ACTION Apartment Association

December 2005

12/01/2005 8:48 PM | ACTION (Administrator)

Action helps you make owning rental property as easy as 1-2-3

October 2005

10/01/2005 8:47 PM | ACTION (Administrator)

President's Message

By Wes Wellman, ACTION President

I am honored to return as president of ACTION. I was previously President of ACTION in 1988 and 1989. ACTION will surely miss Gordon Gitlen and I will personally miss him as well. He was a tenacious leader who was always working to protect your property rights.

Whenever there is a change in leadership for an organization it is a time for reflection about where ACTION has been and where it is going. When I first got involved with ACTION in 1984 I found a young organization with members of great creativity, open hostility for rent control and a desire to protect property rights. Over the years we have had the opportunity to try many plans of attack on Rent Control. Some of which have worked and many have failed.

These attacks have included two initiatives for vacancy decontrol, one in the 80’s and one in the 90’s. In the 80’s, we were successful at getting a condominium conversion ordinance passed called TORCA (Tenant Ownership Rights Charter Amendment). We lost on the first attempt at the polls but we were close enough that SMRR leadership decided to negotiate a deal rather than have us pass TORCA on our own. Unfortunately, it had a sunset provision which occurred during the Real Estate downturn of the mid 90’s. Therefore, it died for lack of interest.

We recently attempted a condo conversion ordinance but it failed at the polls because a majority of the owners were more interested in staying in business than selling their units as condos. This is a testament to the success of the Costa-Hawkins vacancy decontrol bill that passed through the California Legislature in 1995, just 10 years ago. The passage of the Costa-Hawkins bill has brought a more amicable era with the Rent Control Board.

Our opponents too were young and dumb and made many mistakes that we were able to exploit. However, they too have grown, matured, calmed down and have set about the business of protecting their political power base. They are willing to even “eat their own young” when politics have required it. This occurred in the early 90’s when SMRR fired their City Attorney, Robert Myers, when he would not tow the political line in trying to crack down on the homeless problem which was by all accounts worse than it is today. Yes, it is hard to believe, it was worse! But Robert Myers would not prosecute even the most hardened criminal element of the homeless. ACTION made an attempt to create an elected City Attorney position. The measure failed. However, we were successful at pinning a badge on Robert Myers as the promoter of the homeless. When SMRR did a survey they discovered that most of the people in Santa Monica equated the homeless problem with Robert Myers. As such, SMRR majority fired their own to protect their voter base at the polls.

Another example of how SMRR has grown up is in the 3304 regulations, which allow owners to evict a tenant who is not using their unit as their primary residence. The Rent Control Board was informed that they could not protect against such a law on a state level unless they passed one themselves. Thus, the Rent Control Board passed the ordinance in order to control the process. Their process of course makes it much more difficult for landlords to evict tenants not in residency. However, units have been recovered using the process.

Over the years we have used the court system many a time in an attempt to protect property rights. We once won a unanimous appellate decision in the Santa Monica Beach case which held Rent Control unconstitutional. However, the California and the U.S. Supreme Courts saw the property rights issue differently and reserved the decision. To make matters worse we have had several recent cases that have negatively impacted property rights. In Lingle v. Chevron U.S. Supreme Court allowed the State of Hawaii to regulate rents on gas stations. Then, in Kelo v. New London the Supreme Court allowed the government to take property for public use provided it paid just compensation. However, an elderly woman’s home was being taken and then given to a private developer for their corporate headquarters. The ink is hardly dry on the decision and the City of Santa Monica has already announced that it wants to seize an apartment building and demolish it for code violations.

ACTION recently won Balter v. SMRCB, which prevents the RCB from forcing us to pay interest on Security deposits. Our attorney Rosario Perry obtained an attorneys fee award of $175,000.

With the new court rulings we must concentrate on smaller cases of general appeal. We should also focus on changing state laws in Sacramento.

Please feel free to call me or the ACTION office with your own short story of what the rent board is doing to you so that we can help to protect your property rights. We are looking for cases to file which would protect property rights in general and that are not totally unique to your situation.

