The type of rent control action which annoys property owners the most are rent decrease decisions. The Santa Monica Rent Board rendered approximately 4,890 of these decisions since April 1979 and West Hollywood issued approximately 4100 of them since June 1985.  The West Hollywood is actually worse because they began issuing decisions more than six years after Santa Monica did and because it has far fewer controlled rental units. West Hollywood Commissars love rent decrease decisions almost as much as they love Halloween, (which has actually been declared a holiday in that crazy city).

Santa Monica rent decrease decisions have been much less oppressive since the published decision was issued in Santa Monica Properties v. Santa Monica Rent Control Board (2012) 203 Cal.App.4th 751. In that case the Santa Monica Rent Board went too far by attempting to regulate the timers and the heat of the Jacuzzi and sauna at a luxury apartment building.  The Court of Appeal reversed the Board’s decision with an opinion which found that, “. . . the minimal reduction of adult recreational services of a type commonly found only in luxury housing does not justify decreasing rents without evidence that the rent thereby became excessive or the landlord thereby realized an unjust or unreasonable return on the investment in the property.”

The Santa Monica Properties decision reduced the severity of rent decrease decisions in Santa Monica, but unfortunately, West Hollywood Rent Stabilization Commissars refuses to recognize any adverse rent control decision unless their name is on it. Therefore, on April 26, 2016 they rendered the infamous “Turtle Fountain Decision” which they awarded monthly rent decreases for all tenants in a 36-unit apartment building based on the following; (1) reduced accent lighting in plant containers ($3 per unit); (2) vines on pool fence removed while painting the building ($8 per unit); (3) reduction of tables and chairs in the pool area ($6.50 per unit); (4) removal of hallway carpets areas ($20); and (5) non‑functioning turtle fountain by the pool ($3 per unit).

The most outrageous of the rent reduction above was the rent reduction granted for the removal of the turtle fountain. This was based on the following testimony;  “[Tenant] testified that there was a working turtle fountain at the  mid­ point of the pool, between the pool and fence. [Supporting witness] testified that the fountain, on the pool deck, made an arc of water into the pool.  Now, the turtle fountain is still connected, but it is rusted and not working, [Tenant] added.”  The rent decrease decision did not even attempt to say the rent reduction was based upon a “substantial reduction in housing services.”  Instead, it states that the reduction was based upon “a substantial decrease in the turtle fountain.”

The decision was quickly appealed to court and the judge issued a stay order was to prevent the tenants from reducing their rents based on the reduction of “housing services” described above.  And if you don’t believe it, go to West Hollywood Rent Stabilization Department and ask to read Rent Board Story D-4078. But don’t go there on Halloween because every City office is closed that day. That’s a good thing.

L. Jacobson  October 2016

On May 16 ACTION Apartment Association, a non-profit association of landlords, sued the Santa Monica Rent Control Board for a judicial decision as to whether the RCB’s prohibition of passing on actual water billings to tenants violates the Costa Hawkins Vacancy Decontrol Law.  The complaint alleges that the vast majority of apartment buildings in Santa Monica are master metered for water meaning that the Water Division bills the landlord for the water used by the tenants.  New buildings must be designed to allow separate metering and direct billing from the Water Division to the tenants but older buildings were not designed or constructed to allow this.  Despite this situation, the RCB has insisted that landlords must absorb the cost of water used by the tenants rather than allowing a sharing arrangement whereby each tenant pays an agreed share of the water bill.

The complaint alleges that the State vacancy decontrol law allows landlords to establish the initial rental rate by agreement with new tenants and that as part of the rental agreement the parties can agree that the tenant pay an agreed share of the water bill.  Prohibiting landlords to establish a water-pass-through agreement places landlords of these buildings at a competitive disadvantage with owners of newer buildings with separate metering and fosters excessive use of water by tenants.  This latter situation creates a special hardship for landlords because the water rates in Santa Monica are scheduled to increase by over 41% from 2014 to 2020 and the City has placed criminal and civil penalties on landlords if their tenants’ use of water causes the landlords’ buildings to exceed the mandatory curtailment requirements.

