AMAZING STORIES IN RENT BOARD DECISIONS

MANY YEARS AGO, I ENJOYED TWO TELEVISION SHOWS THAT ARE NO LONGER SHOWN EXCEPT AS reruns. One was Ripley’s Believe It Or Not and the other was Amazing Stories. Although I miss those shows, I have found that reading recent Rent Board Decisions for Regulation 3304 cases to be an adequate substitute.

This Magazine and this Column has often reported about Rent Control Regulation 3304 which is titled “New Maximum Allowable Rent for Tenant Not in Occupancy.” This bizarre Regulation arose because the lawful rent for Santa Monica apartments is often so low that tenants use their “controlled rental units” for such purposes as offices, bulk storage areas, massage parlors and vacation retreats.

For example, in Rent Board Story 107 titled “Regulation 3304 Proves that Rent Control is for Yuppies,” I reported on the bizarre decision that a Rent Board Hearing examiner issued in Petition N-002. In that case, an apartment owner filed a petition to prove that one of his tenants was not living in the Santa Monica controlled rental unit because, (1) the tenant owned a house in Pasadena as a joint tenant with her boyfriend of 20 years, (2) she taught school in Baldwin Park, which was close to the home she owned in Pasadena (3) the tenant printed business cards which listed Pasadena as her home address and (4) the owner rarely saw the tenant except during summer vacations and sometimes on the weekends.

That Story also describes how the hearing examiner ruled against the apartment owner by giving great weight to the fact that the tenant never married her boyfriend of 20 years and although she was a “joint tenant” tenant on the property title, she was not really an owner because, “She did not contribute financially to the purchase and does not contribute to the payment of the mortgage, insurance, or property taxes.” Therefore, according to the hearing examiner’s reasoning, a tenant is not an owner of real property if someone gives it to him/her; the tenant must be married and make a financial contribution to the property in order to be an owner. Unless the landlord proves that, the tenant still has a Santa Monica residence.

You might wonder, “What would happen if the facts were different?” For example, suppose that the tenants were married, had children when they lived in the Santa Monica apartment but they bought a home in Arizona and moved to that location? Would the result be different?

The answer is: “No, the result would be the same.” The tenant/husband would still be a Santa Monica tenant entitled to keep the rent controlled rent of $740 per month for his two-bedroom Santa Monica apartment that he uses when is working in the Los Angeles area as an assistant movie director. This was proven in case N-001, which was filed by the same owner who filed Petition N-002.

Both of the first two Stories have a common thread of fact, which is that the tenants both lived in their Santa Monica apartments before they became homeowners elsewhere. Therefore, since they lived in Santa Monica before they bought their houses, then it is arguable that the Santa Monica apartment is the tenant’s “the tenant’s usual residence of return” under Regulation 3304(g) because they lived in the Santa Monica controlled rental unit first.

So, again, you might wonder, “What would happen if the facts were different?” For example, suppose that; (1) a tenant/doctor already lived in a two-bedroom Santa Monica apartment since 1979 when he rented a “single” (no separate bedroom) unit on the beach in 1987, (2) he described the “single” as “additional residence” on his rental application, (3) for more than 15 years he always paid the rent with checks from his business account and gave the property owner 1099 Forms to classify the apartment rent as a business expense, (4) he is still on the lease of the two-bedroom unit but added his wife as an additional occupant after they were married in 1998, (5) the tenant and his wife tell the hearing examiner the hearing examiner that the reason for their successful marriage is because they live in separate rental units, and (6) the tenant testifies that listing the “single” as a business expense for 15 years was a mistake made by his accountant and office staff.

If you thought the result would be different and the landlord would win a case with facts like that, you would be wrong. To prove that truth is stranger than fiction, here are a few of the Findings of Fact (FOF) made the Rent Board made in Decision N-0016. (The names and addresses have been changed slightly because it is not the objective of this column to embarrass private parties, no matter what unbelievable things they say):

“The evidence established that Dr. Tenant rented unit No. 5 at 2137 Franklin Street in Santa Monica in 1979. (FOF No. 4). Dr. Tenant rented the subject unit on Ocean Front Walk from Owen Owner in 1987. (FOF No. 6) There are zero bedrooms in the subject unit (including dens and family rooms). (FOF No. 3) In 1997, Dr. Tenant was dating Nora Nurse. The evidence established that she moved into the Franklin unit in late 1997, after the last subtenant moved out. (FOF No. 11) Dr. Tenant and Ms. Nurse were married in October 1998. FOF No. 12. Both Dr. Tenant and Ms. Nurse testified credibly that they do not live together and that is the basis for their successful marriage. (FOF No. 13).

Owen Owner presented evidence that Dr. Tenant has been claiming his rent at Ocean Front Walk as a business expense on his income taxes for many (i.e., 15) years. Dr. Tenant testified that this was a mistake which his accountant is rectifying. (FOF No. 31) Dr. Tenant’s electric usage for Jan. 28-Feb. 27, 2003 and Feb. 27 - March 28, 2003 was much higher than for the same months in the last two years. This increase was not adequately explained. (FOF No. 34) Dr. Tenant had the addresses on various registrations, including his car registration, his driver’s license, his voter registration and his utilities changed to Ocean Front Walk in early 2003. (FOF No. 36) Dr. Campbell’s name is still on the lease at Franklin, along with Ms. Delp and he is still listed in the phonebook at Franklin as well at Ocean Front Walk.

It is a well knowing saying,” The more things change, the more they remain the same.” My very first Rent Board story was bout the Rent Board giving a large excess rent award to a poor cardiologist who claimed that $400 per month was excess rent although he rented his condo in Long Beach for many times that amount. Now the Rent Board renders decisions which permit a married doctor to tie up two Santa Monica controlled rental units so that he can have a successful marriage by pursuing his separate lifestyle apart from his wife.

Not wishing to end this Column on such a sour note, I mention that you might have a chance of winning if your tenant is a domestic partner of someone else, because the State and local domestic partnership laws require that they must declare a common residence on the affidavit(s) of domestic partnership. In that event, they can only have one location as a common residence and the hearing examiner cannot base the decision on the landlord’s credibility against the tenant’s credibility. Instead, the tenant ends up looking like John Kerry trying to explain his/her flip-flop positions on the issue. I actually won a case where domestic partnership was at issue, but that took nearly a year and one half and will have to be covered in a separate Story.

In summary, if you want some examples of Rent Board Decisions where tenants always win no matter what Amazing Stories they tell, you can file your own “Tenant Not in Occupancy” Petition or go to the Rent Board office and tell them you want to read Rent Board Stories N-001, N-002 and/or N-116.