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Ruzicka, Wallace & Coughlin, LLP
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California's Best Landlord-Tenant and Eviction Attorneys
California's Best Landlord-Tenant and Eviction Attorneys

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City of Los Angeles Enacts Tenant Buyout Notification Ordinance

On December 15, 2016, Mayor Eric Garcetti signed a Tenant Buyout Notification Ordinance. The purpose of the ordinance is to regulate and monitor voluntary vacancies of rental units subject to the City of Los Angeles Rent Stabilization Ordinance (RSO) pursuant to Buyout Agreements.

By way of background, the RSO contains both rent controls and eviction controls. The rent control provisions limit the amount of rent that a landlord may charge. The eviction control provisions limit the grounds for eviction. Under the RSO, a landlord is required to have good cause, as defined by the RSO, to terminate the tenancy. The net result is that as long as a tenant timely pays rent and complies with the terms and conditions of his or her tenancy, the tenant is entitled to continue renting the premises for as long as the tenant desires, subject to certain limited exceptions. When an exception applies, such as to allow the landlord, a family member or property manager to reside in the rental unit or to allow the landlord to demolish or permanently remove the rental unit from the market, the landlord is generally required to pay relocation assistance to the tenant. Currently, relocation assistance amounts range from $7,900 to $19,400 per rental unit depending on various factors such as the length of the tenancy (more or less than 3 years), whether any of the tenants are disabled, elderly or children, and household income. Tenants are not entitled to relocation assistance if they are evicted for a breach of a lease or rental agreement.

When tenants voluntarily vacate a rental unit, the landlord is entitled to increase the rent to market rates. This is known as vacancy decontrol. This creates an incentive for landlords to offer “cash for keys” to residents paying artificially low rents under the RSO.

The potential problem is that some tenants may not know their rights under the RSO. So, if the landlord offers a tenant a few thousand dollars to vacate, the tenant may believe that the tenant is getting a good deal when, in fact, the cost of moving and paying higher rent somewhere else may quickly deplete any money received by the tenant.  In such cases, the tenant may have been better off declining the landlord’s buyout offer.

The new ordinance seeks to address this issue by providing the following rules and regulations:

1.  RSO Disclosure Notice. Before making a Buyout Offer (defined below), the landlord is required to provide the tenant(s) with an RSO Disclosure Notice of tenant rights on a form authorized by the rent stabilization board, which must be dated and signed by the landlord and the tenant(s).

2. .Written Buyout Agreement. Every Buyout Agreement (defined below) is required to be written in the primary language of the tenant and state in a minimum of 12-point bold type above the tenant signature line as follows:

“You, (tenant name), may cancel this Buyout Agreement any time up to 30 days after all parties have signed this Agreement without any obligation or penalty.”

Additionally, every Buyout Agreement must be signed and dated by the landlord and tenant, and a copy of the fully executed Buyout Agreement must be given to the tenant.

3.   Cancellation of Buyout Agreement. A tenant has the right to cancel a Buyout Agreement for any reason for up to 30 days after execution by the landlord and the tenant without any financial obligation or penalty. Additionally, whenever an RSO Disclosure Notice and/or Buyout Agreement does not conform to the requirements of this the new law or applicable regulations, the tenant has the right to cancel the Buyout Agreement through the applicable statute of limitations period.

4.  Filing Executed RSO Disclosure Notice and Buyout Agreement. Within 60 days of execution of a Buyout Agreement, the landlord is required to file copies of the Buyout Agreement and RSO Disclosure Notice signed by the tenant and the landlord, with the rent stabilization board.

5.  Affirmative Defense. A violation of this the ordinance may be asserted as an affirmative defense in an unlawful detainer action.

6.   Private Right of Action. Additionally, a tenant may bring a private right of action against a landlord who violates a provision of the ordinance and recover damages and a penalty of $500.

The ordinance defines a “Buyout Offer” as an offer, written or oral, by a landlord to a tenant to pay money or other consideration to vacate an RSO unit. A “Buyout Agreement” is defined as a written agreement where a landlord pays a tenant money or offers other consideration to voluntarily vacate an RSO rental unit.

Further information regarding the Tenant Buyout Notification Ordinance is available from the Los Angeles Housing and Community Investment Department (HCIDLA), website http://hcidla.lacity.org/, or by contacting Ruzicka, Wallace & Coughlin, LLP at (949) 748-3600; website: www.rwclegal.com.

The law firm of Ruzicka, Wallace & Coughlin, LLP represents landlords, property management companies, institutional and private lenders, employers and insurance companies throughout the State of California in real estate, business and employment litigation. The information provided herein is for general interest only and should not be relied upon or construed as legal advice. 

© 2016 Ruzicka, Wallace & Coughlin, LLP.
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Risks Associated with Proceeding with Eviction While Appeal is Pending

When a landlord who has secured a writ of possession evicts a tenant before the appellate rights of the tenant have been exhausted, the landlord assumes the risk it will be subject to a full accounting and restitution if the judgment granting the writ of possession is reversed on appeal. That principal was again highlighted in the recent case of Beach Break Equities v. Martin Lowell (decided December 14, 2016).

