New Landlord-Tenant Laws for 2002, 2003, 2004 & 2005:
This is dedicated
to learning about rent control and the new laws that have been enacted that
affect landlords and Tenants. Because Rent control has become such a hot button
issue that changes almost yearly I have placed the entire issue of rent control
in it's own section. While this page will certainly give you an overview of the
Rent Control issues, it isn't intended to deal with the issue in detail. For an
in depth discussion of Rent Control Click on
"Rent Control Laws." Once
you go there you will learn more about rent control than you ever cared to know.
Although if you live in a rent control area, this information will help you
through the mind field. You should be aware that Glendale has enacted a rent
control law as of January 1, 2005. So if you live in that area, be sure and
check it out before you make a mistake.
General Rent Control Issues:
Rent Control is such an
unpopular law, that you could make the analogy that it is on life support. As
such each year the City Council tries to tweak, adjust and change the rules to
keep the damn thing alive. While people who support the concept would disagree,
it is basically a socialist idea that forces one segment of society to use their
money and property to support another segment of society. The two concepts
really have nothing to do with the other, it is a remedy in search of a harm
that needs to be remedied. What if instead of housing, we were requiring car
dealers to sell expensive cars to people who basically couldn't afford to buy
the cars to begin with. Would we require a Cadillac dealer to sell a high end
car for only $1,500.00 because that was all the buyer wanted to spend or could
afford? I don't think so. Yet this is in effect what rent control does.
Since it
is such an unnatural thing for a free society and marketplace to do, it requires
that government use it's coercive ability to make unpopular laws that force
landlords to support a government's socialist ideas. Since tenants outnumber
landlords, it is fairly easy to get socialist leaning politicians to pass the
laws. Socialist ideas are basically dead, except in some of our largest cities
where bureaucrats are still trying to prop ideas from the 60's that are not
practical. Which is our segue into the new laws. Each year the bureaucrats must
pass more and more laws in an effort to correct the problems.
If they
were really committed to their ideas, they would buy the units with public money
and then they would be free to rent them for any amount that they wants to. They
also know that it would cost billions of dollars to do this and they would
probably be voted out of office. So, instead of spending their own money, they
coerce others to spend theirs. While this may sound like an
"involuntary taking of property" the courts have held otherwise. But
that is for another day.
.
Exceptions to the Rent Control Ordinances?:
The issue of Rent Control has become a political football, and numerous laws
have been passed carving out exception after exception. The original intent of
the law was to encourage new construction of housing units in the City of Los
Angeles. The City Council felt this was necessary because the costs of renting
one of the few apartments that were available were, for the time, astronomical.
They sold the idea to landlords by telling them that, even if you lived in the
City of Los Angeles, not every building was subject to the Rent Control
Ordinance. They created an exemption for any structure or building constructed "after" October 1978. This was supposedly to encourage landlords to
build additional housing units.
Interestingly, there are other exemptions, such as hotels, motels, college
campus dormitories and, believe it or not, hospitals. There are even special
exemptions for hotels that are for transients. If they can define you are a
guest instead of a tenant, you are not covered. Also single family dwellings
remain exempt, but a duplex or triplex would not be exempt. Even if they were
built after 1978, because evidently the city amended the law and removed these
exemptions. The landlords felt lied to because the City didn't keep it's word
and why didn't they keep their word? Because the socialist concept didn't work.
Which is why they still have a housing shortage, and virtually no new
construction of rental units. In a nutshell, that is how we came to be where we
are today.
Are There Other Problems Caused By Rent Control?:
Ever wonder why there are so many slumlords in the
City of Los Angeles? Well it doesn't take a genius to figure out that if rents
are capped at an artificially low amount, coupled with no way of passing on your
costs, the quality of the available housing is going to suffer. To make matters
worse the City has passed a moratorium on Landlords removing their units from
the rental pool for major renovations. So what happens is that landlords that
have substandard building are required to not remove the tenants, while repairs
are made, or pay for the tenants temporary apartment, while the repairs and
renovations are being made. And when the repairs are complete, the tenants move
back in and good luck in getting the rents raised to cover your costs.
Without
going off on a tangent, part of the problem with low-cost housing is connected
to the illegal immigrant problem. There are people who feel that the City of Los
Angeles is forcing landlords to subsidize the housing of illegal aliens who come
to Los Angeles to work. Obviously there are two sides to this issue and I really
don't want to go off into that swamp in an effort to explain both sides of the
issue.
