MacFarlane Real Estate, Inc.

I recently met with a potential client who was served a “3-day notice to pay rent or quit”…which happened to be improperly served…which came after a 60-day notice to vacate had been served two weeks prior…which happened to have been rescinded days later by the attorney…MY POINT IS THIS: the Rent Stabilization Ordinance of Los Angeles (aka “rent control”) is complicated enough, but throw in Rent Escrow Account Program (REAP) regulations and someone is bound to foul things up.  There are many victims when attorneys, property management companies, housing authorities and tenants are playing with bad information.  By the way, in the example I mentioned above, the property was just recently taken back by the bank (current owner) from a delinquent owner (original landlord/lessor).  Sound familiar in today’s real estate climate?

Based on my discussion with the potential client, I thought I would share one important piece of information when it comes to evicting tenants in Los Angeles when the subject property has been accepted into the REAP program.  Among the many legal steps a landlord must take before, during and after an eviction action, REAP introduces a handful of other considerations.

Prior to initiating an eviction action against a REAP tenant, the landlord must request verification in writing from the Los Angeles Housing Department (LAHD) that the tenant has not paid rent into the REAP account.  LAHD must respond within three (3) business days.  The landlord shall not initiate any actions to evict on the basis on nonpayment of rent without making this inquiry.  Naturally, if the landlord receives confirmation that the tenant has paid the rent to LAHD, no eviction action shall be initiated based on nonpayment.

As discussed in earlier posts, certain properties within the City of Los Angeles are subject to the Rent Stablization Ordinance (”rent control”).  Owners of such properties are limited as to why, how and when they can evict a tenant.  Below are the twelve legal reasons for evictions in the City of Los Angeles, as laid out in more detail in Rent Stabilization Ordinance Section 151.09:

1. Tenant has failed to pay rent which the landlord is entitled;

2. Tenant has violated a lawful obligation or covenant of the tenancy, other than the obligation to surrender possession upon proper notice, and has failed to cure such violation after having received written notice thereof from landlord;

3. Tenant is committing or permitting to exist a nuisance in or is causing damage to the rental unit, or to the appurtenances thereof, or to the common areas of the complex containing the rental unit, or is creating an unreasonable interference with the comfort, safety, or enjoyment of any of the other residents of the same or adjacent buildings;

4. Tenant is using or permitting a rental unit to be used for any illegal purpose;

5. Tenant, who had a written lease or rental agreement which terminated on or after the effective date of the Rent Stabilization Ordinance, has refused, after written request or demand by landlord to execute a written extension or renewal thereof for a further term of like duration with similar provisions and in such terms as are not inconsistent with or violate of any provision of the Rent Stabilization Ordinance or any other provision of law;

6. Tenant has refused the landlord reasonable access to the unit for the purpose of making repairs or improvements, or for the purpose of inspection as permitted or required by the lease or by law, or for the purpose of showing the rental unit to any prospective purchaser or mortgagee;

7. The person in possession of the rental unit at the end of a lease term is a subtenant not approved by the landlord;

8. The landlord seeks in good faith to recover possession of the rental unit for use and occupancy by:

a) the landlord, or the landlord’s spouse, children, or parents, provided the landlord is a natural person and not a corporation or partnership; or

b) for a resident manager, provided that: no alternative vacant unit is available for occupancy by a resident manager; except that where a building has an existing resident manager in order to replace her/him with a new manager;

9. The landlord, having complied with all applicable notices and advisements required by law, seeks in good faith to recover possession so as to undertake Primary Renovation Work of the rental unit or the building housing the rental unit, in accordance with a Tenant Habitability Plan accepted by the Department of Housing, and the tenant is unreasonably interfering with the landlord’s ability to implement the requirements of the Tenant Habitability Plan by engaging in any of the following actions:

a) Tenant has failed to temporarily relocate as required by the accepted Tenant Habitability Plan; or

b) Tenant has failed to honor a permanent relocation agreement with the landlord as established by the Rent Stabilization Ordinance;

