on its own. We have always warned these wishful thinkers that an unlawful detainer action can take some time. Translation: if swift and proactive action is not taken at the outset of the dispute, the landlord can lose months of rent by waiting for the unlawful action to play out.

The message of addressing a problem early on is one we’ve been parroting to rental property owners for years, but now must be amplified on the heels of Proposition F because, rest assured, the newly appointed tenant attorney will make every effort to delay the unlawful detainer by using tactics and wedging obstacles that are beyond the sophistication of tenants who ordinarily would fend for themselves if not for the free legal aid.

Our biased or not-so-biased conclusion

When Proposition F first appeared on our radar, we debunked its logic in the blogosphere, on social media, and in thousands of emails.

If we didn’t steadily rail against it, you might think we are opportunistic by saying the measure calls for aggressive representation and a counter-narrative by a law firm dedicated to protecting the rights of rental property owners and standing up to tenant attorneys.

We are open for business.

 

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

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

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

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

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

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

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

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

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

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

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