I look forward to serving as your new President of ACTION and I look forward to hearing from you. I also encourage and ask you to jump in and participate more with ACTION. We can become stronger and more effective by having more involvement from our members. I look forward to your participation.

August 2005

08/01/2005 8:45 PM | ACTION (Administrator)

The return of Carl Lambert

June 2005

06/01/2005 8:45 PM | ACTION (Administrator)

May 2005

05/01/2005 8:44 PM | ACTION (Administrator)

March 2005

03/01/2005 8:42 PM | ACTION (Administrator)

The Slippery Slope to Second Class Citizenship

By James L. Jacobson

THE SLIPPERY ROAD
TO SECOND CLASS CITIZENSHIP

Santa Monica rental property owners often object to being called “landlords” for good reason: because they are the exact opposite of “landlords.” A much better description would be “landservants” because they are required by local laws to serve their tenants and lose many of the civil rights enjoyed by other citizens once they become the “owners” of rental property.

I would not be a “landlord” in an area with radical rent controls because the California courts have allowed local governments make “landlords” second class citizens to such an extent that it is questionable which side won the American Civil War. This Rent Board Story will review some of the court decisions which led to this situation where property owners are second class citizens.

Birkenfeld v. Berkeley –
Rental Agreements Become Tenant Life Estates

The first step on the road to second class citizenship for property owners came from the California Supreme Court Decision of Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129 which effectively gave all existing tenants property a right to remain on the “landlords” property for life unless they were evicted for “just cause.” As a result, although tenants still had the right and liberty to terminate their tenancies at will property owners could only terminate tenancies by filing eviction actions for limited, specified reasons. The Birkenfeld decision makes this major change on the law seen quite harmless by stating:

These permitted grounds for eviction appear to cover most if not all of the grounds that would otherwise be available except that of termination of the tenancy. No other omitted grounds have been called to our attention and we assume for present purposes that the effect of the provision is simply to prohibit the eviction of a tenant who is in good standing at the expiration of the tenancy unless the premises are to be withdrawn from the rental housing market or the landlord’s offer of a renewal lease has been refused.”

Notice how harmless the quotation above seems. Instead of saying that “landlords” under rent control are permanently forced to continue a business relationship and provide services to persons they no longer wish to associate with (and might have come to despise), the issue is stated as though landlords retain most of their rights except the right to terminate a tenancy. The right NOT to associate with others or to refuse service to anyone is eliminated by this apparently innocuous paragraph. But this was only the beginning of the elimination of the rights of those people known as “landlords.”

Nash v. City of Santa Monica –
Involuntary Servitude Lawful When Applied to Landlords

Although the Birkenfeld quotation above seems to indicate that “landlords” may go out of business because it says that rental units may be “withdrawn from the housing market” this is misleading. The Rose Bird Supreme Court did not actually mean that it would actually uphold the right of “landlords” to exercise the liberty to go out of business. Quite the opposite. Although the Civil War might seem to have outlawed slavery and although the California Constitution at Article 1 Section 6 states, “Slavery is prohibited. Involuntary servitude is prohibited,” the Rose Bird Supreme Court reversed the Court of Appeal on that issue in Nash v. City of Santa Monica (1984) 37 Cal.3d 97 at 110-111, where the Court’s complete disregard for the rights of property owners was best summed up by Judge Rose Bird’s concurring Opinion as follows:

Further, the ordinance [sic] imposes only a minimal constraint on Nash’s freedom. As the majority point out, he can escape from the landlord business by the simple expedient of selling his property or withholding rental units from the market as they become vacant. Nash does not contend that this particular piece of property is especially important to him or that a sale would harm his ability to provide for himself or his dependents. In short, the ordinance burdens Nash’s right to withhold personal services only by limiting his ability to maximize the profits from his property. Though this is a burden, it is not an unduly harsh one in view of the city’s compelling interest in providing housing for its residents.