To accomplish its purpose, the RCB has created its own definition of “rent” to include water.  The lawsuit alleges that the term “rent” has an ancient and well recognized meaning.  Absent special circumstances, it is the cost of housing.  It includes the water pipes but not the water.  All other utilities, such as, gas, electric, telephone, and internet services, are separately billed and paid by tenants and not considered part of the rent; but in Santa Monica the water utility is treated differently for these older buildings.  This is yet another example of extreme rent control as practiced in Santa Monica.

A ruling in favor of the landlords in Santa Monica would be a binding precedent for all landlords in the State as the basis of the lawsuit is that the State enacted Costa Hawkins Act preempts any inconsistent municipal ordinances.

Donald Woods, Esq.

dwoods@donaldwoodslaw.com

The City of Santa Monica has enacted an ordinance that effectively prohibits AirBnb-type vacation rentals; this ordinance is being challenged as unconstitutional through a class action filed in the Central District of California (Los Angeles) by the Los Angeles law firm of Esensten Law on behalf of property owners in Santa Monica who have lost substantial income and potentially face imprisonment of up to six months as punishment for renting out their property as short-term vacation rentals.

The last few years have seen a massive growth in the market for online short-term vacation rentals utilizing websites such as AirBnb and HomeAway, which allow property owners to earn additional income by listing their properties for short-term rental while they are away on vacation or otherwise.  The rapid growth of the market for such rentals is a reflection of the benefits provided to both travelers and owners.  However, because such vacation rentals are typically at least 50% less expensive than hotels, the impact is felt by hotels in lower occupancy as well as by cities that obtain less revenue from taxes paid by hotels.

By its express terms, the Ordinance prohibits all persons from engaging in “vacation rentals,” whereby the owner does not simultaneously reside on the property with the renter.  The Ordinance also contains a partial ban on “home sharing,” where the owner simultaneously resides on the property.  To use the home sharing exception, the listing owner must obtain a City-issued business license, which is available only to property owners residing in their Santa Monica properties.  The advertising of any such vacation rentals or home sharing is also prohibited by the Ordinance.

The impact of the Santa Monica Ordinance is substantial and financially devastating to the thousands of owners in the City of Santa Monica who offer their otherwise vacant properties for short-term rental to earn additional income.

The City of Santa Monica has been vigorously enforcing the Ordinance, budgeting $410,000 to employ three inspectors to ensure enforcement of the Ordinance during the first year of enactment.  In enacting the Ordinance, the City of Santa Monica estimated that the complete ban on vacation rentals would slash Santa Monica Airbnb listings from 1,700 to 300.

The class action filed by Esensten Law seeking to invalidate the Ordinance is based on the violation of the dormant Commerce Clause of the Constitution of the United States, which prohibits legislation that discriminates against interstate commerce.  Based upon the constitutional violations, the class action seeks to have the Ordinance declared invalid and to prevent enforcement of the Ordinance by way of an injunction, which is a Court Order prohibiting the City from enforcing the ban on vacation rentals, as well as seeking a return of the fines the City has already collected and will collect until the case is tried before the Court.   The motion for an Injunction, the motion to certify the class of Santa Monica property owners effected by the Ordinance and a motion by the City of Santa Monica to have the litigation dismissed are pending before Judge Otis Wright.

For many landlords, noise complaints are all too common.

It is often difficult to monitor noise, and to determine if the particular type or level of noise violates the lease agreement.

Not all noise is from partying or loud music. Other common sources include children, dogs or a TV.

Here are some steps to follow to resolve a noise complaint at your rental property:

Knowledge of local laws is crucial. It’s no coincidence that noise levels often are described in local ordinances. Use those standards as your guide.

But sometimes noise concerns can happen in areas not covered by a noise ordinance. Just because tenants can legally play loud music all hours of the night doesn’t mean your other tenants want to hear it, and unresolved noise complaints will likely have other tenants thinking about how to break the lease and move out.

