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California Governor Signs Statewide Rent Control Bill

Posted By USFN, Tuesday, February 4, 2020
Updated: Monday, February 3, 2020


by Kayo Manson-Tompkins, Esq.

The Wolf Firm

USFN Member (CA, ID, OR, WA)


California has painstaking rent control and eviction control ordinances in cities such as Los Angeles, Santa Monica, San Francisco, Oakland, and Berkeley, to name a few. Historically, however, in reality there have only been a few cities with rent control ordinances. Therefore, for most of California the standard process for post-foreclosure evictions has been used. The California legislature introduced and passed Assembly Bill 1482 designed to establish statewide rent control and despite opposition from landlords and mortgage servicers, the Governor signed the bill, which became effective January 1, 2020.

The primary purpose of this bill was to prevent landlords throughout the state from arbitrarily raising rental amounts. This Bill caps rental increases to 5% plus inflation, or 10%, whichever is lower. The Act will sunset January 1, 2030.

New Civil Code Sections 1946.2 and 1947.12 became effective January 1, 2020. These sections prohibit property owners from terminating a lease of a tenant who has been occupying the property for 12 months, without “just cause” and the “cause” must be stated within the notice. Additionally, there is a new requirement that a notice of violation and opportunity to cure must be served before the notice of termination, for those instances where the violation is curable. Furthermore, a no-fault “just cause” eviction will require relocation assistance of at least the equivalent of one month’s rent. If the relocation is not paid, the notice of termination will be declared void. These provisions cannot be waived by the tenant, and if an attempt is made to do so, the waiver of rights provision will be declared void. It is important to note that despite the “statewide” provisions there is nothing to prevent existing local rent control and eviction control ordinances from having a higher level of protection for their tenants.  

Pursuant to the California Constitution (Cal Const, Art. XI § 7), California rent control and eviction control provisions are a valid exercise of a city’s police power within that city’s own jurisdiction. More specifically it states that “a county or city may make and enforce within its limits all local, police, sanitary and other ordinances and regulations not in conflict with general laws”. The scope of this police power is subject to displacement by general state law where the charter or ordinance purports to regulate a field fully occupied by state law. (Birkenfeld v. Berkeley, (1976) 17 Cal. 3d 129).

California has 482 cities and for those cities that do not currently have a rent or eviction control ordinance, they may opt to simply abide by the provisions of the newly enacted statutes. Cities may however, if they want additional requirements, to create their own “rent control” ordinance or a “just cause” eviction ordinance. The question remains what existing ordinance(s) will become the template for drafting their ordinance. Property owners can only hope that the majority of cities will either elect to simply follow the limited provisions of Civil Code Sections 1946.2 and 1947.12 or alternatively create uniform more limited ordinances, as opposed to mirroring the rigorous existing ordinances in Los Angeles, Santa Monica, San Francisco, Oakland, and Berkeley, by way of example.  

Servicers should ensure that they have procedures in place s to determine who is occupying the property as soon after the foreclosure sale as possible. Furthermore, it is imperative that the eviction attorney be notified of whether there are tenants in the property, as the type of occupancy will require different notices, as well as a relocation fee in order to remove tenants from the premises.

This article is not intended to be an extensive or exhaustive review of all the nuances of either rent control or just cause eviction control ordinances, but rather an introductory overview of what the new statewide rent control statutes provide and how it affects the ability of a servicer to proceed with a normal post-foreclosure eviction.


Copyright © 2020 USFN. All rights reserved.

 

Winter USFN Report

 

Tags:  Assembly Bill 1482  California  REO/Eviction 

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California 5th Appellate District Reverses an Award of Attorney’s Fees Following Granting of Temporary Restraining Order

Posted By USFN, Wednesday, December 18, 2019



by Kayo Manson-Tompkins, Esq.
The Wolf Firm
USFN Member (CA)

One provision of the California Homeowner Bill of Rights (“HBOR”) awards a borrower attorney’s fees and costs for violating HBOR.  See Civil Code section 2924.12.  If a foreclosure sale has not taken place, a borrower can file an action and seek to enjoin the sale due to a material violation of the HBOR statutes. 