Thus, according to Rosie and the Supremes, involuntary servitude is a minimal constraint on freedom which “landlords” can easily escape by selling their property and getting out of town. This interpretation of the law seems to be in direct conflict with California Constitution Article I Section 1 which states: “All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.” Unfortunately, the California Supreme Court ignored this part of the California Constitution for approximately 80 years.

Following the Decision in Nash, the State Legislature passed the Ellis Act to permit apartment owners to go out of business if they paid their tenants thousands of dollars in “relocation fees,” which clearly proves that there is no “right” to possess property or to refuse to perform services in this State because the Legislature can revoke this “privilege” at any time and because no Constitutional right may be conditioned upon paying money to another person.

Pennell v.City of San Jose –
Landlords Are Not Entitled to Equal Protection of the Law

The next step the California Supreme court took to deprive property owners of their rights was to make them responsible for the welfare of tenants by limiting the rent levels to the amount of rent that tenants could afford to pay. This took place in the Decision of Pennell v.City of San Jose which was in conflict with the Court’s earlier decision In Department of Mental Hygiene v. Kirchner (1964) 60 Cal.2d 716.

In Kirchner, the Supreme Court held that equal protection requirements of the State and Federal Constitutions prohibited the State from requiring a small class of persons– parents of adults who were involuntarily confined in state mental institutions– to pay the public expense of a patient’s confinement. This Decision was based upon the Takings Clause of the Fifth Amendment to the United States Constitution which forbids the taking of private property for public use without just compensation. This clause “was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” (Armstrong v. United States (1960) 364 U.S. 40)

In Pennell v. City of San Jose, the Court of Appeal applied the Kirchner decision and determined that the landlord’s duty to support their tenants could be no greater than a child’s duty to support his parent and struck down that part of the San Jose rent control law. Unfortunately, the Rose Bird Supreme Court ran to the rescue again and decided that landlords have greater duties than citizens generally by stating the following at 60 Cal.2d 716:

Although Kirchner’s principles have been applied in various “responsible relative “reimbursement cases (see, e.g., In re Jerald C. (1984) 36 Cal.3d 1, 10 [201 Cal.Rptr. 342, 678 P.2d 917] (plur. opn.) (and cases there cited)), we have not applied “Kirchner analysis” outside that context. In this regard, there is no authority suggesting Kirchner prohibits rent control generally, or that it prohibits the present tenant hardship scheme specifically. We have often confirmed the propriety of local rent control legislation that in effect placed the burden of “subsidizing” tenants (to the extent of the difference between unregulated market rents and regulated “fair return” rents) not on the local government but on local landlords.”

After the California Supreme Court rendered this outrageous Decision which made it perfectly clear that California cities were “forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,” that Decision case was appealed to the U.S. Supreme Court, the only two justices who wanted to hear the case were Justices Scalia and O’Connor. Justice Rehnquist wrote the majority opinion which found that the case was not “ripe for review” because no landlord specifically proved that his/her rents had been reduced because of tenant hardship.

The Danekas Decision –
Impairment of Contracts Permitted at Will

California Article 1 Section 9 states: “A bill of attainder, ex post facto law, or law impairing the obligation of contracts may not be passed.” This provision might sound good, but has no meaning when applied to rental agreements in rent controlled areas as proven by Danekas v. San Francisco Residential Rent Stabilization & Arbitration Bd. (2001)95 Cal.App.4th 638 at 651, the Court of Appeal interpreted this provision as follows:

“Legislative impairment of contract rights is forbidden only if the impairment is substantial and lacks a legitimate and significant public purpose. [Citations omitted.]

Therefore, although the Constitution says that the government may not pass a law which impairs contracts, the Courts say that it may do so unless the citizen proves that the impairment is “substantial” and the government does not have a good reason for doing it. For some reason, this approach is never applied to abortion, pornography, flag burning, discrimination or any other issue that liberals favor.

In the Danekas decision, the Court of appeal decided that “landlords” could not limit their contacts to specified persons, but had to permit tenants to replace tenants who departed their rental units even if the rental agreement specifically prohibited this. The Decision said that this impairment was not substantial because landlords operate in a “highly regulated industry” and because “Rent control, like the imposition of a new tax, is simply one of the usual hazards of the business enterprise.”

