BILL ANALYSIS
SB 985
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Date of Hearing: July 11, 2001
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Alan Lowenthal, Chair
SB 985 (Kuehl) - As Amended: July 9, 2001
SENATE VOTE : 22-15
SUBJECT : Landlord - Tenant
SUMMARY : Requires, among other things, additional notice to
tenants when a property owner terminates a periodic tenancy.
Specifically, this bill :
1)Requires landlords within the Cities of Los Angeles, Santa
Monica, or West Hollywood to give at least 60 days notice to
terminate a periodic tenancy. (See existing law re: periodic
tenancy)
2)Requires a tenant to give at least 30 days notice prior to
ending a periodic tenancy.
3)Requires a tenant to have been living in the dwelling for a
least one-year in order for the additional notice requirements
to apply.
4)Sunsets the above notice provisions January 1, 2005.
5)Revises the Costa-Hawkins Housing Act exemption for
condominiums to apply the exemption only to condominium units
that have been sold separately by the subdivider to a bona
fide purchaser for value and provides that the initial rent
for such a unit would be the lawful rent in effect on May 7,
2001.
6)Provides that the current exemption would not be affected when
all the units in the converted condo have been sold except for
the unit retained by the subdivider as his or her principal
place of residence for at least one year following the
subdivision.
7)Requires any rental agreement and 3-day notice to pay-or-quit
to disclose the name, telephone number, and address of the
person to whom the rent shall be paid and provides that, if
the address provided by the owner does not allow for personal
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delivery, then the rent may be mailed to the provided name and
address. If the tenant can show proof of mailing to the
provided name and address, the owner will be conclusively
presumed to have received the rent on the date posted.
8)Requires the owner to provide a copy of the rental agreement
or lease to the tenant within 15 days of its execution by the
tenant and to provide one copy each calendar year thereafter
within 15 days of request of the tenant.
9)Adds, "for the purpose of receiving rental payments", to the
list of situations where a party who enters into a rental
agreement on behalf of an owner shall be deemed an agent of
the owner(s).
EXISTING LAW :
1)Provides that when a lease expires and a tenant pays rent and
the landlord accepts rent for the month following the expired
lease, a "periodic" or "month to month" tenancy is created.
(Civil Code Section 1945)
2)Requires a 30-day written notice by either party to terminate
a periodic rental agreement, such as a month-to-month tenancy.
(Civil Code Section 1946)
3)Allows a landlord to terminate a tenancy by giving three days
notice if the tenant has done any of the following (Civil Code
Section 1161):
a) failed to pay rent;
b) violated any provision of the lease or rental agreement;
c) materially damaged the rental property;
d) substantially interfered with the other tenants; or
e) used the property for an unlawful purpose.
4)Requires landlords to give an additional 30 days notice, for a
total of 60 days, for a proposed rent increase that, either in
and of itself or when combined with all other rent increases
in the 12 months prior to the effective date of the increase,
is more than 10% of the amount of rent charged to a tenant at
any time during the 12 months prior to the effective date of
the increase. (Civil Code Section 827)
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5)Requires that owners, when terminating a Section 8 contract
(which, in most cases, has the effect of terminating the
tenancy), provide at least 90 days written notice to the
affected tenants. (Civil Code Section 1954.535)
6)Requires one-year notice to seniors and the disabled (120 days
for all others) when terminating a tenancy due to an Ellis Act
eviction. (Government Code Section 7060 et seq .)
7)Authorizes, under the Costa-Hawkins Rental Housing Act, owners
of residential real property to establish the initial and all
subsequent rental rates for certain dwellings or units,
including units that are "alienable separate from the title to
any other dwelling unit (condominiums). (Civil Code Section
1954.52.)
8)Requires any owner of a dwelling structure containing one or
more units offered to the public for rent or residential lease
to disclose the name and street address at which personal
service may be effected upon each manager and each owner of
the premises. (Civil Code Section 1962.)
9)Defines an unlawful detainer to include, among others, the
situation where a tenant continues in possession of the
property without landlord's permission after the tenant's
nonpayment of rent and service of a three-day notice to pay or
quit. The notice must state the rent amount that is due.
(Code of Civil Procedure Section 1161.)
