From the President
by Heidi Poppe
Editors Note: In San Francisco, Section 8 tenancies are protected under the Rent Ordinance. “Just Cause” must be utilized when terminating a Section 8 tenancy.
At a time when many Section 8 housing vouchers go unused, because voucher holders are unable to find participating housing, the Fourth District Court of Appeal has issued a ruling (in Wasatch Property Management v. Degrate) that can only further discourage owners of residential rental property from participating in the Section 8 program. On November 19, 2002, the court ruled that 90 days’ notice must be provided prior to the termination (for any reason) of a Section 8 tenancy. The court also essentially reinstated the “endless lease” provisions that Housing and Urban Development (HUD) had done away with in 1996. On December 24, 2002, Wasatch appealed this case to the California Supreme Court. CAA and a number of housing authorities have submitted letters in support of the petition. CAA will also file a request for de-publication of the opinion, so that it can no longer be cited as precedent.
Statutory Background
The Wasatch case arose from legislation passed in 1999. SB 1098 (Burton) was introduced “to remove the incentive in rent control jurisdictions to cancel rental assistance contracts…in order to vacate a rent-controlled unit.” SB 1098 amended the Costa-Hawkins Rental Housing Act by adding provisions designed (1) to assist tenants who are required to move, because they cannot afford the unit unless the owner accepts their voucher and (2) to discourage removal of rent-controlled units from the Section 8 program.
First, SB 1098 limited the ability of owners in rent control jurisdictions to increase rent to market rates for three years after termination of the contract with the housing authority.
Second, SB 1098 provided that,
“Where an owner terminates or fails to renew a contract or recorded agreement with a governmental agency that provides for rent limitations to a qualified tenant, the tenant or tenants who were the beneficiaries of the contract or recorded agreement shall be given at least 90 days’ written notice of the effective date of termination and shall not be obligated to pay more than the tenant’s portion of the rent, as calculated under the contract or recorded agreement to be terminated, for 90 days following receipt of the notice of termination of (sic) nonrenewal of the contract.”
In other words, when the owner takes a unit out of the Section 8 program, the tenant must be given 90 days’ notice and is only required to pay his or her share of the rent.
Factual Background
In Wasatch, the lease between the owner and the Section 8 voucher-holding tenant (Degrate) provided for an initial 6-month lease period, which thereafter changed to a month-to-month rental agreement. The tenant lived in San Diego, a city that did not have rent control. Under the state law in effect at that time, either party with 30 days’ notice could terminate a month-to-month rental agreement without cause. (As of January 1, 2003, owners are required to provide 60-days notice of termination of a periodic tenancy that has lasted more than one year.) Several months after the> rental agreement became month-to-month, Wasatch provided a 30-Day Notice of Termination (without cause) of the rental agreement to Degrate.
Court’s Holdings
Notice of good cause is required for termination of a Section 8 tenant on a month-to-month tenancy. The court essentially reinstated HUD’s endless lease requirement by holding that a month-to-month tenancy constitutes an “extension term” of the initial lease, which cannot be terminated except on notice of good cause.
A notice of 90-days is required for termination of a Section 8 tenancy for any reason. The court held that the Civil Code Section requires 90 days’ notice not only when an “owner terminates or fails to renew a contract or recorded agreement with a governmental agency,” but also when the owner terminates the rental agreement with the tenant.
The 90-day notice requirement applies statewide; it is not limited to rent control jurisdictions. The court disagreed with CAA’s amicus brief arguments that this provision was intended to apply only in rent control jurisdictions, as evidenced by its placement in the Chapter entitled “Residential Rent Control,” and the statement in the bill that it was designed “to remove the incentive in rent control jurisdictions to cancel rental assistance contracts for low-income elderly, handicapped and family tenants in order to vacate a rent-controlled unit.”
These three rulings can only further deplete the supply of quality housing available to Section 8 tenants, discouraging participation by owners who, due to the current economy and the elimination of the “endless lease” provisions by HUD, may otherwise have been very interested in offering their units to tenants with vouchers.
For more information regarding CAA, please go to caanet.org. The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. Heidi Poppe serves as the Research Counsel for the California Apartment Association. Copyright © 2003 San Francisco Apartment Magazine