Sacramento Report

The Governor’s Eleventh Hour Legislation

by Debra Carlton

As the recall election loomed on the horizon, Governor Davis made a last minute sprint on signing legislation. Described below are just a few of the bills signed by Davis that will have an impact on the rental housing industry.

AB 196 (D-Leno) Discrimination.
CAA Position: Support.
This bill prohibits discrimination in housing and employment based upon an individual’s gender. It allows employers to require employees to comply with reasonable workplace appearance, grooming and dress standards, provided that employees are allowed to appear or dress consistently with their gender identity.

AB 276 (D-Koretz) Labor Code Violations Fines.
CAA Position: Neutral.
AB 276 proposes to increase the maximum potential $1,000 fine to $5,000 for violations of the Labor Code by any railroad corporation; as to all other employers, $50 penalties are increased to $100 and $100 penalties to $200 for each Labor Code violation.

AB 309 (D-Chu) Contracts: Foreign Languages
CAA Position: Oppose.
Existing law requires a business or trade person who negotiates a contract in Spanish to provide a Spanish-language copy of the agreement, prior to execution, to the other party. This bill would extend this requirement to apply to the following languages: Chinese, Tagalog, Vietnamese and Korean. This bill is joined with SB 146 (Escutia), which defines contract terms.

AB 647 (D-Nunez) Tenancy: Code Violations: Penalties.
CAA Position: Neutral.
This law takes effect January 1, 2004. AB 647, as signed by the Governor, increases penalties from a maximum of $1,000 to a maximum of $5,000 against slumlords who increase or demand rent from tenants for property that is substandard.

At the demand of CAA, a significant condition was placed in AB 647. In order for the penalties to apply to a rental-property owner, all of the following conditions must exist prior to an owner’s increase or demand for rent from a tenant:

The dwelling must be declared untenantable or substandard, and the conditions must exist to an extent that they endanger the life, limb, health, property, safety, or welfare of the public or the occupants of the dwelling;
A public officer or employee who is responsible for the enforcement of any housing law, after inspecting the premises, must have notified the landlord or the landlord’s agent in writing of his or her obligations to abate the nuisance or repair the substandard condition;
The conditions must have existed and gone unabated 35 days beyond the date of service of the notice from the public officer, and the delay must have been without good cause (existing law gives owners 60 days to abate substandard conditions); and
The conditions must not have been caused by an act or omission of the tenant or lessee.

These conditions are significant in that they protect an innocent owner by precluding a tenant from using this statute when habitability defects in the property are “discovered” or “noticed” by the tenant during the course of an unlawful detainer action. This is a common tactic used by unethical tenants who wish to delay their eviction.

AB 1639 (D-Firebaugh) Criminal Activity: Rental Housing.
CAA Position: Support.
This bill intends to help prosecuting agencies and the courts fight gambling, prostitution, or the use or sale of narcotics by providing that the filing of an appeal by a defendant does not temporarily stop the enforcement of a judgment unless a trial judge decides otherwise.

ACR 53 (D-Lowenthal) Fair Housing Act of 1963.
CAA Position: Support.
This Assembly Concurrent Resolution commemorates the 40th anniversary of the passage of the Fair Housing Act of 1963. The bill reviews the history of the legislative process. It reminds Californians that in 1963, with the support and encouragement of Governor Pat Brown and former Governor Earl Warren, that Assembly Member Byron Rumford introduced AB 1240 to give all Californians the equal opportunity to purchase or rent housing without regard to their race.

SB 90 (D-Torlakson) Security Deposits.
CAA Position: Neutral if amended.
As initially introduced, SB 90 required rental property owners to provide tenants with a receipt for any labor or materials paid for by the owner and deducted from the security deposit. The owner was required to provide this information, and any remaining security deposit, within 16 days from the time the tenant vacated the unit instead of within the currently required 21 days. It became clear in early meetings with legislators that Senator Torlakson would have the votes to pass SB 90, largely because of the negative atmosphere created by extensive press given two cases brought against rental property owners by the Attorney General. These cases gave tenants $1.5 million in refunds as a result of the owners’ unethical use of tenants’ security deposits. The owners were also required to pay nearly $500,000 in penalties and administrative fees. Tenants also brought separate class-action lawsuits. At the same time, CAA members reported that courts had restricted the ability of owners to charge for repairs and had restricted their ability to estimate within the 21-day period.