10)Provides that a party who enters into a rental agreement on
behalf of the owner who fails to comply with the provisions of
this bill is deemed an agent of each person who is an owner
for various specified purposes. (Civil Code Section 1962)
FISCAL EFFECT : None.
COMMENTS :
60 Days Notice of Termination
According to the sponsors, California is experiencing record low
vacancy rates. All major cities have vacancy rates well below
the 5% rate considered normal. Rental housing in the San
Francisco Bay Area is particularly tight, with a vacancy rate in
San Francisco of 1.3%, San Mateo County - 0.8%, Santa Clara
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County - 0.6%, Oakland - 0.3%, Sunnyvale - 0.3%, and Gilroy -
0.0%. In fact, northern California seems particularly affected,
with vacancy rates of 0.5% in Solano County, 0.0% in Dixon, 0.5%
in Davis, 2.9% in Sacramento, and under 2.0% in San Joaquin
County. Southern California is also very constricted, with
Orange County at 2.2%, Ventura County at 3.0% and Los Angeles
County at 4.0%. Only Fresno County seems unaffected, with a
vacancy rate of 7.7%.
Given that of all the areas noted above, Los Angeles County
seems to be the closest to a healthy vacancy rate, the committee
may wish to consider expanding this bill to include some of the
Northern California Bay Area Communities.
Previously this bill applied statewide and would have required a
landlord to give 90 day notice prior to terminating a periodic
tenancy. This bill was amended in Assembly Judiciary Committee
to decrease notice to 60 days, provide application to only the
Cities of Los Angeles, Santa Monica and West Hollywood and
require that a tenant must have been living in the unit for at
least one year.
Under existing law, as noted above, both tenants and landlord
must give 30 days notice to terminate a month to month tenancy.
The sponsors note that in high cost areas of the state, tenants
forced to move in 30 days are presented with serious hardship in
securing new housing. This bill seeks to give tenants more time
in securing a new place to live following the termination of a
tenancy. According to the sponsor this bill does not impact
3-day notice to pay/cure or quit as noted under existing law.
For example, if a tenant has failed to pay rent or is causing a
nuisance, the landlord may give that tenant a 3-day notice to
pay rent/end the nuisance or leave the premises. This bill does
not affect those provisions.
In rent control cities a periodic tenancy cannot be ended by the
landlord without "just cause" or "good cause" reason to evict.
In these communities, the landlord must state the reason for the
termination, and the reason may be reviewed by the local housing
authority. Landlords usually have to state just cause for
evicting tenants who live in federal or state subsidized
housing.
Under this bill, a landlord would still have to show just cause
for termination of a periodic tenancy.
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Opponents argue that the current 30 day notice has worked for
the rental housing industry for 120 years and that a longer
notice would place another impediment on the operation of rental
housing in California. The California Apartment Association
argues that landlords go to great lengths to keep good tenants
and voluntarily provide longer notices to good tenants.
Other state's notice requirements
Other states have varying notice requirements. In Vermont, for
example, a landlord must give 30 days notice to terminate a
month-to-month tenancy if the tenant has been living in the unit
for 2 years or less. If the tenancy has continued for more than
2 years, the landlord must provide 60 days notice. (9 Vermont
Statutes Annotated 4467.) Maryland requires 30 days notice to
terminate a periodic tenancy. (Md. Real Property Code Ann.
8-402.) New Jersey provides only for eviction for cause,
thereby making a longer notice period unnecessary. (N.J. Stat.
2A: 18-61.1.) And, Georgia requires a landlord to give 60 days
notice and a tenant 30 days notice to terminate a tenancy at
will. (O.C.G.A. 44-7-7.) Massachusetts, which has the lowest
vacancy rate in the country according to a recent U.S. Census
Bureau report, generally has a 90-day notice, which can be
reduced to the period of the rental payment. (Mass. Ann. Laws
ch. 186, 12.)
Costa Hawkins amendments
SB 985 would revise the condominium exception in the
Costa-Hawkins Act to only apply to a condominium unit that "has
been sold separately by the subdivider to a bona fide purchaser
for value."