The judges might have a different attitude if someone broke their contracts and/or moved onto their properties without permission, but those who criticize “landlords” and support controls on them rarely invest any of their own money to providing housing or put their own rights at risk.

Pick v. Cohen –
No Right to Refuse Service to Anyone

It is common to see signs posted in businesses which say, “We reserve the right to refuse service to anyone.” But these signs are never seen in rent-controlled apartment buildings because “landlords” don’t have the right to refuse service to anyone any more.

As explained above, in Birkenfeld v. Berkeley the Supreme Court effectively converted month-to-month rental agreements into life estates for tenants, but that did not go far enough for the little City of West Hollywood where nothing ever seems to go far enough. That City decided that tenants could invite relatives or “domestic partners” to share the rental units (no matter what the rental agreement said) with the additional benefit that the rental agreements became inheritable estates for the domestic partner if the authorized tenant died or became incapacitated.

The Appellate Department of the Los Angeles Superior Court approved this Ordinance in Pick v. Cohen (2000) 83 Cal.App.4th Supp. 6 and explained that this law was a “proper use of police power” for the following reasons:

“The section at issue applies only to certain specific relatives or domestic partners of the named tenant, and provides the named tenant is restricted to only allow one person in this category to move into the premises, the person must have been in residence for more than one year, and the tenant must have died before the disputed section provides any protection. This is a proper use of police power to protect a specific group of relatives or domestic partners residing in the controlled property on a permanent basis from involuntary displacement due to a death or incapacity in the family. Additionally, the protection is only from eviction as a termination of tenancy of the named tenant; all of the good cause reasons for termination remain should the relative or domestic partner not perform his obligations as a tenant.

The restrictions seem reasonable until one realizes that every “named tenant” gets to invite one additional tenant to share the rental unit and that forming a “domestic partnership” in West Hollywood is less serious than joining a good bowling team as fewer qualifications are required.

After the Pick v. Cohen decision was rendered, the Santa Monica Rent Board thought this ordinance was a great idea and had the Rent Control Law amended to basically accomplish the same purpose. This Law was the subject of Rent Board Story 113 titled “How Landlord Virginia Finally Got Her Rental Unit Back.”

For all of the reasons stated, Santa Monica property owners rightfully object to being called “landlords” because the term is not reasonably applicable to them and neither is the Bill of Rights. And if you don’t believe it, go to any good law library and read the Rent Board Stories cited here.

January 2005

01/01/2005 8:39 PM | ACTION (Administrator)

Action Files the Federal Case Against REnt Control!

ACTION’S HAPPY NEW YEAR PRESENT TO YOU

By Rosario Perry

Well, ACTION has done it! It has filed its federal lawsuit against Santa Monica Rent Control. It is entitled ACTION and Mathew Millen v. Rent Control Board of Santa Monica. For those of you who wish to better understand the lawsuit’s theory we have set forth an explanation in the following paragraphs. (Click here to see the actual text of the complaint.)

First, the lawsuit seeks to declare only part of the law unconstitutional. However, because it may be too hard to separate that unconstitutional part from the rest, the entire law may have to be re-written. In any event, based on our research no less than 60% of the existing units which have not had a Costa-Hawkins increase are occupied by wealthy tenants who do not need rent control protection. Put another way, of the approximate 20,000 housing units whose rents are not yet up to market under Costa-Hawkins , more than 60% of them (12,000 units) are occupied by non-qualified tenants. These 12,000 units’ rents must be brought to market whether or not the tenants vacate. The lawsuit seeks to have the court declare the law unconstitutional under the 5th Amendment because the law protects wealthy tenants with low rents. Such protection has no legitimate state interest.

Second, and as a separate cause of action, ACTION is also alleging that the entire framework of rent control is unconstitutional because it does not accomplish its legitimate goals. In Santa Monica Beach v. Santa Monica Rent Control Board, this same argument was raised and rejected by the California Supreme Court. ACTION is going to present this argument to the federal courts.

