A published court decision may provide welcome news for landlords whose rental stock is subject to stringent rent control regulation. A recent Appellate Court level case confirmed the constitutionality of recently enacted local rent control regulations which provide that a landlord can petition to raise the permissible rental rate ceiling where the tenant occupant is not using the rental unit as the principal residence.

In the case of Robert Bisno v. Santa Monica Rent Control Board, No. B176350, Second Dist., Div. One. (Jun. 28, 2005), an Appellate Court upheld the constitutionality of Regulation 3304 of the Santa Monica Rent Control Board that permits landlords to petition for a rent increase when the tenant is not occupying the premises as his or her principal place of residence.

In that case, plaintiff Robert Bisno rented an apartment at The Shores apartments in 1996. Bisno also maintained a primary residence in the San Francisco Bay Area. The leasing landlord then sold the property to Douglas, Emmett & Co., a primary proponent of Regulation 3304. After Regulation 3304’s adoption, Douglas, Emmett & Co. petitioned for an increase in the maximum allowable rent on the sole ground that Bisno’s apartment was not his principal residence.

The Santa Monica Rent Control Board, after receiving extensive evidence, including revelations about Bisno’s marital status, and results of investigators’ inspections of the apartment’s medicine cabinet, refrigerator, kitchen cabinets, and bedroom closets, authorized an increase in the maximum allowable rent. Douglas, Emmett & Co. then raised Bisno’s rent from $1,111 to $4,295 per month, which after appeal to the Rent Control Board, was reduced to at $4,045 per month.

Subsequently, Bisno filed suit challenging the constitutionality of Regulation 3304. Both the Trial Court and the Appellate Court found that the Santa Monica Rent Control Board did not exceed its authority by passing Regulation 3304. The Appellate Court, exercising its own independent judgment and using the criteria established in Ramirez v. Yosemite Water Company Inc., ruled that Regulation 3304 did not exceed the scope of, nor was it inconsistent with, the Santa Monica Rent Control Board’s enabling statute, the Rent Control Charter Amendment. The Appellate Court noted that the Rent Control Law is very specific about its purpose and that its tenor focuses on housing not ancillary residential usage.

The Appellate Court held that the clear emphasis on housing reasonably permits the inference that the Rent Control Law authorizes the Rent Control Board to enact measures designed to ensure that rent control benefits are restricted to serving the law’s goals. The Appellate Court also noted that the regulation provides certain exemptions that excuse tenants who have a reasonable justification for not using a unit as their primary residence on a temporary basis. Individual tenants such as students, the infirmed, or visiting professors at institutes of higher education would still be afforded the protections of the Rent Control Law and be exempt from the revocation provisions of Regulation 3304.

It is of note that while Regulation 3304 has been ruled constitutional, the Santa Monica Rent Control Board, on its own, has already pared back Regulation 3304 by granting itself, and not the landlord, the authority to determine the new rental rate based on the rental rate for comparable units. Despite that limitation, this judicially approved avenue of relief may still bolster legal efforts to evict tenants who do not use their rent-controlled units as their primary residence. By showing a reasonable amount of proof that the unit is not used as a primary residence, a landlord can potentially be freed from the burden of subsidizing their part time tenant’s rent. WAM

About the Authors: Edward F. Morrison and Larry A. Schwartz are partners in the Los Angeles office of Lewis Brisbois Bisgaard and Smith, LLP.