Court Talk
by Clifford E. Fried
Yoann Bohbot v. Santa Monica Rent Control Board
The rent laws
of Oakland, San Francisco and Santa Monica provide landlords with
plenty of litigation fodder. In Yoann Bohbot v. Santa Monica Rent
Control Board, the court was asked to review Santa Monica's law
relating to owner-occupancy evictions in condominium units.
At issue in Bohbot was whether the Santa Monica Rent Board had the authority to promulgate a regulation creating a conclusive presumption that a second owner-occupancy eviction attempted within four years of a dismissal of an earlier eviction is brought in bad faith.
As early as 1976, the California Supreme Court held that while it is permissible for cities to create additional substantive defenses to eviction actions, any additional procedural requirements imposed on landlords would be struck down. Our state's unlawful detainer statutes were intended to occupy all procedural aspects of unlawful detainer actions. A local rent law that conflicts with California's unlawful detainer statutes is invalid.
Examples of procedural defenses already struck down include a Berkeley law that created a presumption of retaliatory eviction (pre-empted by the California Evidence Code) and a San Francisco law that allowed the San Francisco Rent Board to set initial rents on vacant units (pre-empted by the Costa-Hawkins Rental Housing Act).
On the other hand, a local rent law that merely creates a substantive defense to an unlawful detainer action is proper. Examples of substantive defenses are those relating to limitations on rental rates and grounds for eviction.
The Bohbot court was persuaded that the Santa Monica regulation created an impermissible conclusive presumption of bad faith. Since state procedures governing unlawful detainer actions permit voluntary dismissals without prejudice, the Santa Monica regulation conflicted with state law and was invalid.
Meanwhile, the Rental Housing Association of Northern Alameda County
has mounted an attack on Oakland's Just Cause for Eviction Ordinance
in court. Oakland's law requires landlords, in certain evictions,
to serve a written warning notice before serving an eviction notice.
Based on the ruling in Bohbot, Oakland's warning notices are an
improper procedural barrier to an owner's right to possession.
There are numerous provisions in San Francisco's Rent Ordinance
that are procedural in nature. For example, the requirement that
an eviction notice must be served at the Rent Board is procedural.
A judge may not dismiss an eviction lawsuit for failure to serve
the Rent Board. When the occasion arises, landlords should argue
that procedural requirements are preempted and invalid.
250 LLC
v. Photopoint Corp
Security deposits are frequently discussed in this publication
because if you are a landlord, you will have to deal with deposit
issues. This, of course, assumes all landlords require security
deposits. If they don't, they should.
250 LLC v. Photopoint Corp. involves a commercial lease and security deposit dispute. While the statute regulating commercial deposits is different from the statute dealing with residential property, the ruling in this case will have an impact in a residential context.
A commercial security deposit, like a residential deposit, may be applied to remedy tenant defaults in the payment of rent, to repair damages and to clean the premises upon termination of the tenancy. In Photopoint Corp., the court defined the meaning of “rent” in the security deposit statute.
The tenant argued that rent means unpaid rent that has accrued at the time the deposit must be returned (within 14 days for commercial deposits and within 21 days for residential deposits). As a result of the tenant vacating before the expiration of the lease, the landlord claimed he was entitled to not only past-due rent but also future rent or rent owed for the remainder of the lease.
The court sided with the tenant and ruled that the words “defaults in the payment of rent” in the deposit law refer only to unpaid rent that has accrued at the time the deposit is required to be returned and not to future rent damages.
In the residential context, landlords certainly would like to deduct any and all rent due as a result of a tenant breaching the lease. The last thing a landlord wants to do is return a security deposit when a tenant vacates the premises before the end of the lease term and future rent is owed.
Is the holding in Photopoint Corp. applicable to a residential tenancy? Tenants will no doubt argue that since the language of the residential deposit statute is the same as the commercial statute (and because residential tenants need more protection than commercial tenants), the result should be the same with a residential deposit.
Claiming a need to protect tenants from unscrupulous landlords, state lawmakers have gradually taken away the benefits of security deposits. A security deposit isn't what it used to be. Photopoint Corp. and a recent string of court decisions interpreting the deposit laws are further eroding the benefits of security deposits.
Wasatch Property Management v. Degrate
California Civil Code Sec. 1954.535 states that when an owner terminates
or fails to renew a Section 8 contract with the local housing authority,
the tenant must be given at least 90 days' written notice of the
effective date of the termination. When this law was enacted in
1999, questions arose as to its meaning and application.
One important question was, when terminating a Section 8 tenancy does a landlord serve a 60-day, 90-day or some other notice of termination of tenancy? The law addresses the termination of the contract with the housing authority, not the tenancy of the tenant. It did not appear from the language of the law that 90-days' notice was required to terminate the tenancy itself.
Another issue was whether or not the law applied in cities without rent control. Section 1954.535 was placed in a chapter of the California Civil Code under the heading “Residential Rent Control.” Why did the Legislature place it there unless the law only applied in cities with rent control?
Earlier this year, the California Supreme Court answered these questions in the case of Wasatch Property Management v. Degrate by holding that Section 1954.535 applies whether or not the property is subject to a local rent-control ordinance, and that landlords must comply with the 90-day notice provision of the law in order to terminate a tenancy agreement with a Section 8 tenant.
The Supreme Court pointed out that there is nothing in the language of the law that limits its application to rent-control jurisdictions. The placement of the law in the Civil Code is of no consequence, and in fact there was no better location for it than where it was placed.
The court acknowledged that the landlord's contract with the housing authority is separate from the lease contract between the landlord and the Section 8 tenant. However, it ruled that terminating one contract necessarily terminates the other. When a landlord terminates a Section 8 tenancy, he indirectly terminates the housing authority contract. To do this, a 90-day notice is required.
So now we know. All landlords must give 90-day notices of termination of tenancy to Section 8 tenants. But Wasatch involved a tenancy that was terminated without just cause. What notice must a landlord serve if the tenancy is terminated for just cause? If the tenant commits a nuisance at the premises or breaches the lease by not paying rent, California law permits the service of a three-day notice. The answer will have to wait for the California Supreme Court to address the issue on another day.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or the San Francisco Apartment Magazine. The information within this article is general in nature. Consult an attorney for any specific problem. Clifford E. Fried is with Wiegel & Fried, LLP, 415-552-8230. Copyright © 2005 by Wiegel & Fried, LLP. All rights reserved.