A particular type of taking involving the 5th Amendment to the U.S. Constitution, deals with the regulation of land (as opposed to the more traditional eminent domain version). This type of taking is called regulatory taking of property. A regulatory taking of property occurs when either one of two things happens: First, when government regulates the use of your property, without substantially advancing a legitimate governmental interest in doing so; or Second, when the governmental regulation of the property is so severe that it deprives the property owner of any real economic use of the property. In Lingle v. Chevron U.S.A. Inc., (a case currently before the U.S. Supreme Court which should be decided in mid 2005) the legal issue is whether a commercial rent control law passed by the State of Hawaii promotes a substantial state interest. The lower court struck down the Hawaiian law as unconstitutional, finding no substantial state interest. If a regulatory restriction is challenged under this test (no substantial governmental interest being served by the challenged law) then the law is said to “effect a taking” regardless of how much money the owner is making or losing. In other words this test deals with the justification (or lack thereof) for the law, and not how much money the property owner is losing because of the regulation.

So, the question in our lawsuit will be: “Is Rent Control (or any part of it) a regulatory taking under, making it a violation of the 5th Amendment (i.e. because rent control serves no legitimate governmental purpose)?” Lingle v. Chevron is the first case before the U.S. Supreme Court that squarely presents this issue as it deals with Rent Control. All other cases dealing with rent control which have made it to the U.S. Supreme Court discussed rent control under different provisions of the U.S. Constitution, such as due process violations or equal protection violations.

ACTION does not want to wait until Lingle is decided before filing our lawsuit, due to the uncertainty of a definitive outcome of the court’s decisions. ACTION hopes that the federal court trial judge will look at the cases previously decided by its own Court of Appeals decisions. In ACTION’s pending lawsuit. ACTION will maintain that there is no substantial state interest in protecting rents of tenants who are wealthy. ACTION believes that even though rent control can arguably be justified as providing a legitimate state interest when limited to protecting the poor, the law is still unconstitutional since the burden of providing affordable housing for the poor is placed solely on the housing providers. The government collects taxes for social welfare from the entire community; it is their responsibility and not the select group of housing providers to deal with this social burden. ACTION believes that the current rent control law has artificially kept rental rates high due to the shortage of supply caused by providing wealthy people holding onto low rental units in Santa Monica. Many of these units are not even occupied full time by the wealthy tenants, said tenants using the units for vacation homes or extended hotel rooms. If these wealthy tenants were forced to pay market rates, they would give them up (because they do not need them as housing) and that would return a great number of units to the market. This would in turn increase the supply of the available units, and lower the rents. Thus ACTION believes that Rent Control is not solving the affordable housing issue; it is exacerbating it. Pure common sense. Not only is there no legitimate governmental purpose for providing low rents to wealthy people (which thus makes it an unlawful taking of private property and a violation of the Fifth Amendment), but by providing these units to wealthy tenants, it encourages them to hoard unused units, and defeats rent control’s intended purpose.

Can this lawsuit succeed? Many detractors state we should not file the lawsuit at all. It is a waste of time and money. Well, the correct question to ask is this: “If we do not file this lawsuit what should we be doing instead?” Or as better expressed long ago: “It is better to light one candle than to curse the darkness.” Thus, ACTION is not guaranteeing victory, but ACTION is guaranteeing action. We are here to make things happen, and we cannot do that if we do nothing. This lawsuit will pose very important questions to the court: Why should Housing Providers subsidize wealthy tenants’ rents? Why should a city be able to force a subsidy just to get the political support of wealthy tenants?

We do not know what the U.S. Supreme court will do in Lingle v. Chevron, but we do know that there will be no opinion issued before approximately May or June 2005. We also know that time is money and we need to move as quickly as possibly. To waste six months for an opinion that may not resolve the question would be a crime.

THE ECONOMY IN 2005?
Should You Refinance To A Fixed At This Time?