Typically, the borrower will seek a temporary restraining order (“TRO”) and will provide only one day's notice that he/she will be going into court to seek the TRO.  Since there is little prior notice, and/or often counsel is unable to obtain authorization to appear at the TRO hearing, the court grants the TRO.  The court schedules an order to show cause (OSC) hearing for approximately 15 days in the future.  It is at this hearing that the parties have an opportunity to present to the court the arguments and evidence as to whether a preliminary injunction should be granted by the court.

In Lana Hardie v. Nationstar Mortgage LLC (2019), 32 Cal. App. 5th 714, Hardie filed an ex parte application for a TRO and requested fees and costs within the body of the memorandum of points and authorities.  Although there was a discussion during the hearing that the court was only granting a TRO and not awarding fees and costs, the actual form order awarded $3,500.00.  Nationstar Mortgage immediately filed an appeal.

The trial court had a lengthy discussion on whether it was appropriate to grant fees and costs at the TRO stage.  It looked first to the statute itself.  Section 2924.12 states:

 

 “A court may award a prevailing borrower reasonable attorney’s fees and costs in an action brought pursuant to this section.  A borrower shall be deemed to have prevailed for purposes of this subdivision if the borrower obtained injunctive relief or was awarded damages pursuant to this section.”

 

The court stated that the plain meaning of the statute is to award fees and costs to a borrower who obtained “injunctive relief.”  The statute does not distinguish between temporary, preliminary or permanent, so under this plain meaning, the attorney's fees are authorized.  Therefore, section 2924.12 authorizes a court, "in its discretion", to award fees and costs to a prevailing party who obtains a TRO.  However, the appellate court reversed the lower court's ruling, based on a procedural issue as the request for the TRO was not adequately noticed.

The importance of the Hardie decision is to send a clear message that one cannot ignore an ex parte hearing for entry of a TRO.  The risk of an award of attorney fees is very real.  It is important to remember that some orders are issued on a court form which includes fees and costs, regardless of whether it was properly requested.   As a result, irrespective of whether or not the ex parte papers notice a request for fees and costs, steps should always be taken to appear at all TRO hearings.

Copyright © 2019 USFN. All rights reserved.

December e-Update

 

Tags:  California  California Homeowner Bill of Rights  Lana Hardie v. Nationstar Mortgage LLC 

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California to Allocate $331 Million to Provide Legal Assistance to Renters and Homeowners

Posted By USFN, Wednesday, December 18, 2019



by Kayo Manson-Tompkins, Esq.

The Wolf Firm

USFN Member (CA)

 

As part of the National Mortgage Settlement entered into in 2012, funds were allocated to the states to assist with the housing crisis and California was allotted over $400 million.  The State Legislature enacted Gov. Code 12531, which provided that funds could be used to offset general fund expenditures for the 2011-2014 fiscal years.  In 2014, the National Asian American Coalition filed a suit against the Governor, Director of Finance, and the State Controller seeking the return of the funds.   

The Court of Appeals in 2018 held that $331 million was to be returned and directed Governor Newsom to return the funds for its intended purpose.  During the 2019 legislative session, Senate Bill 113 was approved by the governor and will take effect immediately.

As a result of this bill, $331 million will be deposited into a trust for non-profit organizations to provide legal assistance to homeowners to prevent a foreclosure, defend an eviction, or to aid housing counselors in other housing related situations.  The ultimate goal will be to provide an ongoing source of funds to legal aid organizations to assist renters and homeowners.

Copyright © 2019 USFN. All rights reserved.

December e-Update

 

Tags:  California  California Senate Bill 113  National Mortgage Settlement 

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