Legal Corner
by Stephen C. Duringer, Esq., The Duringer Law Group, PLC

Question          I am about to enter into a five-year term lease for an industrial unit in Southern California.  The unit has been vacant several months and I do not want to lose this deal, seems like good tenants are kind of few and far between lately.  We have agreed on just about all of the deal points except a couple.   At the last minute, the tenant requested the lease be prepared with a subsidiary of his company rather than the parent company, saying it is for ‘tax reasons.’  Additionally, he wants to make the use provision extremely broad rather than specific allowing him to do just about anything in the premises without having to get my permission.   He knows I need to lease the space, but I am not sure I want to give in on these points, what are my options?

If Evictions Destroy Many Tenants’ Credit, Who Will You Rent To?

The entire country is currently very sick of commercials with sad face emojis and pouting voices all themed around saying “during these unprecedented times.” It’s all well and good to have a support system but if one more advertisement promises that now is a great time to buy a car because this one brand understands the world is changing but hey, look at this cool car, well, there will be more than one smashed phone screen.

This is all incredibly irritating because no, now is not a good time to buy a car, which explains why some companies sneakily unlisted their ad campaigns. It’s one thing to remind people that hey, you can get your pizza delivered, and another to suggest restructuring their entire insurance policies or booking plane tickets for the fun of it. Even without mentioning a pandemic, it’s important to know that a recession, if not here already, is coming. In fact, most landlords and rental housing pros already know it’s here.

The Round-Up of California’s Wasted Taxpayer Money

By Jon Coupal, Howard Jarvis Taxpayers Association

Anyone who has ever managed a household knows that it is not only how much money you make that matters. It is also how much you spend.  California’s budget is vastly more complicated, and less transparent, than family finances. So, it is even more important for taxpayers to watch closely as elected officials spend our money.  The Howard Jarvis Taxpayers Association has found that, in many instances, California’s budget is a catalog of careless, excessive, and wasteful spending, or, as some might have it, business as usual.

For example, the Department of Motor Vehicles had years to prepare for the launch of the national “Real ID,” but failed to do so. The agency was rewarded with an additional $242 Million in new spending to try it again.  State Auditor Elaine Howle found misuse of state resources in county fair funds, documenting $318,000 in misspent funds, including more than $30,000 for “excessive and unauthorized travel expenses,” lavish dinners and alcohol.  In another audit, State Auditor Howle discovered that the California State University system hid $1.5 Billion in an outside account to spend on operating costs, while raising tuition almost yearly and asking the Legislature for more funding. CSU has nearly doubled tuition from 2008 to 2018.

Will a Wealth Tax Make California’s Wealthy Flee?

By Edward Ring
August 25, 2020

If you’re rich, there aren’t too many places on earth better than California to live. Sure, there are the perennial earthquakes and wildfires, but those are more than made up for by the Mediterranean climate and the scenic splendor; the Pacific Shore, the High Sierra. And apart from these natural disasters, nothing is wrong with California that money can’t cure.

If you’re a billionaire, then California’s punitive cost-of-living and its failed public schools are of no concern. The moneyed liberal patricians of California, from Tom Steyer to Jack Dorsey, have options. Who cares if your mega-mansion costs $12 million instead of $1.2 million, if you’re a billionaire? Who cares if the local public school is a war zone, if you can easily afford to send your children to the finest private school money can buy?

Tenant Problems: Not Taking it Personally

By Matt Williams, Founder, Williams Real Estate Advisors

The Security Deposit Refund Quandary

Just out of college, I rented a little studio apartment in Brentwood less than five miles from my new job. The building’s owner was kind, thoughtful and took care of all my maintenance requests.  One day though, I remember waking up exhausted, feeling like one does after they have spent the night swimming. As it turns out, the hot water line under my unit had  broken and had been leaking for over five days. I called the owner and told her something was wrong. She discovered the broken pipe and fixed it. However, the massive mold smell  coming into my unit through the floors was more than I could take. I informed her that my health was at risk and told her I would be moving out immediately. I still remember her words on the phone, “this is a business and you will owe me for the 30-day notice”, meaning I would not get my security deposit back.  Well, I did eventually move out and to my surprise I eventually received a portion of my security deposit a couple months later. Apparently, the owner had to leave the doors and windows open for over a month to air out the unit. It was at that point I think she must have realized I was telling the truth about the odor in my unit and she refunded a portion of my security deposit.

