No-fault evictions top of mind lately

Tenants can be transitioned out of the rental unit through no fault of their own, but this comes with a host of statutory obligations and is met with the scrutiny that arises from political blowback.

We were intrigued to come across a tweet from the Eviction Lab about the struggle to erase no-fault evictions from prospective tenants who are denied housing because an eviction notice has been served.

“I was just like, ‘What is stopping us from getting an apartment?’… And it basically was that eviction notice, even though we were not evicted. The eviction notice shows up on our background checks.”

By @GBHNews’s @clemoulthttps://t.co/627TrnuN9M

— Eviction Lab (@evictionlab) December 9, 2022

To be clear, the story chronicles the plight of two siblings in Massachusetts who had a hard time finding an apartment after a landlord decided to renovate the rental unit. As New England does some soul-searching in reforming what type of information is revealed in tenant background checks, California tenants can rest assured that a no-fault eviction will not be recorded on their record unless there is a judgment.

A judgment would only result if the landlord has a permissible, no-fault reason to evict and the tenant still doesn't leave, Regardless, these types of evictions stir up a deep-seated feeling of antipathy for tenants' advocates who cannot accept the notion that landlords can freely use their properties.

As a bit of trivia, only four lawmakers in the California Assembly are renters. They've banded together to form a caucus. One of the items on the agenda is reforming the Ellis Act.

See what they are up to →

We have been fielding more calls, tragically, from distressed rental property owners looking to go out of business because of a shortfall in rental income, particularly in Alameda County.

Under COVID-related protections rent debt accrued during certain time periods is deferred, not waived, and the tenant is ultimately responsible for paying the rent later on. Unfortunately, we do not have a rosy outlook on landlords collecting this mountain of IOUs.

Read our earlier article: The arduous road ahead of recouping COVID-related rent debt →

There may be some exceptions with educated tenants who have an upward trajectory in life and want to remove the stain of a judgment on their credit.

Despite the newfound ability to file small claims actions in civil courts (small claims/Superior Court) to collect rent debt, we have not observed many landlords taking advantage. It's been said that we live in a litigious society but less so nowadays; California's Chief Justice says it is a troubling sign that court cases have plummeted.

With landlords hemorrhaging money and little prospect of bouncing back from their losses, many owners are looking to get out of the rental business.

Owner move-in and Relative move-in evictions (OMIs/RMIs)

In the case of a new buyer, we can effectuate a vacancy through an Owner move-in eviction relatively easily because it is done in good faith and without an ulterior motive - the aspiring homeowner wants to move into the property they just purchased and stay there for many years to come. There is no prior history of acrimony with the tenant.

Using another example, an owner gives birth and wants to transplant her mother from the east coast to California in order to help raise the child. With the assistance of Bornstein Law, she was able to do so by means of a Relative move-in eviction. Keep in mind, there are nuances. In San Francisco, for example, the owner who intends to welcome a close relative must also live in the building.

In San Francisco, it used to be that owners could move their grandchildren around to different rental units throughout the city every couple of months and re-rent them, but the city has since clamped down on this practice.

We recall when an enterprising reporter, aware of the requirement for owners to actually occupy the premises, went door-to-door asking whether or not the owner still lived there. The Board of Supervisors was incensed to learn that in many cases, the owners did not in fact live there. In response, lawmakers added teeth to the ordinance, putting a chill to the old owner move-in eviction runaround.

Where we get in trouble, of course, is when the Owner move-in or Relative move-in eviction is fraudulent or it looks retaliatory.

The many, many new homeowners our office has helped purchase their first property will not make the news because that's the nature of the media - a building on fire is more interesting and newsworthy than a pristine, well-manicured building not on fire. Throughout the years, then, landlord abuses have been found like heat-seeking missiles.

Take, for instance, two record-setting settlements north of $2 million a piece. These settlements cost the owners more than the house itself.

In other jurisdictions such as Oakland and Berkeley, owner move-in and relative move-in evictions are regulated, as well, but what does state law say?

If owners are not in a jurisdiction with more restrive rent and eviction controls, they may still be subject to the Tenant Protection Act of 2019 (AB 1482), which delineates the just cause reasons to evict. Among them is the intent of the owner or close relative to occupy the unit.