For the unwary landlord or tenant this whole area is a minefield. You can
accidentally violate so many of these provisions, that it isn't funny. In my
opinion it does little to alleviate the housing shortage. If anything it makes
it worse. If any of these items concern you, I would suggest that you
contact the Rent Stabilization Board to find out the current status of this
section of Law. Preferably before you take some action that could get you in hot
water. If you think this is the worst of it, just wait until we deal with the
R.E.A.P. accounts where the City intercepts the rent payments and places them in
an escrow account.
Couldn't You Just Opt Out?:
As I am sure you have figured out, rent control was never
designed to be opted out of, if you were a landlord. In fact they have passed
new laws that are basically aimed at preventing landlords from removing units
from the housing market. It also authorizes those cities that have rent control
to be able to enforce severe and Draconian penalties against landlords who serve
Eviction Notices for the purposes of removing them from the market and then
later on returning them to the rental housing market.
The new
law requires that any unit that was removed from the rental housing market by
Eviction Notices, must be returned to the rental housing market at the same
level that was in effect when the notice of eviction was given. This applies for
a five year period. It also allows for any legitimate increases that would have
been permitted under the local rent control statute. Although if you removed the
unit, in what they would consider bad faith, I wouldn't expect to get a break by
being able to raise your rents. In fact. if you didn't know that the eviction
was not permitted, rescinding the notice won't save your hide.
Under
the new law, the five year period is ascertained by using the following
criteria. In particular, it provides that the restriction apply for which ever
of the following time periods is longer:
(1) Five years after the Eviction Notice is served, a subsequent rescission of
the Eviction Notice doesn't save you either;
(2) Five years after the units were withdrawn pursuant to the Eviction Notices.
The next
provision will really upset most landlords: If the units in question that were
withdrawn are once again offered for rental within two years of the date
the units were withdrawn, then the landlord is liable to the former tenants for
actual and punitive damages. Independent of that provision, the City has
its own cause of action against the landlord for withdrawing the unit. The City
may sue for exemplary damages for the displacements of the tenants.
In
addition to all of the above, the evicted tenants also have the right of
First Refusal, provided the Tenant advised the Landlord in writing within 30
days of their eviction. The local ordinance may provide that the "Right of
First Refusal" shall be in effect for up to "ten years" from
the date of the unit is withdrawn from the rental housing market according to
the original eviction notice. It also provides for punitive damages if the
Landlord refuses to comply.
If a
landlord withdraws their units from the residential rental housing market,
demolishes the old units and builds new units, the new units are subject to
rental restrictions for five years after the date the original units were
withdrawn, based entirely on the so-called standards of "Fair and
Reasonable Return". While there are exceptions to this rule, it is
obvious to me that these types of laws, while well meaning, will cause many
landlords to withdraw their units and either convert them to condos, or
something else.
This new
law only applies to new tenancies created after December 31, 2002. An exception
is also made if a lawful tenancy was made before that date, and if the
tenancy was the result of the unit having been lawfully withdrawn from the
Residential Rental Housing Market. But you can bet that most of the landlords
that are affected by this rule, will have an uphill battle proving that they
were in compliance. A final consideration to remember is that these rules
only apply where the cities have enacted a Rental Control Board.
Notice of Increases to Prevent Gouging:
In the State of California, landlords are permitted to raise
your rent by giving you a 30-day notice. As of January 1, 2001,
Civil Code Section §827 requires landlords to give a 60 day notice if they
intend to raise the rent more than 10% in one year. This law affects only month
to month leases, but not leases for a year or more. Be advised that the law will
evaporate in the year 2006 unless extended by the legislature and signed by the
Governor. As of this writing, no one knows what the Governor will do.
In order
to illustrate how this works, lets assume that this time last year your rent was
$1,000.00 per month. In August the landlord raised your rent by $50.00, if he
were to raise the rent another $50.00 within the remainder of this year, the
landlord would have to give you 60 days notice.
In
addition, the new law also requires that the landlord increase the notice by an
additional 5 days if he mails the notice. Therefore if they mailed you a
30-day notice, it is not effective until 35 days later and a 60-day notice
is effective 65 days later.
This is
not intended to cover each and every aspect of rent control ordinances. In order
to ascertain if your situation is covered, you should have an experienced
attorney review your particular situation. The law is very complex and you
should not rely solely on the information you find on a web site.
The New Laws:
If you want to see what laws the
hippies in the Legislature passed during the last three years, you can click on
one of the following links to review each years work:
New Laws for 2002:
New Laws for 2003:
New Laws for 2004:
New Laws for 2005:
Back to Top
| 
THE LAW
OFFICES
OF
