Outrageous Goings On Around Town

THE ECONOMIC STATE OF YOUR APARTMENT

With interest rates staying lower than we have seen them in awhile, the residential rental market has just gone up and up with no end in sight. it is clear that owners are doing quite well. The future looks unclear for almost all sections of the economy, and from day to day the forecast is good or bad. No matter, if you are an owner of property in santa monica you are protected against the vulgarities of the economy. Currently there are few buildings for sale, and many lookers. It appears that the investor world has discovered what Santa Monica owners have known all along, that long slow careful investment will pay off in the end. Prices have gone up so much that many owners don’t even know what their properties are worth. Many owners undervalue their property when they go to sell it. Please be careful in the sale of your property. If there is any profit to be made, you deserve it, since you have been maintaining the property through the long and hard years of rent control. Do not sell your property for any price until you look at all there is to buy in our city, first. Too often an owner will accept an unsolicited offer because the owner is thinking 1995 values. Be aware, be smart, and sell high. Or don’t sell at all.

CASES AND STATUTES OF INTEREST

Tenant Harassment
The People v. Joseph Andrew Benitez, No. C031974 In the Court of Appeal of the State of California. Even terrorist threats are subject to the protections of the first amendment to the constitution. Defendants’ conviction reversed. The court stated: “The purpose and effect of the constitutionally limited definition of the term ‘threat’ is to insure that only unequivocal, unconditional and specific expressions of intention immediately to inflict injury may be punished,”

In United States v. Poocha, the 9th Circuit Federal Appeals Court has held that profanity is protected speech under the first amendment, and that to characterize speech as actionable “fighting words,” the government must prove that there existed “a likelihood that the person addressed would make an immediate violent response.”

ELLIS:

Nothing has changed at the state level on Ellis, however people should be aware of the City of Santa Monica Rent Control Board’s interpretation of Ellis. As you may know, Ellis allows the owner to go out of the residential rental business by filing with the Board and then giving the tenants a 4 month notice of termination of tenancy. If any tenant is disabled or 62 years old, that tenant can require the owner to allow the tenant to stay for 12 months. If the owner wishes, he can then allow any other tenant to stay the full 12 months as well. (I.e., the owner can extend the non-qualifying tenant’s term from the 4 months to 12 months). The owner (or successors) must stay out of the rental business for two years. After that time the owner (or successor) can go back into the rental business. The Board’s position is that the two years starts to run from either the 4 month date if all tenants leave on the 4 month notice date, or from the end of the 12 month date if there is a disabled or 62+ tenant who stays beyond the 4 month notice period. Thus it can be up to 3 years from the date of original filing with the Board before an owner can go back into the residential rental business after Ellising the property. The Board states that if any tenant extends his/her stay after the 4 months, then the 2 years starts to run after the end of the 12 month period, even if the tenant moved out prior to expiration of the 12 months. Thus the owner is being punished with additional time if he/she has any disabled or 62+ tenants living in owner’s building. To add insult to injury, the Board’s position is that registration fees are due on all units of the property, even though only one unit or more is occupied beyond the 4 months by a disabled or 62+ tenant. The demand for rent control registration fees is illegal, and will be the subject of yet another Action lawsuit against the Board.

Ellis Cases
Drouet v. Superior Court
In Drouet v. Superior Court, the Court of Appeal held that tenants may not defend against an Ellis Act unlawful detainer action by claiming it is retaliatory. The Court of Appeal did allow them some ability to sue for money damages after moving out. This case was taken up by the California Supreme Court and the opinion cannot be cited until that court comes down with a new ruling. We are waiting for this to happen.

Occupancy Limitation Standards
Local occupancy limits subject to state law preemption: Briseno v. City of Santa Ana (1992) 6 Cal.App.4th 1378, 8 Cal.Rptr.2d 486 (invalidating Santa Ana minimum dwelling unit square footage ordinance which increased State Code occupant density standards) . Locally enacted maximum occupancy standards are generally preempted by the State Housing Code to the extent they impose more onerous requirements than established by the Code (see Ca. Health & Safety § 17922, adopting State Uniform Housing Code). Local municipalities may modify the Code standards only pursuant to the governing body’s express finding that such modifications are “reasonably necessary because of local climatic, geological, or topographical conditions” (Ca. Health & Safety §§ 17958, 17958.5, 17958.7).

