Articles Posted in Landlord

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The City of Sacramento recently passed ordinances that allow and regulate “short-term rentals”, which are of the type advertised non-Airbnb, VRBO, and similar sites. This is welcome news, as this type of rental has been in a state of limbo under the law of most communities. Usually, it fits in with motels or bed and breakfasts and is governed by rules for those types of operations. Now, in Sacramento, as in San Francisco and other communities throughout California, they have their own classification and regulations. Owners who are interested in renting their properties on this basis should consult with a Sacramento real estate attorney to be sure they understand the ordinances and have an appropriate short-term rental agreement.

sacramento short term rental attorneyShort-Term Rental

Under the new ordinance, A short-term rental@ means a bed and breakfast inn that is limited as follows:

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For a California real property owner, liability to third parties for their injuries on the property requires that the injured person prove the owner had a duty of care to the injured party, there was a breach of the duty of care that was the proximate cause of the injuries, and the injured party suffered damages. Often most difficult test is the duty of care. The landowner must exercise ordinary care or skill in the management of their property. The idea is that the owner has control over the property and the ability to prevent the harm. When the owner is aware of (or should reasonably be aware of) a dangerous condition on the property, there are obligated to either fix it or warn people of the risk. I have written previously of the failure to warn of a dangerous attic stair, and how the real estate agent failed to warn a person who was injured. The California Supreme Court has established a list of factors in determining whether there is a duty of care:

(1) the foreseeability of harm;

(2) the degree of certainty that the plaintiff suffered injury;

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Federal law enacted in 2009 requires, after foreclosure of a federally related loan on residential property occupied by a tenant, that the acquirer serve a ninety (90) day notice to terminate the tenancy. Three day, 30 day, and 60 day notices are not enough. This is an important consideration to buyers of foreclosed properties at trustee’s sales. Sacramento real estate attorneys are often consulted as to the correct notice required to terminate a tenancy. Failure to follow the rules provides the tenant an affirmative defense in an unlawful detainer (if the judge allows them enough time to put in evidence). However, as a disappointed tenant recently learned in the 9th Circuit Court of Appeals, Federal Court, the law does not give tenants an affirmative right to bring a claim for violation of the statute.

sacramento landlord attorney.jpgIn Karen Logan v. U.S. Bank National Association, the lender filed an unlawful detainer after it foreclosed and served a three day notice. The tenant filed a demur in the unlawful detainer court, based on “The Protecting Tenants at Foreclosure Act of 2009.” (PTFA) The court denied the demur. The tenant filed suit in Federal District Court, seeking an injunction to stop the unlawful detainer property, plus damages, based on the federal statute.

The 9th Circuit Court of Appeals had to determine if it had “subject matter jurisdiction” over the tenant’s claim for damages under section 702(a) of the Protecting Tenants at Foreclosure Act of 2009. That is, whether or not the tenant had any rights under the statute that the court could rule on. Private rights of action under federal law must be created by Congress. The court must determine whether the PTFA shows such congressional intent, either explicitly or by implication.

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California Courts sometimes reserve jurisdiction over parties or an action after the case has gone to final judgment, for various reasons. Jurisdiction is generally the power to hear and determine the claims of the parties. Some examples of court’s holding on to jurisdiction are to to enforce settlement in an action at the request of parties; or to determine the distribution of a fund of money deposited in court; and to make such other and further orders and decrees as might be deemed proper to carry out the judgment. In fact, there is a specific procedure to have the court reserve jurisdiction to enforce a settlement agreement. Where parties reach a settlement agreement that requires one or both parties to perform some acts that will not be complete within 45 days, they can file a “Notice of Conditional Settlement” per Rules of Court Rule 3.1385. In the Notice, they give the Court a date certain that the suit will be dismissed. Until then, the case becomes inactive, and off the court calendar, but still the court has jurisdiction to enforce the terms of the settlement agreement until the dismissal date.

sacramento real estate attorney option.jpgHowever, there is a limit to how long the court may keep jurisdiction over the parties. In Stump’s Market, Inc., v. Plaza De Santa Fe Limited, LLC, Stumps had rented space for a grocery store in a shopping center from Plaza. The relationship had lasted several years. They negotiated a modification granting Stump five additional five-year options. The rent included a calculation of the percentage of sales (percentage rent). There was some water damage in the parking garage below Stumps grocery store. Plaza said it was caused by condensation from Stump’s freezer. Stump disagreed, claiming that it was due to a leak that Stump had informed Plaza about.

They did not agree on what caused the damage, but they agreed that Stump would go ahead and repair the damage. They apparently did not agree (at least in writing) if, and how, they would split the cost. They got into a dispute as to paying for the repairs, calculating percentage rent, and Stump’s exercise of the next option. The lawsuit ensued.