There are many views as to what the new year will bring. There seems to be a consensus among those who predict such things as the future economic health of our county, that the years 2004 and 2005 are/will be much like the years’ economy of 1994 and 1995. We here in Santa Monica remember 1994 as the year of the earthquake (January 17, 1994) which shook up not only the local city bureaucracy but the housing market as well. But others remember the 1994-1995 years as those of stock market prosperity. Clearly, the real estate market was on the rise as well. Inflation was low and interest rates were on the way down. Will 2005 bring higher, same, or lower interest rates for the real estate encumbered investors? Most people would state that rates are going up. There is strong support for this position, no doubt. The U.S. dollar has fallen about 30% since 2001 against the Euro. However, it is still higher (stronger) against a basket of foreign currencies than it was in 1995. Thus we have been here before. Household mortgages are at an all time high, no doubt. However, so is home ownership, and those that pay mortgages not only avoid rent payments, but get tax deductions as well. The politicians know what happens if they hurt the home owner, and thus there is another reason mortgage interest rates will not go up dramatically.

Many owners are re-financing from variable rates to fixed rate mortgages to put their loans where their beliefs are currently located. However, there is a contrary philosophy, which states that interest rates are only going up next year 1/2 percent more. The thought is that since inflation is at the stand still, the only thing that could drive up interest rates would be the falling dollar, and the U.S. Government’s need to attract more investors from over seas to buy the billions of dollars in U.S. 10-year Treasury bonds which the government sells each month. The higher interest rate believers maintain that foreigners are no longer attracted by U.S. bonds, and if we are going to get them to buy more in the future, we need to raise the interest rates we offer them. As the interest rates increase on U.S. Treasury bonds so does the interest rate on real estate mortgages. Many variable mortgages are tied to the U.S. Treasury bond (usually an average of the last 12 months interest).

Before you go out and re-finance your low variable rate for a higher fixed rate loan, you might want to consider another view point. And that is that foreigners are not going to abandon buying the U.S. Bonds for a number of reasons. First there is the stock market. A strong stock market encourages foreigners to invest in Bonds. The prediction for 2005 is an across the board upward growth on all stocks. If this happens, foreigners will not abandon U.S. bonds then the Federal reserve rate will stay around 3% for 2005. The U.S. treasury bond will continue to trade around 4.5%, and all this even if the U.S. dollar falls to $1.40 to $1.50 against the Euro. Second, is the idea that the European countries will try to deflate the Euro so as to keep in competition with the U.S. Dollar. If that happens the dollar will not be losing as much value as against the Euro, and the U.S. Dollar will be more attractive to foreign investors. Third, there will be low inflation in 2005 (say 2% as in 2004). There is the idea that the global economy is getting better for all people around the world. And that this continued global competition which will keep inflation low (i.e., prices of good will stay low because of global competition). Under this theory free trade among countries (China included) creates the lowest possible prices for goods and services, and yes, Adam Smith in The Wealth of Nations (1776) was right all along. Thus in inflation stays low, interest rates are not going to increase much more than we have seen. And, finally Fourth, the U.S. Dollar may be increasing in value against the Euro and other foreign currencies. Bush has stated that he will try to increase the value, and prior to his speech the Dollar gained in the market. It just could happen that with a better economy in our country, and tax revenues going up, our dollar will rise in value as well.

So before you trade in your 3.5% variable for a 6% fixed, you should take another look at the big picture. In any event you should wait for a few months to see if interest rates level off before giving up such a tasty loan rate.

TIPS TO THE WISE OWNERS:
NEW YEAR’S TUNE UPS

With the beginning of a new year, each Housing Provider should take stock of his or her building and tune up their operations. There are a few mistakes that have been consistently made by owners in the past, and with the coming new year, this would be a fine time to correct them. Here are a few of the more outstanding issues:

Anniversary of January 17, 1994 Earthquake
We are in striking distance of the big quake’s Anniversary. Just a short reminder and word of wisdom to you all. The major injury occurring to victims of the earthquake last time, was cuts on the hands and feet due to broken glass. After the quake, people got out of bed, walked around their homes in bare feet and used their hands to pick up or remove broken glass. If you buy one present for yourself this season, make it a pair of strong slippers, and keep them by your bed. Wear them whenever you get up. And if there is another quake do not pick up glass. Leave it there. If you want to do something for yourself, take yourself outside (wearing your slippers and warm clothing) and just look for a coffee shop that’s open. Or better yet, just roll over and go back to sleep until it gets to be daylight.