This case concerned a single family home that had been leased to a tenant, Lowell, under a five year lease with multiple five-year options. The owner of the property defaulted on the loan and the lender foreclosed.  Beach Break acquired the property at the trustee's sale and then filed an eviction action against Lowell.  The trial court granted Beach Break's motion for summary judgment. While Lowell appealed the judgment, Beach Break obtained a writ and proceeded with the eviction.  After it evicted Lowell, Beach Break sold the property to a third party.

In a major development, the appellate court reversed Beach Break’s victory on summary judgment, and also ordered the trial court to grant Lowell a hearing for potential restitution. However, in later proceedings, the trial court refused to grant Lowell a restitution hearing because Lowell had not sought such relief in his answer or by a separate Cross-Complaint. The trial court then allowed Beach Break to dismiss the action.  The case looked over again; but again Lowell appealed.  The appellate court reversed and held that Lowell was entitled to a restitution hearing, including because the prior appellate court had ordered it.  The court explained that receiving such a hearing is an equitable right that exists independently of whether the party had actually requested restitution in its pleadings.  Moreover, Beach Break was not allowed to avoid the potential of a restitutionary remedy by dismissing the case. In reversing the dismissal, the appellate court noted that it was not holding that Lowell was entitled to restitution, only that he was entitled to a hearing on the issue.  The actual right to restitution following reversal on appeal is left to the trial court's judicial discretion.

For further information, please contact Ruzicka, Wallace & Coughlin, LLP at (949) 748-3600; website: www.rwclegal.com.

The law firm of Ruzicka, Wallace & Coughlin, LLP represents landlords, property management companies, institutional and private lenders, employers and insurance companies throughout the State of California in real estate, business and employment litigation. The information provided herein is for general interest only and should not be relied upon or construed as legal advice.

© 2016 Ruzicka, Wallace & Coughlin, LLP.
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California Supreme Court Clarifies That The Purchaser of Real Property At a Foreclosure Sale Must Wait For The Foreclosure Deed To Be Recorded Before Serving a Notice to Quit

On November 30, 2016, the California Supreme Court ordered published the opinion of the Appellate Division of the Superior Court of San Diego in U.S. Financial, L.P. v. Michael McLitus, which held that title is not perfected for purpose of California’s post-foreclosure eviction statute until the foreclosure deed has been recorded.

Code of Civil Procedure section 1161a permits the purchaser of real property at a foreclosure sale to evict the former owners where: (1) “…the property has been sold in accordance with Section 2924 of the Civil Code, under a power of sale contained in a deed of trust executed by such person, or a person under whom such person claims, and the title under the sale has been duly perfected”, (2) the former owners have been served with a three day notice to quit, and (3) the former owners continue in possession of the property. (Code Civ. Proc., § 1161a, subd (b)(3))

The legal issue decided in this case is whether a foreclosure purchaser must wait for the foreclosure deed (known as a “Trustee’s Deed Upon Sale” or “Trustee’s Deed”) to be recorded before serving a notice to quit.

Various arguments have been advanced as to why the foreclosure purchaser does not need to wait for the foreclosure deed to be recorded before serving a notice to quit. One such argument is that the foreclosure statutes state that “The trustee’s sale shall be … deemed perfect as of 8 a.m. on the actual date of the sale if the trustee’s deed is recorded within 15 calendar days after the sale….” (Civil Code § 2924h) Under this argument, as long as the foreclosure deed is recorded within 15 days of the foreclosure sale, it is proper to serve a three day notice as soon as the foreclosure sale is completed. Another argument is that Code of Civil Procedure 1161a does not specify the order of when title must be perfected and the notice must be served; so, as long as both occur before the filing of an eviction, the requirements of the eviction statute have been met.

This issue is now resolved. The purchaser at a foreclosure sale must wait for the foreclosure deed to be recorded before serving a notice to quit. The language of Civil Code § 2924h stating that title is perfected as of 8 a.m. on the date of the sale if the trustee’s deed is recorded within 15 days of the sale relates to perfection of the sale rather than perfection of title. Title is perfected when the trustee’s deed is recorded. The eviction statute requires both the sale and title to be perfected before service of the notice to quit.

For further information, please contact Ruzicka, Wallace & Coughlin, LLP at (949) 748-3600; website: www.rwclegal.com.

The law firm of Ruzicka, Wallace & Coughlin, LLP represents landlords, property management companies, institutional and private lenders, employers and insurance companies throughout the State of California in real estate, business and employment litigation. The information provided herein is for general interest only and should not be relied upon or construed as legal advice.

© 2016 Ruzicka, Wallace & Coughlin, LLP.
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Ruzicka, Wallace & Coughlin, LLP Extends Its Winning Streak In Jury Trials

This week, the law firm of Ruzicka, Wallace & Coughlin, LLP extended its streak of consecutive jury trial victories to over 20. Partner Richard Sontag, Esq. successfully represented a landlord in a lawsuit filed against a tenant in the Superior Court of California, County of Los Angeles, Michael Antonovich Antelope Valley Courthouse located in Lancaster, California. The tenant was represented by an attorney from BASTA. The jury decided 12 to 0 in favor of the landlord.  
  