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California landlords are faced with a myriad of regulatory requirements for disclosures as well as enforcement of their leases. Two new mandatory disclosures for commercial leases will be required in 2013- past energy use of the building, and whether the premises have been inspected by a “certified access specialist”, and if it was inspected, whether or not it passed. Property owners with concerns about their leases and disclosures should consult with a Sacramento and El Dorado commercial lease attorney to have their questions answered.

Sacramento El Dorado commercial lease attorney energy use.jpgENERGY USE REPORTING

The new law was actually enacted in 2009, required the California Energy Commission to set a schedule for rolling out, over time, the disclosure requirements. The commission adopted regulations in July 2012 setting the schedule:

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Senate Bill 332, added to the Civil Code as Section 1947.5, allows landlords of residential property, to ban smoking tobacco products as of January 1, 2012. This applies to dwelling units, defined in section 1940 as a structure or the part of a structure that is used as a home, residence, or sleeping place by one person who maintains a household or by two or more persons who maintain a common household. Landlords have authority to put restrictions in new leases. Those wanting to modify existing agreements, the should contact an experienced Sacramento and Placer County Real Estate attorney.

Condo.jpgAny lease or rental agreement entered January 1 or later, where the tenant is just moving in, is required to specify the areas on the property where smoking is prohibited . The new law does not provide for automatically changing existing rental agreements; all existing laws would apply. If a lease was entered before January 1 and the landlord desires to ban smoking, it would be a change in the terms of the lease. In a month to month tenancy, 30 days written notice is required, as specified in Civil Code section 827.

If it is a longer term tenancy, the parties would need to enter a new agreement on expiration of the existing agreement, or have a written modification of the agreement. For a modification to be enforceable the landlord must provide some consideration- some benefit to the tenant, such as some free rent, an amenity, or anything else. It does not need to be large value benefit, but if no new consideration is provided, the tenant can revoke the agreement.

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One aspect of California commercial property evictions you seldom see is the unlawful detainer judgment being overturned on appeal. It can happen. While it is established that the lessor is not liable for forcible entry and detainer or wrongful eviction in such a case, a court recently ruled on a claim for breach of contract.

In Munoz v. MacMillan the landlord obtained a judgment for possession of commercial property. The tenant appealed and won. Meanwhile the landlord had leased the property to someone else. The tenant then sued for breach of contract. The trial judge threw the suit out, finding that the landlord had “proceeded in accordance with orderly judicial processes.” The decision was based on the principal that legitimate, non-fraudulent use of the judicial process, protects the lessor from tort claims. A tort involves breach of a civil duty (as opposed to a contractual duty) which can be redressed by damages. Of course, if the landlord proceeds fraudulently in obtaining the judgment -for example, lying about receipt of rent, or communications between the parties, or notices given- they are not protected.

The appeals court overturned the decision, finding that the breach of contract claim is viable. It noted that whenever an order is reversed, the court may direct that the parties be returned as far as possible to the positions they occupied before the enforcement of the order. This includes restitution of all property and rights, or money compensation for those that cannot be restored. This is the principal of restitution.

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A commercial lease specified an address for service of notices. Here was a default, and the landlord sent notice to the tenant’s leasing agent (by mail, fax, and email), who was not at the address specified in the lease. The agent acknowledged receiving notice by email.

In the eviction action, the court ruled, in a slam-dunk decision, for the tenant because the notice went to the wrong address. First, although the leases’s notice provision varies from the unlawful detainer statutes, that is allowable in commercial leases.

Secondly, the landlord also emailed the notice to the agent. The landlord argued that, as email is not mailing address specific, it could have been received at the designated address. The court points out that this is a problem of the lease language, which does not indicate an acceptable electronic notification address.

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Under California law, the Uniform Fraudulent Transfer Act allows defrauded creditors to reach property in the hands of a third party, if a debtor transfers an asset with the intent to prevent a creditor from reaching that interest to satisfy its claim.”

In a recent California decision, Gordon owed his ex-wife over $70,000 in spousal support. She obtained a judgement and recorded it so it would be a lien against any real estate that he owned. Gordon and his girlfriend refinanced their house which was in both their names, at which time the debt should have been paid, but the title insurance company missed it, so they had to pay the ex-wife, and then recorded a new lien against Gordon. Gordon then fraudulently conveyed his half interest in the property to his girlfriend so the title company couldn’t get to it.

The court looked at how much money could be raised for the creditor if the house was auctioned. Gordon’s half of the equity in the property was only about $9,400. But, as it was his residence, he was also entitled to an automatic (undeclared) homestead exemption of $50,000. This exemption protects the debtor when the creditor seeks a court-ordered sale of the house. If the judge finds that the sale price will not be greater than all liens, plus the homestead exemption, there will be no sale. That was the case here, and the title company could not get the house sold.