Mold Containment
Mold is still the number one problem for Housing Providers in Los Angeles County. Mold creates a problem when a tenant’s apartment is exposed to its spores. Before you allow a plumber to open up a wall to look for leaks, make sure that the area around the to be made hole, is encapsulated with heavy plastic sheets to contain the spores. All too often a plumber, in looking for a leak, opens a wall inside the apartment unit, and spores infect the entire room causing thousands of dollars in unnecessary remediation.

Insurance, Mold Tool
Shop around. Once you have insurance, you’ll be tempted to stay the course unless something happens, but you may be able to lower your premiums simply by shopping around. If you can’t lower them, at least you’ll feel good knowing you got the best deal. Direct writers of homeowners insurance include American Express (800-535-2001), Amica (800-242-6422), GEICO (for auto, home or boat insurance, 800-841-3000) and USAA (for members of the military and their families, 800-531-8100). They do their selling over the phone and if you qualify, you’ll save, big time, on the commissions. Even with a great policy, you might be able to drop your premium further with one of the ideas given here.

Raise your deductible. Some insurance companies will drop you if you make more than two claims in a year. Make sure your insurance covers you for catastrophes and plan on picking up the cost of everyday expenses. Raising your deductible from $250 to $500 might shave 12 percent off your premiums. Raise your deductible to $1,000 and your savings might double.

Three-Day Notices to Enter for Repairs
An owner needs to understand and use the 3-day notice. All too often, we hear that an owner cannot gain access into a tenant’s unit for purpose of repair, because the tenant refuses to allow the worker access. The owner is not relieved of his or her obligation to make repairs if the tenant refuses access. Rather the owner must do the following: First, prepare and serve a 3-day notice to cure requiring tenant to allow owner access some time after 3 days of service of the notice. Second, prepare and serve with the 3-day notice, a Notice of Entry to Make Repairs, stating a day and time after the 3 Days period expires. Third, and finally, go with the repair person on the appointed time and date and seek entry for repairs. If the tenant refuses entry, do not contest the refusal, but immediately file a lawsuit for eviction. It is a violation of both State and City laws for a tenant to refuse an owner entry for purposes of inspection or repair.

Hoarding
All too often a owner will allow a tenant to hoard junk and trash inside the tenant’s apartment. Hoarding is against the State and City laws. It creates a fire hazard, health hazard, and nuisance for the other tenants at the property. If you have a tenant who hoards material, promptly give that tenant a 3-day notice to cure or quit.

3-Day Notice to Pay Rent or Quit
All too often we see a owner using the wrong 3-day Notice for collection of rent. ACTION has the correct forms for your use, and no one should use an incorrect form. If you do, your lawsuit may be dismissed and you will have to start all over again, giving the tenant the opportunity to pay rent once again. A correct 3-day notice must contain certain information. Also, it must tell the tenant where and how she/he must pay the late rent. Do not allow a below market rate tenant to pay rent late. All too often we hear the owner state that if a 3-day notice is served the tenant will simply pay the rent. If the tenant does not pay within the 3 days, the owner does not have to accept the rent payment offered AFTER the 3 days has expired. If the tenant has a history of 3-day notices, the court will be even more reluctant to give the tenant a break after the lawsuit is filed. Remember also, that the easiest way to evict a problem tenant is for non-payment of rent. All too often we hear owner complaining about how horrible a tenant is, but then hear that the tenant is habitually late in payment of rent, but the owner does not take the effort to serve 3-day notices. That is bad business.