However, state law is conspicuously silent on how long the owner or their relative must live in the unit. Unlike local jurisdictions that prescribe how long the owner or their relative must maintain the unit as their principal place of residence (36 continuous months, for example), AB 1482 does not spell out such a requirement.

Bornstein Law nonetheless cautions owners to comply with the spirit of the law. If it is discovered that the owner simply re-rented the unit at a higher price, this can be considered "bad faith" and invite a lawsuit.

We have said that there is no statewide rent board to hear landlord-tenant disputes; rather, any conflicts that arise out of AB-1482 would be aired out in litigation through the courts. Thus far, we have little precedent on this, but we urge clients not to be used as an example by being mired in a costly lawsuit after an OMI/RMI happens without the intent of the owner or a relative to use the unit as their principal place of residency.

There are tell-tale signs to answer whether or not the owner or a close relative is living in the unit in question.

At one time, Oakland tenants could be evicted without just cause in an owner-occupied duplex or triplex. The operative term is "owner-occupied."

One Oakland couple put their landlord under video surveillance to document how often the owner was on the premises. After his whereabouts were put under scrutiny, he visited the property more often.

Incidentally, however, over 58% of Oakland voters passed Measure Y in 2018, a ballot initiative that stripped owner-occupied duplexes and triplexes from their exemption to just-cause eviction rules. We discussed this in an earlier blog →

The intent to make capital improvements or substantially remodel the unit

There is a patchwork of local rules relating to the displacement of tenants because of work to be performed and questions abound.

Does the tenant have the right to re-occupy the unit once the work is complete?

Does the landlord have vacant units and if so, is the landlord obligated to offer tenants the opportunity to temporarily or permanently occupy them?

Can the costs of capital improvements be passed onto tenants?

Improvements can add value to the property and prolong its useful life, but generally, improvements must primarily benefit the tenant, rather than the owner. If the repairs or upgrades are not essential and there is prior acrimony in the rental relationship or the work creates loud noise or another tumult, it is not uncommon for an aggrieved tenant to create problems for the landlord.

We suggest you google local ordinances, if applicable, or better yet, contact Bornstein Law whenever substantial work is contemplated.

What state law has to say when the property is not subject to more restrictive local ordinances? 

If the property is covered by the Tenant Protection Act of 2019 (AB-1482), there are four no-fault reasons to evict. Among them is the landlord's wishes to demolish or substantially remodel the unit but this does not include cosmetic repairs.

Think structural, electrical, plumbing, and mechanical modifications that require a permit, or abatement of hazardous materials, which require the tenant to vacate for at least 30 days.

The common denominator in state law and local ordinances is substantial means substantial. Rest assured it isn't sanding a hardwood floor or applying a fresh coat of paint.

Keep in mind relocation payments

If a tenant is transplanted through no fault of their own, it stands to reason that they must be compensated for their trouble. Relocation payments can be substantial and quickly balloon if there are certain categories of people occupying the rental unit, such as the elderly, disabled persons, and school-aged minors.

If the property is only covered by state law (AB-1482) and not a more onerous regulatory regime, the landlord need only pay relocation assistance equal to one month's rent or a rent waiver, at the discretion of the owner.

Additional remarks on no-fault evictions

California has an ever-expanding class of tenants who enjoy protected status. First in San Francisco and most recently in Oakland, educators and households with minor children cannot be evicted for a no-fault reason.

For those real estate practitioners representing buyers, you need to anticipate the need of your clients to doll out relocation payments when they want to move into a tenant-occupied property - buyers will be horribly disappointed if they do not know beforehand the additional money they must part with in order to use it for their own use.

In the event of an OMI/RMI, if there is any question that the owner or relative will not stay implanted for a time certain, Bornstein Law can assist in effectuating a tenant buyout agreement that gives owners maximum flexibility.

In a concluding thought, it is imperative that owners seek competent legal counsel when pursuing a no-fault eviction. This is a perilous path and rules must be followed to the letter - many in our community are comfortable serving standard demands to pay rent, but no-fault evictions come with many procedural requirements that should not be approached by a novice.