Co-Ownership Partnership Agreements
(Tenants In Common)
In a very good case entitled Rossetto v. Regina Ann Barross, No. AD4609, AD4610 the California Appeals Court has ruled that agreements between tenants in common as to how property will be occupied and expenses paid for between the owners, is enforceable. In addition, if the owners agree to possession for payment of expenses arrangement, then an owner can be evicted from the property if that owner fails to pay the expenses s/he was required to pay under the agreement. In essence the court has held that an owner can agree with other owners to be treated as a tenant for purposes of maintaining possession. There are many of these agreements in Santa Monica, where multiple owners live in apartment buildings and pay “rent” for the upkeep of the property. It is good to see that if written correctly, these agreements are enforceable.

Takings (Inverse Condemnation)

Anthony Palazzolo, v. Rhode Island, No. 99-2047
United States Supreme Court is the latest word on the subject. As reported earlier, the case upholds the right of property owners to build on their property or get damages for the government’s refusal to allow them to use their property. In addition, the court stated that an owner is allowed to attack any law or regulation which existed at the time that owner bought the property, and the government is not allowed to argue that since the offending law existed when the owner bought the property, that owner waived his right to attack the law by voluntarily buying the property. This is good news for us in Santa Monica, where the Rent Board has argued in the past that people who purchased their property after rent control passed in April 10, 1979 were aware of the existing law.

Roger Galland v. City Of Clovis, No.S080670
This is a California Supreme Court case which holds that the city is liable to the owner, if the city “flouts the law” in dealing with the owner. This case dealt with a rent control increase application filed by a mobile home park owner. The city seriously delayed the hearing on the owner’s petition and the trial court awarded the owner damages for civil rights
violation as well as takings. The Supreme Court overruled the court of appeal stating that the test for taking is much higher that the test applied by the court of appeal. The owner appealed the decision to the United Supreme Court. ACTION has filed a friend of the court brief with the United States Supreme Court asking that court to accept the case for hearing in the October 2001 term. Owner (and ACTION) are arguing that the test should not be so stiff (“Flouting the law”). Why can’t the city be made to follow the same laws that we the people are held accountable for as well.

Chevron U.S.A., Inc. v. Benjamin J. Cayetano
(9th Cir., 224 F.3d 1030)
Correct test in assessing whether rent control ordinance effects regulatory taking is whether legislation substantially advances legitimate state interest. Leave it to the oil companies to bail out apartment owners. This case is a blockbuster, and overrules Santa Monica Hotel v. Santa Monica Rent Control Board. This case holds that an owner can attack the constitutionality of rent control if he can prove that the law does not substantially advance a legal state interest. We have been saying for years that rent control does NOT provided housing for the poor. This case was decided by the 9th Circuit Court of Appeal, was then appealed by the government to the United States Supreme Court. In March 2001, the United States Supreme Court refused to hear it, thus making the case final and good law. Look for ACTION to file a similar lawsuit against rent control soon.

LEAD BASE PAINT

Finally, an organization steps forward to put the blame of lead paint on the industry that created the problem. In Santa Monica, even after much cajoling, the City Council would still rather punish Owners for lead base paint (make the clean it up) than punish the paint industry itself for making the toxic stuff, knowing that it was toxic all along. In anticipateed salvation for owners comes the NAACP (National Association for the Advancement of Colored People). During the New Orleans convention NAACP president Kweisi Mfume says the civil rights organization is preparing to sue the lead paint industry in an effort to hold it accountable for health problems linked to lead in paint. Mfume, who unveiled the planned lawsuit, said more details would be released later “For us it’s a civil rights issue because you ought to have every reasonable expectation that as an American, you have the right to grow up in an environmentally safe situation, where you’re not put at risk,” Mfume said. Lead-based paint was widely used in homes throughout the 1950s and 1960s until being banned in 1978. At high levels, lead can cause kidney damage, seizures, coma and death. Children are most commonly exposed to lead by inhaling lead-paint dust or eating paint flakes. “This affects everybody,” Mfume said. “This is not a black problem in the ghetto or in white suburbia, it’s everywhere these houses exist.” Thank you Mr. Mfume, and good luck.