The next step is to include clear rules regarding noise in your lease agreement. For example, it is a very common practice for landlords to have quiet hours listed, perhaps from 10 p.m to 8 a.m, to avoid late night noise — the most common irritant.

But don’t assume that all tenants work 9-5 day jobs. You might have a tenant who works a graveyard shift and sleeps during the day. For them, quiet hours should look more like 10am-8pm, which is not practical.

Have a policy where tenants can report a problem without forcing tenants to go to one another.  Resolving an issue may not be as easy as just leaving a friendly note on the door. Renters are not always comfortable talking to one another about these situations. Avoid escalating disputes. You should expect to play mediator and investigator.

If you can’t mediate the dispute, then you may have to take the next step: 

You will have to figure out if a tenant’s complaint is warranted, or not. Some tenants might not like the sound of the neighbor’s children running and playing. Complaints involving families are tricky as it might be misconstrued as discrimination if you go after large family gatherings or tenants with children. For this reason, you should be dubious about forbidding tenants from having too many guests, because if the guests are related, it might be discrimination.

Speak to the accused culprit and let them tell their side. Also, talk to other tenants for collaboration. Maybe the complaint comes from someone who expects too much silence for an apartment building. You may have to explain to the complainer that you have done all you can.

If you are receiving complaints routinely, check for yourself how noise-proof your dwellings are.

Do the dwellings need more insulation from the outside noises, as well as in between units?

Many complaints are one-time events, perhaps from a tenant who wasn’t aware of their nocturnal neighbor. It is a good ideal to provide one warning to avoid evicting an otherwise good tenant. But for persistent complaints, you might have to give the offending tenant a “cure or quit notice” informing them that they are in violation of the lease agreement and can be evicted if the problem isn’t fixed.

Then, you have to be ready to make good on your promise and file an eviction. Otherwise, you are never going to hear the end of it!

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

Residents of an apartment complex in Iowa will be sharing a $2.45 million dollar settlement after a major bedbug outbreak occurred at the building.

According to a report , the class action lawsuit, which involves 300 current and former tenants, has been going through the courts for four years and eventually ended up in the Iowa Supreme Court. After years of legal wrangling, the case was settled before going to trial.

Three different entities will pay out the settlement: $2 million from the previous management company’s insurer, $350,000 from a development group which acquired the property in 2013 (even though the lawsuit was already filed in 2010), and the insurer of a pest control company which serviced the units is expected to pay $100,000. Individual tenants, many of whom were elderly or disabled, will receive from $200 to $6,000 each, according to the report.

The tenants’ attorney, Jeffrey Lipman, who specializes in bedbug lawsuits, says this case puts other landlords on notice that they can’t simply ignore the problem.

According to the report, the apartment complex became infamous due to the bedbug outbreak, and tenants told reporters that they suffered stigma in the community for living there.

This stigma can cause serious financial problems for rental property owners, especially when the information shows up on bedbug reporting websites, and comments or reviews on rental listing sites. Rental candidates may think twice before checking out a building that had bedbugs.

The best way to avoid losses from bedbugs is to be proactive:

Inspect for the pests on a regular basis, even if you haven’t received any complaints. Bedbugs remain dormant for long periods, which can be deceiving. Ask your pest management expert how often you should inspect.

Encourage tenants to report signs of bedbugs. The sooner the infestation is discovered, the better the chances of a full remediation.

Take complaints seriously. Tenants who feel they are getting nowhere with the landlord will look at other options.

Share tips with tenants on ways bedbugs spread — like used furniture, or in suitcases from travel. Teach tenants how to spot the signs so they can report problems.

Work with a professional pest control company. Don’t try to fix the problem on your own.

American Apartment Owners Association | Company Website | Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

A Pittsburgh landlord recently was thrown in jail for six months because of his “nuisance” rental.