For further information, please contact Ruzicka, Wallace & Coughlin, LLP at (949) 748-3600; website: www.rwclegal.com.

The law firm of Ruzicka, Wallace & Coughlin, LLP represents landlords, property management companies, institutional and private lenders, employers and insurance companies throughout the State of California in real estate, business and employment litigation. The information provided herein is for general interest only and should not be relied upon or construed as legal advice.  Past performance is not a guaranty of future results.

© 2016 Ruzicka, Wallace & Coughlin, LLP.

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HUD Issues New Guidelines Regarding Use Of Criminal Records By Housing Providers
On April 4, 2016, the U.S. Department of Housing and Urban Development (HUD) issued guidance on the use of criminal records by housing providers.  Landlords are encouraged to review their rental screening criteria to ensure compliance with the new guidelines.  A copy of the guidelines can be found at the following web address: http://portal.hud.gov/hudportal/documents/huddoc?id=HUD_OGCGuidAppFHAStandCR.pdf.
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California Landlord May Evict a Tenant for Operating an Airbnb Business in Violation of Zoning Laws In Chen v. Kraft (decided January 13, 2016), a landlord filed an unlawful detainer (eviction) action against a tenant who had been subletting a spare room in the rented premises on Airbnb. The premises were subject to the City of Los Angeles Rent Stabilization Ordinance, which requires good cause for eviction. The landlord filed the eviction action on the ground that the tenant was using the premises for an illegal purpose - namely, operation of a bed and breakfast in a residence zoned R-1.. The tenant claimed, among other things, that the prior owner of the property approved use of the premises for an Airbnb business. The trial court granted judgment for the landlord. The tenant appealed. The Los Angeles Superior Court Appellate Department affirmed the judgment in favor of the landlord.  It determined that the tenant was using the premises for an illegal purpose.  The court further held that a 2009 Addendum wherein the landlord's predecessor in interest expressly agreed, in writing, to allow the tenant to engage in Airbnb activities constituted an illegal contract in violation of existing regulations, and was therefore void and unenforceable. (Chen v. Kraft (2016) 243 Cal.App.4th Supp. 13)
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Tenant May Be Evicted Due To Failure to Obtain Renter's Insurance

On October 1, 2015, the Appellate Division of the Superior Court of California held that a tenant may be evicted for failing to obtain renters insurance required by the lease, regardless of whether the breach was material, where the lease provides that “any failure of compliance or performance by Renter shall allow Owner to forfeit this agreement and terminate Renter's right to possession”. (See, Boston, LLC v. Juarez, 2015 WL 5771040)
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The City of Richmond Enacts Rent Control and Just Cause for Eviction Ordinance.  On August 5, 2015, the City of Richmond passed a rent and eviction control ordinance.  (Ordinance No. 21-15 N.S. , Chapter 11.100 et. seq. of the Richmond Municipal Code) The ordinance becomes effective September 4, 2015.  A copy of the ordinance is available from the City of Richmond’s website at the following web address: http://www.ci.richmond.ca.us/ArchiveCenter/ViewFile/Item/6688.  A fact sheet is available here: http://www.ci.richmond.ca.us/DocumentCenter/View/3526.
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Effective January 5, 2015, Two Additional Los Angeles Courthouses Hear Unlawful Detainer Actions Effective January 5, 2015, Los Angeles Superior Court expanded limited jurisdiction unlawful detainer operations from five to seven courthouses.  Eviction cases are currently heard at the following locations in the County of Los Angeles: (1) Norwalk Courthouse, 12720 Norwalk Blvd., Norwalk CA 90650, (2) Van Nuys Courthouse, 6230 Sylmar Avenue, Van Nuys, CA 91401, (3) Governor George Deukmejian (Long Beach) Courthouse, 275 Magnolia, Long Beach CA 90802, (4) Michael D. Antonovich (Antelope Valley) Courthouse, 42011 Fourth Street West, Lancaster, CA 93534, (5) Pasadena Courthouse, 300 East Walnut, Pasadena, CA 91101, (6) Santa Monica Courthouse, 1725 Main Street, Santa Monica, CA 90401, and (7) Stanley Mosk Courthouse, 111 N. Hill Street, Los Angeles, CA 90012.
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In an eviction action for non-payment of rent, is the landlord required to prove that the tenant actually received the three-day notice to pay rent or quit? Answer: No. It is enough that the landlord properly served a three day notice to pay rent or quit in accordance with applicable law (i.e. by personal service, substitute service, or nail and mail). The landlord is not required to prove that the tenant actually received the notice. On the other hand, proof that the tenant actually received the notice cures any defect in service of the notice. These principles are also applicable to other types of notices that may be served by a landlord such as notices to perform covenant or quit, notices to quit, and notices of termination of tenancy.
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