More Restrictions on Small Landlords Only Leads to Loss of Affordable Housing
More than Four Decades of Retreaded Housing Policy Has Only Led to Increased Housing Shortages and Homelessness
By Jenifer Anisman, Associate, Law Firm of Harold Greenberg
This article addresses the unintended ramifications of tough eviction control. Tenant advocates are fighting for tougher legislation on landlords, including proposals that would require Landlords to pay for tenant attorney’s fees when facing eviction. It is no secret; however, that the toughest rent / eviction control laws exist in the cities with the highest homelessness rates.
Yet, the response is to implement even tougher laws, and the result? Well, I see more homelessness. Is this a chicken or egg situation? Are the two even related? Persons experiencing homelessness come from a myriad of backgrounds and situations. Do all homeless persons want to be housed? This is a complicated question. Tenant’s Rights groups who identify themselves as “homelessness prevention” fighters have no basis for this claim. They merely use it as a ploy to win their cases and recover attorney’s fees from Landlords. Do you disagree? If so, please continue reading…
I work for a law firm that represents both landlords and tenants. Most of our landlord clients are minority, indigenous, retirees, and small business, “mom and pop” landlords. Many own between just 2 to 8 rental units and often, one of the units are owner occupied. Most of our clients own pre-1978 buildings subject to the Los Angeles Rent Stabilization Ordinance. These are the folks I will be referring to in this article. This article does not pertain to the large corporate management companies or real estate investment trusts with hundreds of units or more. This letter also does not pertain to COVID-19 related reasons for not-paying or collecting rent.
If merely one unit in a small building does not generate rent, it adversely affects the entire building. Of all the landlords I have personally represented, not one of them has wanted to evict a tenant in order to attempt to receive higher rent. It is quite the opposite. Our landlords have an excellent relationship with their long-term tenants. Many small landlords are retired or have unrelated daytime jobs and family responsibilities. They would rather have a long-term tenant who pays the low rent on time and respects the property as opposed to a higher paying, higher turnover unit. Forcing prohibitive legislation and costs on landlords who have to evict a non-paying tenant or a tenant who is otherwise breaching the lease will have a detrimental effect on Los Angeles’ grass roots, smaller landlords with long-term tenants.
For example, we have one landlord couple now in their 80’s who own multi-unit buildings off the Venice Boardwalk. Their long-term tenants pay barely four figures for their one- and two-bedroom units and these landlords would not change that for anything. The properties have long been paid off and the rents afford them a comfortable life in addition to offering affordable housing in Venice. When a tenant needs to be evicted, for either non-payment of rent (not COVID-related) or for breaching the lease agreement (usually interfering with the quiet enjoyment of the other tenants), presently, it costs the landlord anywhere from $20,000 to $60,000 to evict them due to continuances, jury trials, motions and discovery that tenant’s rights attorneys launch. They fight very hard to keep the bad tenants in so they can recover huge attorney’s fees. If the tenant prevails, and the landlord has to pay the tenant’s attorney’s fees too, this amount doubles or more. For the landlords who offer affordable units, this represents more than what they collect a year from their tenants in one four-unit building.
What would you do if this were you? Well, being situated on Speedway in Venice, seems like an easy multi-million-dollar sale to developers. And what will developers do? Seems like a new multi-unit building with luxury units would be the best return on their investment. Where are the good tenants going to go? To the tent camp down the street? Seek government assistance via section 8? These are their options. Do you think I am speculating? This is exactly what happened and is happening. Just look around you.
Another example is a young Hispanic family who saved their money to buy a fourplex in USC area. The family lives in the fourplex and the wife manages it. She and her husband work for the City of Los Angeles. Their kids are school age. She has one tenant who is an old man in his 80’s who has lived there for many years and pays about $450 a month, well below market rate. She would never consider evicting him. He is kind and helpful, does work around the property and pays on time. Where would he go? The third unit contains a long-term tenant who pays low rent does not like the new owners. The prior landlord never raised the rent. This new landlord gave the tenants an allowable 3% rent increase. His response was to start harassing the new owners, breaking windows, and breaking screens, taking out smoke detectors and then making complaints to the housing department and Department of Building and Safety. He plays loud music and shouts insults at them when he sees them, even in front of the children! He also harasses the woman who lives in the fourth unit because she would not get on board with him to harass the landlord. This fourth tenant successfully got a restraining order against him. She eventually moved out and her unit remains empty. When the landlord tried to evict this bad tenant, he retained a tenant’s rights attorney who demanded $125,000 for him to move. Because of the COVID-19 eviction moratorium, he has been living there rent free for two years, even though she started the eviction before the Moratorium. She presently has one paying tenant, the old man. Now that she has exhausted her savings, she has to get a loan to cover the building costs, mortgage, taxes, etc. of the beautiful building she was so excited to own, but the tenant will not let the appraisers in. She is going to lose this lovely old building. Probably to developers who will tear it down to make way for luxury units.
James Burling, Vice President for Legal Affairs, Pacific Legal Foundation in Sacramento said it best:
“It should be noted at the outset that landlords are not in the eviction business; they are in the business of providing housing to those who can pay for it. Most landlords in a situation like today’s crisis will try to work something out with tenants who are in trouble through no fault of their own, as opposed to tenants who are troublesome. Landlords are neither a charity nor the source of unlimited resources by which they can maintain housing in good repair while paying taxes, interest, and utilities for free. Any leasehold that results in an eviction represents a failure both for the lessor and lessee. No one wants to evict a tenant and no tenant wants to be evicted. But sometimes eviction is the only remedy.” (Burling, James: California Litigation Vol. 34 No. 1 2021 p. 31).
To drive the point home, in my 12 years of practicing real estate and commercial litigation, NOT ONCE has a landlord come in wanting to evict a tenant for the purposes of collecting more rent. It is almost exclusively for non-payment of rent or interfering with the peaceful enjoyment of other tenants. This is reflected in the many affordable units throughout Los Angeles where families have peacefully lived for many years with low rent and without problems. We believe tougher eviction control laws will drive out the small business, “mom and pop” and minority landlords which will result in more development of corporate owned high-end properties, gentrification, and disparity in wealth. Again, look at Los Angeles, San Francisco, New York. Strict rent control/eviction control and highest amount of people experiencing homelessness. Coincidence? I think not.
Jenifer Anisman, Esq. is an attorney at the Law Firm of Harold Greenberg in Los Angeles specializing in landlord / tenant matters. You can reach Jenifer at Jenifer@hglaw.pro or via telephone at (323) 732-9536.