10. The landlord seeks in good faith to recover possession of the rental units under either of the following circumstances:

a) to demolish the rental unit; or

b) to remove the rental unit permanently from rental housing use;

11. The landlord seeks in good faith to recover possession of the rental unit in order to comply with a governmental agency’s order to vacate, order to comply, order to abate, or any other order that necessitates the vacating of the building housing the rental unit as a result of a violation of the Los Angeles Municipal Code or any other provision of law;

12. The Secretary of Housing and Urban Development is both the owner and plaintiff and seeks to recover possession in order to vacate the property prior to sale and has complied with all tenant notification requirements under federal law and administrative regulations.

Note: Evictions under provisions #3 and #4 (when police reports and city attorneys are involved) and #8-12 require that a Landlord Declaration of Intent to Evict be filed with the Los Angeles Housing Department.

As is clear from reading the above-described twelve scenarios, the justifications for evictions in a “rent control” property in Los Angeles are fact-driven.  In addition, eviction proceedings related to a “rent control” property are highly scrutinized by tenant advocate groups and the Los Angeles Housing Department (LAHD).  Therefore, it is important for a “rent control” landlord to be wary of the law.

What is Rent Control?

The Rent Stabilization Ordinance (RSO), commonly referred to as “rent control”, was passed as an ordinance in 1978 to protect Los Angeles tenants from excessive rent increases, while at the same time, allowing landlords a reasonable return on their investments.

What Buildings are Covered under Los Angeles Rent Control?

Rent control covers properties within the City of Los Angeles, built before October 1978, that are apartments, condominiums, townhomes, duplexes, houses with two or more dwelling units on same lot, or a hotel, motel, rooming/boarding house room where tenant has stayed for 30 or more consecutive days. In addition, mobile homes or mobile home pads are covered under rent control if the park was issued a permit to operate before February 10, 1986.

What Properties are Exempt from Rent Control in Los Angeles?

1. Properties located in other municipalities or within unincorporated areas within the County of Los Angeles;

2. Single family dwellings, used as such;

3. Properties (except for mobile homes and mobile home pads) with a Certificate of Occupancy issued after October 1, 1978 (considered “new construction”);

4. Mobile homes or mobile home pads when the park was issued a permit to operate after February 10, 1986;

5. Government owned properties;

6. Units occupied by an owner or family member where no rents are collected;

7. Vacant units (10 days to register upon rental of property);

8. Properties permanently removed from the rental market;

9. “Luxury housing accomodations” issued an Los Angeles Housing Department (LAHD) certificate;

10. Demolished rent control properties;

11. Schools/hospitals;

12. Hotels/motels - with tenancy under 30 days; and

13. Non-profit owner units, with certain qualifications.

Each one of the above-listed scenarios can present difficult issues that should be examined closely.  If you believe your property may fall into one of the above categories, it is highly suggested you consult an attorney and confirm the findings with LAHD.

What is the Yearly Allowable Rent Increase for Rent Control Properties in Los Angeles?

As of July 1, 2008, the maximum percentage is 3%.  This percentage is tied to the Consumer Price Index and is calculated each year.

There are particular adjustments and potential exemptions related to this percentage, but generally the 3% figure is controlling.

On What Grounds Can a Tenant Be Evicted From a Los Angeles Rent Control Property?

Tenants may only be evicted for one of twelve reasons allowable under rent control laws (section 151.09).  I will list out and explain each of these twelve situations in a later post.  The reasons can be difficult to understand and vary considerably based on the specific facts.

What is “relocation assistance”?

Relocation assistance is required if a rental unit is under rent control and the landlord is evicting a tenant for his/her own occupancy or occupancy for his/her spouse, parents, children or for a resident manager.  Relocation assistance is also required for major rehabilitation and demolition, as well as orders from a governmental agency for a tenant to vacate due to a violation of the Los Angeles Municipal Code or any other provision of law.

For further information and more detailed explanations regarding Los Angeles rent control laws, the LAHD website provides helpful information.