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2007 State Laws
For property owners, the year 2006 was relatively quiet on the state
legislative front. While certain pro-tenant lawmakers actively sought to
enhance tenants’ rights, Governor Schwarzenegger vetoed many of these bills,
and responsible legislatures voted against numerous others, thereby preserving
the ability of California apartment owners to control their property. Thus,
while on the local front landlords have been hit hard, not a lot came out of
Sacramento this year.
Three pieces of legislation that did get signed into law will significantly
impact our industry. The first piece of legislation is the 60-day eviction
notice requirement for certain tenants. This law, known as Assembly Bill
(“AB”) 1169, came from legislation first enacted in 2003 that expired on
December 31, 2005 without being renewed. The law was initially implemented
because several large apartment operators in the North Bay and the Sacramento
areas generated a wave of negative publicity when they evicted large numbers
of tenants. As a result, the State Legislature stepped in and passed a law
requiring that tenants who have resided in their unit for more than one year
be allowed sixty, as opposed to thirty, days to vacate their apartment when
evicted through no fault of their own (a “no fault” eviction).
A “no fault” eviction means that the tenant’s lease is terminated not
because the tenant breached the lease but rather because the lease term has
expired and the landlord does not wish to renew it. In places without rent
control, the landlord is free to terminate the tenancy upon lease expiration
provided that the owner is not discriminating against the tenant for unlawful
reasons such as the tenant’s race, religion, ethnicity, gender, sexual
orientation, or national origin. However, in San Francisco, a no fault
eviction must also be expressly permitted by the rent law; as such, no fault
evictions are generally limited to owner/relative move-ins, removal of illegal
units, substantial rehabilitations, sale of condominium units, and, for a
temporary displacement of tenants with the right to return, lead abatement or
capital improvement work to the unit.
“Fault” evictions are governed by a separate statute that requires the
tenant to vacate after three days if the breach is not cured, or, in some
instances, without any opportunity to cure. In California, fault evictions
include nonpayment of rent, breach of a lease covenant, commission of waste
and/or nuisance, or using the dwelling for an illegal purpose. San Francisco’s
rent law imposes additional requirements on owners doing fault evictions, but
passage of AB 1169 will have no impact in this area.
So effective January 1, 2007, landlords serving notice on tenants for no
fault evictions must comply with AB 1169. Like its predecessor, this bill
expires in three years unless renewed. It also does not apply to tenancies
that have existed for less than one year when the eviction notice is served;
in those instances, the traditional thirty day notice is still available.
However, AB 1169 goes further and states that the sixty-day requirement
shall not apply if any tenant or resident has resided in the unit for less
than one year. The legal staff at the California Apartment Association (“CAA”)
interprets this clause to mean that the one-year “clock” re-starts if a new
tenant/subtenant/roommate is added to the lease agreement. Such an
interpretation may apply outside of the City, but given the local rent law’s
liberal stance on what is permissible subletting regardless of additions to
the rental agreement, San Francisco owners are advised to consider giving
sixty days’ notice for tenancies longer than one year even if there have been
subsequent occupancies that are less than twelve months in duration. The other
exception contained in this bill is an exemption for single family homes or
condominiums that are being sold to natural persons for owner-occupancy. If
notice is given less than 120 days after escrow has been opened, the historic
thirty-day notice is allowed. For structures in San Francisco that are
governed by the rent law, this exemption has no application, as sellers cannot
evict their tenants for the purpose of emptying the unit for sale. Indeed, AB
1169 ends with the following warning: “This section may not be construed to
affect the authority of a public entity that otherwise exists to regulate or
monitor the basis for eviction.”
CAA understandably opposed AR 1169 because it represents a further erosion
of landlords’ property rights. Yet local practitioners generally found the
additional notice period to be inconsequential or even helpful in San
Francisco’s extremely restrictive rent and eviction control framework. For
example, because the City’s rent laws impose major barriers on owners
terminating tenancies for no fault, coupled with the fact that many of these
no fault evictions are contested and eventually wind up before pro-tenant
judges and juries, allowing tenants more time to vacate may be seen as a plus
for owners who are otherwise vilified. Indeed, a jury may be more inclined to
award the owner possession if the tenant was given sixty or more days to
vacate rather than just one month’s notice. As the Governor stated when he
signed this bill, “[b]eing asked to move involuntarily is never easy, and
moving is especially difficult for the elderly and persons with disabilities.”
Finally, the City’s Rent Ordinance contains several hybrids of fault and no
fault just cause provisions for eviction that may be impacted by AB 1169. For
example, many practitioners believe that the just cause grounds for
terminating a tenancy because the tenant denied lawful access into the unit,
paid rent habitually late, paid rent with checks that frequently bounced, or
refused to sign a renewal lease fall outside of the three-day notice statute
even though these types of evictions are predicated on the tenant’s fault. As
such, the hybrid just causes usually invoke the longer thirty-day notice
period, which will be extended to sixty days in light of AB 1169 for tenancies
longer than one year.
Two other pieces of noteworthy bills were also signed into law.
AB 2210 clarifies a landlord’s right to remove vehicles illegally parked on
residential property. It allows an owner or another tenant to, in certain
circumstances, have a vehicle towed that is parked in an unauthorized space,
and further permits the towing company to redact the name of the party
requesting the tow from the towing authorization form. This redaction may
reduce retaliation against a resident or property manager who ordered the tow.
AB 2210 also states that the persons authorizing the tow can do so without
being present at the tow site as long as they are at the property; however,
this requirement does not apply to buildings consisting of less than 16
residential units with no resident manager provided that written authorization
has been given to the tow company (which can be faxed or e-mailed).
San Francisco landlords should be very careful about towing vehicles. If a
tenant or the tenant’s guest is parked in an unauthorized space, the owner
should serve proper notice under the rent law. The temptation to tow may
result in an expensive lawsuit against the owner claiming that the tenant was
wrongfully displaced from a parking privilege without the benefit of due
process under the Rent Ordinance. Moreover, as the local law was recently
amended to prohibit landlords from severing parking privileges without a
permitted just cause, a tenant whose car is towed may have a substantial claim
for wrongful eviction damages. Consequently, if the car belongs to a tenant or
a tenant’s guest in the building, the owner should consider the more time
consuming eviction process before calling the tow company.
Finally, AR 2865 requires owners and managers to notify tenants operating a
day care facility that they are applying pesticides at the property. This
legislation compliments existing law that requires owners who contract for
pest control to provide a notice of the pest control company’s practices at
the property to all new tenants. The new law represents good public policy and
will only protect landlords from liability should someone claim injury from
pesticides. It also serves as a reminder to landlords that they should be
posting Proposition 65 warning signs in common areas and distributing
Proposition 65 pamphlets with their new lease agreements.
Landlords should thank the Governor for bills that he vetoed, including one
that would have allowed tenants to post political signs and banners in their
rental units and another that would have eased restrictions on sex offenders
to move into rental housing. Legislatures on both sides of the political aisle
have also been receptive to the industry’s concerns, as voiced by CAA
lobbyists working tirelessly at the Capitol. In 2006, CAA continued to fight
ongoing assaults by pro-tenant elected officials to curb the use of the Ellis
Act and to limit the application of Costa-Hawkins. To this end, it is
imperative that members of the local chapters, such as SFAA, continue their
financial support of CAA by making, at a minimum, the suggested contributions
to CAA set forth on the annual membership dues statement. Absent this funding,
neither the Governor nor the members of the Assembly and Senate who are
respectful of the rights of property owners can be apprised of the adverse
effects created by irresponsible legislation.
DW
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