According to the sponsor, this amendment is necessary to close a
loophole in law that allows landlords to avoid local rent
control laws. The exemption was originally created to spur
construction of condominiums, seen as an affordable housing
alternative, and in recognition that condominiums were built
with the same purpose as apartment units. However, the language
was broadly written and, as a consequence, some apartment
property owners have taken advantage of the law by obtaining a
permit to convert to condominiums, but never completing the
process. In the meanwhile, the property owners continue to rent
the apartment units, free from local rent controls because of
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the Costa-Hawkins exemption. In some cases, proponents assert,
the condo-conversion permits were pulled up to eight years ago,
but the owners are still renting the units to tenants.
This bill seeks to close that loophole and provide that the
exemption would apply only when the unit is sold separately to a
bona fide purchaser for value. Thus, apartment units that have
remained rentals would be subject to local rent control laws.
This is only fair, asserts the sponsor.
In opposition, the Small Property Owners of San Francisco
(SPOSF) assert that this bill would deprive an owner of market
rents to which he or she is entitled under current law. SPOSF
also asserts that SB 985 will have the undesirious effect of
reducing available housing stock because "the great majority of
owners of newly converted condos will simply not rent them out.
Instead, they will leave them empty until such time as they
choose to sell."
SPOSF also asserts that expanding the scope of rent control will
surely discourage developers from building new units in rent
control jurisdictions.
The proponents of SB 985 respond that the opposition arguments
simply do not acknowledge the reality that many apartment owners
have abused the Costa-Hawkins exemption to avoid local rent
controls. Otherwise, why haven't the units been separately sold
to third parties instead of being rented out to tenants at
uncontrolled rents? The proponents also respond that developers
building new units are not likely to rent their new units to
tenants, as opposed to selling them brand new and ready for
immediate occupancy by the buyers.
Rent Payment Information
This bill requires any rental agreement and 3-day notice to
pay-or-quit to disclose the name, telephone number, and address
of the person to whom the rent shall be paid.
According to the Legal Aid Foundation of Los Angeles, it
frequently encounters cases where the landlord has unilaterally
changed the method of collecting or receiving rent payments from
the tenant. In these cases, the tenant is unsure of whom to
pay, and this confusion could lead to an unlawful detainer
action. In one case, a man claimed to be the new owner and
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demanded that the rent be paid to him without providing proof of
the new ownership. The tenants naturally hesitated without the
proof and were served with a 3-day notice to pay-or-quit which
did not have a payment address, only a name and telephone
number. When Legal Aid called the number, the person told Legal
Aid to mail the rent to an address that was occupied by a tenant
in the apartment building. Faced with this confusing
information, the tenants waited for further clarification. While
waiting, they were sued in unlawful detainer. Proponents assert
that this provision would protect both landlords and tenants
alike, by setting forth clear rules for payment to whom and
where. If the landlord wishes to change the payment terms, he
or she could easily notice a change pursuant to Civil Code
Section 827 by giving 30-days notice of the change.
Rental Agreement
This bill would require the landlord to give a copy of the
executed rental agreement to the tenant within 15 days of the
execution of the agreement. Proponents say this provision is
necessary because many landlords do not give tenants a copy of
the executed agreement, thus leaving a tenant uncertain of his
or her rights and obligations when a dispute arises. This
problem has become increasingly acute as property owners become
more aggressive in seeking ways to evict tenants from
rent-controlled or cause-controlled units.
In support of this provision, the sponsor has provided several
examples cited by the Legal Aid Foundation of Los Angeles where
the landlord is restricting a tenant's rights under the rental
agreement (e.g., no roommates, no amenities) but is refusing to
provide the tenant a copy of the agreement. Fairness, argue the
proponents, dictate that the tenant should be given a copy of
the rental agreement.
This bill would also require the property owner to give a tenant
a copy of the rental agreement no more than once a year after
the rental commenced, upon the tenant's request. This provision
is needed, say proponents, in the event a dispute arises later
in the tenancy and the tenant never received or lost the rental
agreement.
Double referred : The Assembly Committee on Rules double
referred SB 985 to Judiciary and Housing and Community
Development. This bill passed Judiciary on July 3, 2001 by a
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vote of
6 to 3.