As directed by CAA’s State Government Committee and a task force of CAA members, CAA staff went to Senator Torlakson with a list of amendments. Their hope was to mitigate the negative impacts of the court cases that had restricted the ability of owners to operate under the security deposit law. Each of the following requested amendments has been added to the bill:

Back to 21 Days. The bill has been amended to reflect the current legally required 21-day provision for the itemized statement to be provided by the owner to the tenant. The 16-day language has been removed.
Receipts or Vendor Documents Can Be Used. With some exceptions, as outlined below, the owner must provide the tenant with the following information no later than 21 calendar days from the time that the tenant vacates the premises (the owner also has the option to provide receipts and vendor information at an earlier time—during the walk-through, for example—if the owner knows what those costs will be):
• An itemized statement and the remaining portion of the security deposit, if any remains;
• Copies of receipts, bills, invoices, or a vendor price list or other vendor document that reasonably documents the cost of the items purchased by the owner and used in the repair or cleaning of the unit.
The Owner Can Charge for Self-Performance Work. The owner or the owner’s employees may perform the work and charge the tenant for that work. The owner can generate his/her own bill or receipt and document the work performed and the hourly rate charged.
Estimates are Allowed. If the repair cannot be completed within 21 days or if the owner does not have the receipts within the 21-day time period, the owner may supply the tenant with an estimate for work planned. If a contractor or vendor has not made the receipts available, the owner can simply list on the itemized statement the name, address, and telephone number of the contractor or vendor.
Once Work is Complete. If an owner has provided an estimate to the tenant, the owner must provide the documentation for the completed work within 14 days after it is completed.
Opt-Out Provisions. The owner does not have to provide receipts, invoices, bills, or a vendor price list in the following instances:
• The repair and cleaning together do not exceed $125.
• The tenant waives his or her rights to receive the receipts, invoices, bills, or vendor price list. (The tenant must sign the waiver after a notice to terminate a tenancy has been given.)
Cap on Tenant’s Request for Information. A tenant has 14 days from the time he/she receives the itemized statement to make a request for any documentation concerning the security deposit. The owner must then provide that information to the tenant within 14 days from the time he/she receives the tenant’s request.

SB 515 (D-Kuehl) Anti-SLAPP Motions.
CAA Position: Oppose.
Existing law provides that a cause of action against a person arising from the person’s right of petition or free speech under theUnitedStatesorCalifornia constitution in connection with a public issue, is subject to a special motion to strike, unless the court, after considering the pleadings and supporting and opposing affidavits, determines that there is a probability that the plaintiff will prevail on the claim. The lawsuits that are subject to the special motion to strike are known as “SLAPP” suits (Strategic Lawsuits Against Public Participation). California’s anti-SLAPP statute (Code of Civil Procedure Section 425.16) was passed a decade ago to protect against allegedly frivolous lawsuits brought by industries against public protestors in order to dilute the financial resources of public protestors by requiring them to expend monies to defend their First Amendment rights in court. Business defendants have used, with frequent success, the anti-SLAPP law to defeat nuisance lawsuits. This bill places restrictions on the use of the anti-SLAPP statute in two instances. First, the law may not be used against certain plaintiffs bringing actions in the public interest. Second, the law may not be used by defendants who are businesses that sell or lease goods or services, including insurance securities and financial instruments, when the lawsuit relates to commercial speech to actual or potential customers.

SB 538 (D-Torlakson) Housing: Tenants: Notices.
CAA Position: Neutral.
Existing law requires a property owner to notify affected tenants prior to the anticipated date of the termination of a subsidy contract, rental restrictions, or prepayment of the loan on an assisted housing development.Thisbillextendsthenotice requirements to prospective tenants.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. DebraCarlton is the Vice President of Policy and Research for the California Apartment Association and is CAA’s chief lobbyist.