According to a news report, neighbors and police “suspected” the property was being used as a drug house. Police say they’ve been called to the house dozens of times over the past few years. Officers did find drug paraphernalia on at least one call, and have responded to drug overdoses in the area.

In response to complaints, a judge previously ordered the landlord to evict all of his tenants, pay a $10,000 fine to the city for the nuisance, and repair the house.

However, when the case was reviewed, the court found that the landlord had not fully complied with the order. Now, the landlord will serve a six month jail sentence for contempt of court — unless he complies with the order.

Meanwhile, police have boarded up the building, and city officials are considering demolishing the property, according to the report.

It is unclear in this case whether the tenants were charged with crimes, or if the complaints of neighbors — that tenants were awake and “active” at 5:00 am, or that tenants were “making money” at the property, would have been sufficient evidence to convict each of them of these alleged crimes.

A number of cities across the country have recently enacted similar “nuisance” laws requiring landlords to evict tenants for disruptive behavior or suspected criminal activity. Unfortunately, this can be a daunting task if there is no evidence of an individual tenant’s wrongdoing. Often, police do not charge individuals or issue tickets at the scene, choosing instead to pursue the landlord, who then may have to reconstruct the event and attempt to evict each of the tenants for cause. That places landlords in a no-win situation, especially when fines are being levied daily.

However, there are steps that landlords can take to avoid renting to nuisance tenants:

Be careful who you allow in the property; always screen each adult occupant, including a criminal background check.

Adopt a crime-free lease policy that tracks your local nuisance laws. Make sure you have the ability to evict a tenant who violates the policy, even if you can’t prove they violated the law. Local police may participate in landlord training programs that help reduce crime in the area.

Keep a close eye on the property by performing regular property inspections. If you suspect drugs or other dangerous activities, call the police rather than trying to solve the problem yourself.

Get to the know the neighboring property owners, or at the very least, make sure they have your phone number in case they see something suspicious going on at the rental. You don’t want to be the last to know.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

Requiring residents to carry renters insurance is one of the most valuable property management levers that you have at your disposal. Unfortunately, a recent Insurance Information Institute (III) poll indicates a major discrepancy in the number of homeowners that have insurance at 96 percent compared to an estimated 35 percent of tenants who had renters insurance in 2013.

Inform and Empower Residents by Encouraging Renters Insurance

We all know that most anything can occur anytime – so why is there so much tenant hesitancy to invest in renters insurance? The core of the quandary is likely lack of knowledge on behalf of the tenant, many of whom believe that the contents of their abode are covered by your property insurance policy, which, as property managers know, is not the case.

Here are the facts. Your owner’s policy covers the structure but not renters’ possessions and, if the unit becomes uninhabitable, you aren’t responsible to provide a accommodations. Another simple fact is that renters insurance is actually fairly inexpensive. Arm yourself with accurate and current info, so you know how to approach potential residents about the importance of protecting their interests with proper coverage.

The Cost of Losing Everything

Certainly, those precious keepsakes, photos, and mementos can never truly be replaced, but a little cash replacement value can go a long way when all of a tenant’s belongings are lost due to a fire, windstorm, or other unpredictable act of nature. Furnishings, bedding, and incidentals such as medications and clothing are replaceable through renters policies, but coverage limitations will depend on the policy type the tenant chooses. Print up this handy Renters Insurance Checklist from the III, and offer it to new and potential tenants during the application process, because the cost of losing everything is incalculable.

Dispelling the Myth that Renters Insurance is Expensive

Many tenants often don’t want the hassle of one more bill, but renters insurance can be had for less than $200 per year nationwide according to estimates from the National Association of Insurance Commissioners. Discounts are available for many reasons including renters combining multiple policies, having good credit, being a senior or active military, and for having a long-term relationship with an insurer.