Let’s be clear about a couple of things right up front.  I am a small rental property owner, also known as a “mom and pop” landlord.  I have been in the rental housing business for over 40 years.  This business and the investments I have made in rental property are a major part of my retirement income and financial security.  I have several tenants who have been with me for over 30 years.  I am not the government; I am just a private citizen who invested in the rental housing business.  I should have no greater obligation to solve the housing crisis than any other business or taxpayer.  I think we can all agree that California has a major housing crisis.  The cause of the crisis is quite simple, demand for housing far exceeds the supply.  For those of you who remember the Economics 101 class you may have taken, there is the “Law of Supply and Demand.”   It is very simple: when demand goes up, if supply doesn’t keep pace prices increase.   

A major problem with Proposition 21 is that it attacks the very people, mom and pop housing providers   who are actually providing affordable housing in our community, and working to solve our housing problems. The actual villain and cause of today’s housing problems are government policies and Wall Street.  Instead, we housing providers are being made out to be the villains here.  It’s unfortunate that many of our elected officials pander for the votes of vocal renters by placing the blame on those of us who have risked our life’s work and retirement by making substantial investments in our communities to house our neighbors.  Yet, we are made out to be rent gouging, eviction loving and homelessness causing  “evil” landlords. 

There has never been a global disruption to daily life quite like what we’ve seen from the coronavirus pandemic. It’s a reminder that we’re all in the same boat, good times and bad. Recent struggles with unemployment, social distancing and even paper product shortages have real effects on our mental, physical and/or financial wellbeing. Without assistance, some people may have to choose whether to pay rent or buy groceries.

What can property managers do to avoid evictions? Here are four ways to approach rent assistance, especially when the economy is in rough shape.

1. Consider rent deferral for residents who may have lost their jobs

Addressing every multifamily, single-family or commercial tenant’s request individually has its benefits. Here are just a few reasons to personalize rent deferment and assistance plans:

• You give priority assistance to those who have lost their main source of income
• You want to avoid deferring rent to someone who can still pay
• There may be better ways for the tenant to receive assistance (e.g., government programs)
• Uncollected rent puts your business at risk and may upset owners
• You need a constant stream of revenue to support yourself and your staff

Even when the economy is bad and some of your tenants are jobless, it’s still your right (and your job) to collect the rent you’re owed. It might take time to evaluate each tenant’s needs and come up with a payment strategy, but it’s worth it. After all, you need to be paid, but jobless tenants need support due to societal events and aftereffects that are out of their control.

Governor Signs Assembly Bill 3088, the “Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020”

Bill Passed by Overwhelming Majority, Bipartisan Vote in Both the Assembly (59-9) and Senate (33-2)

As anticipated, late Monday night, Assembly Bill 3088, the “Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020” was signed into law by Governor Gavin Newsom and takes effect immediately.  The “key” provisions contained in the legislation are described below.

Low interest rates that affect estate planning in uncertain times

There has been a lot of uncertainty during the last few months in 2020, such as COVD-19, the shutdown of our economy, high unemployment, increased national and state level loss of revenue and increase debt, besides the national protests in our country.  Adding to the continued uncertainty will be our national and state elections in November.  Given the uncertainty of our national and state governments, how will the national and state governments raise money to pay the loss of revenue and increase of governmental debt? 

COVID-19: Addressing Water Damage While Social Distancing

By Jesus Toro, President, Toro Water Damage and Mold Remediation

We are living during a time of so many uncertainties.  An unexpected disaster may only add to the already stressful situation we are living in. The government has deemed the water damage industry as essential workers because water damage services are imperative when water damage occurs from burst pipes, overflowing toilets, roof leaks and mold growth due to poor ventilation and high humidity.  Water damage happens whether we are in a global pandemic or not. Therefore, it is important for you as property owners or property managers to get the impacted units back to pre-existing conditions for the health of everyone at the property and for the integrity of the unit and value of your property. Under our present conditions of social distancing, face coverings and other protective measures, the job of water damage mediation does not change but the interaction does. What do I mean?