The Deck is Stacked Against Tenants

A frustrating aspect of pro-tenant advocacy work is that however well-intentioned the outreach, the fact is the deck is stacked against those who rent housing. The 3-day notice awaits the tenant who keeps a pet, lives with an unapproved partner or roommate, or is a a day late or a dollar short on the rent. But landlords can withhold repairs, enter the unit unlawfully, and even retaliate without being held to account. Our rent stabilization ordinance does not come to the rescue!

When a landlord violates the law, the remedy for the tenant may come long after-the-fact if it comes at all. Usually it entails a civil remedy, which means hiring a lawyer to prepare a complaint and taking it to court. In some cases small claims will suffice such as when a deposit is withheld.

The challenge is practical: hoping that potential damages will persuade an attorney to take the case on contingency (which is easiest with discrimination cases). But instances like unlawful unit access or retaliation, which are clearly spelled out in state law, or even criminal violations are an uphill battle. The tenant may have her rights, but securing them is another story!

We know of a landlord who had planted electronic listening devices and retaliated in other ways too, but was not held to account because the police didn’t respond as she had hoped, and the city prosecutor declined to prosecute. The reality is that tenants rely on city officials to step up and they don’t always.

For example, landlords are not infrequently caught entering a unit without permission. We see video from door cameras that clearly show it. When would that ever make it to a courtroom? And nobody in city hall will step up for the tenant because it is a civil matter (unlike the espionage). Let’s not forget that unit access can be a form of intimidation; a reminder that the landlord is always in charge — even if state law says otherwise.

But even for the serial offender, and even when a tenant has a police report in hand, the landlord may not pay. Suing the landlord may be the best way to hold a bully to account (after all the behavior can come to an end with a court order) there is a long and risky road to that court judgment.

Local Ordinance NOT to the Rescue!

A tenant has a better chance when the landlord’s behavior or business practice violates the Municipal Code. And sometimes the city has stepped up when it is a cut-and-dried issue like improper utility billing or an unlawful rent increase. We are seeing the new RSO office more aggressively police violations like over-payment of rent and withheld relocation fees. That’s all to the good!

It is the other issues that pose the problem. As this code section suggests, the remedy for the tenant often comes not from City Hall but from the court:

Civil Remedies: Whenever it is necessary for any tenant to file a court action to recover the payment of rent which was in excess of the maximum lawful rent allowed by the provisions of this chapter, or to collect any relocation fee provided for in this chapter, or whenever it is necessary for the tenant to defend against any wrongful action filed in court against the tenant…the landlord shall be liable to the tenant for damages… Municipal Code § 4–6–12 (D) ‘REMEDIES’

That is a good argument for expanding our rent stabilization ordinance to embrace added tenant protections locally where the city can enforce them. Other cities have: in West Hollywood and Santa Monica especially, the city prosecutor goes to bat for tenants.

By prescribing a civil remedy our city lets itself off-the-hook.  In fact the Municipal Code Chapter 6 (which covers 97% of tenants) shows no instance of a specified landlord penalty or sanction except for failing to register his rental units. There is no reason to let landlords off the hook; we can bake-in provisions and penalties to hold them to account locally. Instead, under our current ordinance, a Beverly Hills landlord can shrug-off ‘administrative process’  penalties even for months.

What an Effective Rent Stabilization Ordinance Can Look Like

Rent stabilization reform in Beverly Hills should hold landlords to account when they violate tenants’ rights. Let’s look at how the ordinance can be improved.

The landlord fails to pay a relocation fee on or before the tenant moves. The ordinance is clear on having to pay the fee:

If a landlord serves a notice of eviction on a tenant for any other reason [not allowed by law], or for no specified reason, the landlord shall pay to such tenant a relocation fee…The relocation fee or pro rata share thereof shall be paid to any tenant who vacates the apartment unit at the time he or she vacates it. — Municipal Code § 4–6–9

What if a landlord does not pay? That puts the tenant in a financial bind for having to front the entire cost of relocation. And that appers to violate the spirit of requiring the fee, which is described in the urgency ordinance that enacted relocation fees for all rent-stabilized tenants: “[To] assist the tenant with the cost of obtaining and moving into a different rental unit” (Urgency Ordinance February 21, 2017).

If the landlord does not pay, then the tenant has to take the landlord to court because there is only a civil remedy specified in the ordinance; there is no financial penalty for the landlord included in the ordinance.

Solution: Specify a money penalty and other sanctions right there in the ordinance. That penalty should escalate each day the fee is unlawfully withheld and prevent re-leasing the unit until the fee (and penalty) is paid. The city will tell you there is an administrative process for dealing with recalcitrant landlords. However it does not offer a timely remedy to the tenant and the process can be drawn out by the landlord.

When a buyout offer (i.e., ‘cash-for-keys’) is tendered, the tenant is likely not cognizant of her rights and may not realize the value of her tenancy. The buyout is a cash offer in exchange for the tenant voluntarily vacating the apartment. Unfortunately the rent stabilization ordinance has nothing to say about buyouts — nor does it require disclosure of the tenant’s rights to the occupant who is considering a buyout offer.

Consequently a landlord will tender a lowball buyout offer. For example $5,000. That small sum greatly undervalues a rent-stabilized tenancy even though it may seem sufficient to a tenant who is not cognizant of her right to stay in the unit. The landlord may have any number of reasons for wanting a vacated unit and that vacated unit will be worth something to the landlord. It is always more than, say, $5,000!

The landlord may want a troublesome tenant gone or wants to remodel to re-market the unit at a higher rent. Perhaps the landlord is contemplating a sale of the building. (Vacant units are worth more to a buyer than are occupied units.) The landlord attaches some value to the vacated unit and that is the tenant’s leverage. Remember, the landlord can’t terminate for no-just-cause.

Beverly Hills, unlike other rent-control cities, does not regulate buyouts even though the city knows that the buyout has been abused in the past to pressure tenants to vacate. The single best reason to regulate buyouts is to inform tenants of their right not to vacate. There should be some required disclosure when a buyout offer is tendered so that tenants do not unwittingly waive their rights.

For example, the city requires a relocation fee when lawfully terminating a tenancy through no fault of the tenant. The landlord can redevelop the property, say, or under certain conditions evict a tenant for a relative’s use of the unit. The fee cannot be used to pressure the tenant to accept the buyout: “If you don’t take the buyout then I can just pay the relocation fee.” Lawful termination is not a voluntary vacating of the premises and that is what a landlord pays for with a buyout offer.

Another good reason to regulate buyouts is to keep track of where they occur. Buyouts provide an important insight into the dynamic of our rental housing market. Is there upward pressure on rents? An increasing incidence of buyouts will suggest properties are more valuable empty than rented.

A third good reason to regulate buyouts is to track buyout amounts. Other cities do, and from their data, which is made public, we can see that the average 1-bedroom buyout is about $25,000 in Santa Monica and Los Angeles. The $5,000 offer is woefully insufficient.

Solution: Regulate buyouts and require a tenants-rights disclosure to any tenant who receives a buyout offer. Mandate a 10-day notice of coming buyout offer and, after the offer is tendered, mandate a minimum period for consideration of the offer during which the landlord may not contact the tenant.

Landlords prefer that buyouts remain unregulated and that buyout amounts not be disclosed (much less tracked by the city). That gives the landlord an advantage in the negotiation. The negotiating table should be leveled and regulation can do that.

There are many more fixes to our rent stabilization ordinance that could be pondered by City Council this fall, but we remained concerned that the city has too-narrowly scoped the issues. Nowhere in those discussions will we touched on important protections as outlined here. We need to reshuffle the deck so that it is not stacked against tenants.