As a property manager and owner, you can do your part to foster insurance discounts for yourself and your tenants by providing:

• Security Systems
• Smoke Detectors
• Deadbolt Locks
• Ample Exterior Lighting
• Property Security

Renters Insurance Benefits are Immediate Following a Disaster

Renters policies also provide displaced tenants with funds to cover temporary living arrangements and associated expenses. Today, most reliable insurers can make almost immediate arrangements to offer a stipend for a hotel or temporary housing arrangements for policyholders, which can be a huge burden on any family. Without renters insurance coverage, they may be out on the streets – something many people just don’t have the foresight to consider when opting out of renters insurance.

Don’t make renters insurance optional, – require your tenants to purchase coverage – or at least highly encourage them to do so.

Appfolio | Company Website | LinkedIn Connect | AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money.  Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Landlords all across the country are fed up with crime in rental properties, and all the associated costs. Many communities are now pushing landlords to adopt crime-free rental policies. Usually, this means landlords would go to training sessions hosted by the local police department, and allow in-depth inspections of their properties.

The goal in mind for landlords is attracting higher quality tenants who will help to maintain a higher quality rental property, which in turn keeps profits up. A crime-free property accomplishes that goal.

Landlords can learn how to prevent and identify crime directly from a crime prevention officer while completing a training session. It is very difficult for the untrained eye to spot signs of serious crimes like drug sales or manufacturing.

Local police departments are eager to assist landlords wishing to help lower crime in the neighborhood. For example the Salem, Oregon police department is actively registering property managers for its annual landlord training in April. This is a two-day intensive class focusing on local rental laws and crime prevention, with topics like drug recognition in and around rental properties. The cost of this two day workshop is about $70 per person.

This demonstrates a growing trend; landlords who care want advice on how to prevent crime in the rentals. Cities strive to provide that training.

The only downside is the fees.

In addition to tuition, property owners may have to pay an annual licensing fee for each unit, and inspection fees on an as-needed basis. It’s possible for a community to adopt a policy that forces all landlords to attend the training sessions, willing or not.

The alternative is self-education. A central focus on crime training is screening tenants. Most seasoned landlords already know the value of properly performed background checks — and how invaluable quality tenant screening can be. Focusing on who you allow into the rental property can greatly reduce the risk of criminal activity.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.

Pasadena, CA – March 25, 2014

We hope to see everyone back in Pasadena in 2015!

www.IncomePropertyExpo.com

Seduced by the promise of extra income — a $100 or so a night in many cases — tenants across the country are looking to vacation rental service Airbnb to turn their apartments into profit centers through temporary sublets.

The most active markets are in major cities, including those with rent limits. In some cases, rent-controlled tenants are making more money than the landlord is legally allowed to charge.

Some call it ingenuity. But others, including property owners and managers, say it’s illegal.

As the practice grows in popularity, landlords are fighting back. For instance, in a recent report from San Francisco, a tenant who was earning $185 a night by taking in temporary boarders just got the boot. An eviction attorney says he’s filed about a dozen of these cases in the last few months, according to the report.

In New York, a landlord was slapped with fines when a tenant’s sublet violated the ban on short-term lodging.  The landlord deferred the eviction when the tenant agreed to pay the penalties and to stop renting out the spare bedroom.

Airbnb offers a turnkey service allowing visitors to search online listings for extra rooms or even empty couches in large cities around the world. Sublets in San Francisco alone are estimated in the thousands, according to the report.

Despite negative publicity,  the problem doesn’t seem to be going away.

If a lease agreement prohibits sublets, or short-term rentals violate local law, a landlord may have grounds to file an eviction. However, in some cases there is no built-in remedy for landlords against tenants who are exploiting a lease for profit.

And, some tenants won’t leave quietly. One tenant attorney told reporters that landlords are using the Airbnb situation as a “false pretense” to get rid of rent-controlled tenants. He negotiates lease buy-outs on behalf of tenants in cases where an eviction may be costly and protracted.

Airbnb says its policies discourage anyone from breaking the lease, or the law.

American Apartment Owners Association | Company Website |  Rental property management can be very demanding. Our job is to make this day-to-day property management process smoother. AAOA provides a host of services ranging from tenant screening to landlord rental application forms and contractor directory to apartment financing.