Excess Rent
There are some owners who are charging the incorrect rent. It may be off by only $1.00 (or even less). However, the owner must seek to correct this mistake. The correct MAR is on line at the Rent Board’s web site, by property address. Every owner should check this site from time to time to be sure that the owner is not collecting excess rent. Remember that the correct rent (also called the MLRundefined Maximum Lawful Rent) consists of the scheduled on line MAR, plus $11.00 per month for registration pass throughs, plus lighting surcharges if available, plus school bond taxes the owner pays. If the owner is off by a very small amount, and the tenant fails to pay rent, the owner’s 3-day notice will be incorrect and the owner will not be able to evict the tenant for non payment of rent based upon that incorrect 3-day notice. The owner will have to recompute the correct rent, and then after giving the tenant credit for the over charged rent, serve a new 3-day notice. The owner gains nothing by waiting to correct the rent, instead of doing in now.

Additions or Amendments:
Written Rental Agreements
One of the least understood legal issues in rent controlled properties (any city) is: “Can an owner give a tenant a written rental agreement if the tenant does not have one?” and “What is the best way to handle this situation?” The law is clear that a owner may serve on a tenant a 30-day notice which contains a new written rental agreement, whether that tenant has an existing oral agreement or written agreement. After 30 days that rental agreement will be effective between owner and tenant, whether the tenant signs the agreement or not. However, the Rent Control Board has passed a regulation Chapter 9, which states that an owner cannot evict a tenant for a breach of a term which is contained in a rental agreement the tenant refused to sign. This regulation does NOT state that a owner cannot serve on a tenant a new rental agreement, or that the terms of the rental agreement are not binding for purposes other than eviction. Indeed, there are many economic reasons and legal ramifications that can be advantageously accomplished by the serving of a written rental agreement on the tenant. ACTION has a good rental agreement and a 30-day notice form for this purpose. In the situation where the tenant has an existing written rental agreement, the owner may want to consider amending only certain paragraphs, (such as deleting the attorney’s fees clause) rather than replacing the entire agreement with a new agreement. For the owner who happens to have a good written rental agreement in place, don’t forget that the Rent Control Law states that the tenant must sign a new agreement with terms substantially similar to that one, or move out.

Drop Box For Rent
Each owner should consider establishing a drop box on the property for the payment of rent. This is especially true if the owner has a tenant who habitually pays rent late. The tenant should be notified in writing that the drop box is the only place where rent can be paid. The drop box should be accessible at all times of day and night. The drop box can be a mail slot in the manager’s door or a storage room’s door, or a mail box mounted inside the building. The owner should keep inside the box blank copies of form 3-day notices to pay rent or quit. The owner should check the box on the 2nd of each month. While there, if any tenant has not paid their rent, the owner can fill out and post and mail a 3-day notice. Then the owner can return on the 6th of the month to see if the tenant has paid their rent. If not, the owner can then file a lawsuit for eviction. This method avoids the time delay accompanied by mailed rent, and the possible legal presumptions that the rent was lost in the mail.

Inspections
The city and state require the owner to know at all times the condition of the tenants’ apartment units. If a tenant fails to inform the owner that something is leaking or broken, this failure does not relieve the owner of responsibility. In addition, may leaks if caught in time, will save thousands of dollars in repair bills. Thus it is incumbent upon owner to maintain a schedule of walk throughs of their tenants’ units at least as often as once every months. Each inspection should be noticed by a writing served on the tenant 24 hours in advance (a greater advanced notice would be preferable) The correct notice form is available at ACTION’s offices. The owner or agent can walk through for the inspection. A check list should be used, with the time and date listed, along with the name of the person(s) making the inspection and the tenant or other person present. The check list should contain items such as: smoke detectors, space heaters, water heaters (if any), water pipes, stove, windows, carpets, painting/ walls, ceilings, floors. Any items in need of repair can be noted. The owner should make all repairs and not allow tenant to make any repairs. If the damaged item is the tenant’s fault, then the owner should still make the repairs and sue the tenant for reimbursement. The owner should never allow the tenant to make repairs, because the owner loses control over the material and work done to the building, and runs the risk that illegal material may be used by the tenant (such as illegal paints and varnishes, or non-tempered glass), and further that the work is substandard and will lead to more problems. The owner must never allow a tenant to make repairs and deduct the repair costs from the rent.

December 2004

12/01/2004 8:38 PM | ACTION (Administrator)