REGISTERED SUPPORT / OPPOSITION :
Support
Western Center on Law and Poverty (co-sponsor)
California Rural Legal Assistance Foundation (co-sponsor)
Affordable Housing Foundation, San Francisco
The Agora Group, Goleta
Asian Law Alliance, San Jose
Burbank Housing Development Corporation, Santa Rosa
Cabrillo Economic Development Corporation, Saticoy
California Church Impact
California Federation of Labor, AFL-CIO
California HIV Advocacy Coalition, So. Calif. Region
California Institute for Rural Studies, Davis
California Legislative Council of Older Americans
California Network of Neighborhood Programs
California Reinvestment Committee
California State Association of Electrical Workers
California State Pipe Trades Council
Center for Community Advocacy, Salinas
Chicano Consortium, Sacramento
Chico Housing Improvement Program
Children Now
Children's Advocacy Institute
City Heights Community Development Corporation, San Diego
Civic Center Barrio Housing Corporation, Santa Ana
Clearinghouse CDFI, Lake Forest
Coachella Valley Housing Coalition, Indio
Coalition for Economic Survival, Los Angeles
Community of Friends, Los Angeles
Community Resource Associates, Clayton
Congress of California Seniors
Council of Churches of Santa Clara County
Council of Community Housing Organizations, San Francisco
East Bay Asian Local Development Corporation, Oakland
East Bay Community Law Center, Oakland
Ecumenical Association for Housing, San Rafael
Eden Housing, Hayward
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The Enterprise Foundation
Esperanza Community Housing Corporation, Los Angeles
Fair Housing Foundation of Long Beach
First Community Housing, San Jose
Friends Committee on Legislation
Friends of the Homeless, Santa Rosa
General Assistance Advocacy Project, San Francisco
Great Northern Corporation, Weed
Harbor Interfaith Shelter, San Pedro
Homeward Bound of Marin and San Rafael
Housing Authority of the County of Santa Clara
Independent Living Resources, Concord
Inglewood Neighborhood Housing Services
Jericho: A Voice for Justice
The Kennedy Commission, Lake Forest
La Raza Centro Legal, Inc., San Francisco
Law Center for Families, Oakland
Legal Aid Foundation of Santa Barbara County
Los Angeles Housing Law Project
Los Angeles Housing Partnership
Lutheran Office of Public Policy
Metropolitan Area Advisory Committee on Anti-Poverty, National
City
Mexican American Legal Defense and Educational Fund
Mental Health Advocacy Services, Los Angeles
Mercy Housing California
Mid-Peninsula Housing Coalition, Redwood City
Napa Valley Community Housing
Neighborhood House Association, San Diego
Nevada County Housing and Community Development
New Faze Development, Inc., Sacramento
Older Women's League
Orange County Community Housing Corporation, Santa Ana Pacific
Pajaro Valley Housing Corporation, Watsonville
People's Self-Help Housing Corporation, San Luis Obispo
Planning for Elders in the Central City, San Francisco
Preservation Properties, Santa Monica
Protection and Advocacy, Inc.
Related Companies of California
Rubicon Programs, Inc., Richmond
Rural California Housing Corporation, Sacramento
Rural Communities Housing Development Corporation, Ukiah
Sacramento Gray Panthers
Sacramento Loaves and Fishes
Sacramento Mutual Housing Association
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Sacramento Neighborhood Housing Services
Santa Cruz Community Counseling Center
Santa Monica Commission on Older Americans
Scotts Valley Band of Pomo Indians, Lakeport
Self-Help Enterprises, Visalia
Senior Housing Action Collaborative, San Francisco
Sentinel Fair Housing, Oakland
Shelter Inc., of Contra Costa County
Shelter Network of San Mateo County
Shelter Partnership, Los Angeles
Sisters of Saint Joseph's of Carondelet, Los Angeles
Skid Row Housing Trust
South County Housing, Gilroy
Southern California Association of Non-Profit Housing
St. Joseph Health System, Santa Ana
St. Peter's Housing Committee, San Francisco
Tenderloin Housing Clinic
Transitional Living and Community Support, Sacramento
Venice Community Housing
West Contra Costa Conservation League, El Cerrito
West Hollywood, City of
West Hollywood Community Housing Corporation
Western States Council of Sheet Metal Workers
Westside Fair Housing Council, Los Angeles
Opposition
Apartment Association of Greater Los Angeles
California Apartment Association
California Association of Realtors
Small Property Owners of San Francisco
Individual Letters (9)
Analysis Prepared by : Hubert Bower / H. & C.D. / (916)
319-2085