How the Deck is Stacked Against Tenants

One of the more frustrating aspects pro-tenant work is recognizing how the deck is stacked against those who rent. There are many provisions in the law to keep the tenant in line. Keep a pet or live with an unapproved partner or roommate? The 3-day notice may come. A few days late (or a dollar short) on the rent? Sudden death for the tenancy. Yet the rules are much more lax for landlords, and the bad apples among them withhold repairs, enter the unit unlawfully, and even retaliate. Holding them to account is the tenant’s challenge because often the city won’t.

When a landlord violates the law, the remedy for the tenant may come long after-the-fact if it comes at all. That’s because there are mechanisms in place to keep the tenant in line but few to hold a landlord to account — even when he has clearly violated the state law on hiring real property or federal and state laws on discrimination. These are civil remedies, too, so the tenant must fend for herself in court if she is to challenge the landlord’s practices or recover damages.

Bringing a civil action means hiring an attorney to bring suit, of course. Or it means hoping that available damages will persuade an attorney to take it on a contingency-fee basis. (Often easier with discrimination cases than other forms of abuse.) In certain cases the law allows for an ‘affirmative defense’ in an eviction proceeding if, say, the landlord has retaliated. The problem is that the tenant is already already on the defense and just weeks from relinquishing her home after a court judgment.

But there exist few instances where a landlord can be held to account for his criminal behavior. We’ve heard of a landlord’s electronic eavesdropping (planting listening devices) and instances of retaliation too. While we thought those practices begged prosecutorial action, they found none in Beverly Hills. Why? Tenants must rely on police, the local prosecutor or a district attorney to bring a criminal action. The tenant is often disappointed when the institutions fail to hold property owners to account.

Consider that breaking and entering is a felony crime. Yet landlords are not infrequently caught entering a unit unlawfully — and not always without seeming criminal intent. But how often does that scofflaw find himself in court? Rarely. Maybe never. Even if the landlord or his agent is a serial offender, and the tenant has a police report in hand, prosecution can never come.

However most landlord offenses are not criminal but civil: violations of the state housing and hiring codes. That’s where the courts come in. And suing the landlord is indeed the best way to hold a bully to account: with a court order the offending behavior must cease. But it’s a long and risky road to that judgment.

Local Ordinance NOT to the Rescue!

There are instances where landlord behavior or business practices violates our Municipal Code. In theory that’s actionable: we expect City Hall to fight for us. Surely the city will enforce its own ordinance? Sometimes. We have found the city is more interested in enforcing cut-and-dried issues (like improper utility billing and unlawful rent increases) but less interested to enforce certain violations like over-payment of rent or a withheld relocation fee.

For example, rent overpayment can result from an unlawful rent increase or an improper utility billing practice. Perhaps an expense is passed-through even if not actually allowed by the rent stabilization ordinance. These are all routine in Beverly Hills. Yet as this code section suggests the remedy for the tenant comes not from City Hall but from the state courts:

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’

Now, there is some incentive to file a suit for damages; the municipal code allows the greater of $500.00 “or up to three times the the amount of rent charged or relocation fees due.” It may be worth the effort to recover a penalty on an unpaid relocation fee, but filing suit is a gamble. Should the landlord prevail he can go after the tenant for his legal fees. And then there’s that $500 bit: no attorney will take a case on consignment for such low-dollar damages. It is to small claims court for the tenant!

By prescribing a civil remedy in the courts the city lets itself off-the-hook for enforcing the provision. Beverly Hills need not police the landlord’s practices. In fact the Municipal Code Chapter 6 (which covers 97% of tenants) shows no instance where a landlord money penalty or sanction on business practices is baked-into the ordinance. (Chapter 5 tenants do have more protections and we have seen the city step in to enforce them. Rent stabilization is very much two-tier in Beverly Hills.)

Contrast the lax approach taken by Beverly Hills with the cities of Santa Monica and West Hollywood: those municipalities not only have more robust tenant protections on the books but each has built-in mechanisms to hold the landlord to account for violations. It is not up to the tenant to recover excess rent or recover a relocation fee in the courthouse, for example; the city steps in. Nor does any tenant in those cities have to sue the landlord for habitable conditions. Habitability standards are built into the Municipal Code, and should a ‘housing service’ diminish (like an air conditioner going without repair), the rent stabilization folks will invite the tenant to petition for a rent reduction.

Ninety-seven percent of tenants in Beverly Hills have no access to a rent reduction; only the 3% that are Chapter 5 are protected from a reduction in housing services. So most of the time a Beverly Hills the landlord can whistle past the Code Enforcement officer and shrug off the ‘administrative process’ for months.

What an Effective Rent Stabilization Ordinance Should Look Like

Rent stabilization reform in Beverly Hills should include holding landlords to a higher standard. And we should hold them to account when they violate that standard. Indeed a stronger rent stabilization ordinance will have sanctions baked into our municipal code instead of relying on an administrative process and ‘someday’ penalties. What would that look like? Let’s take a couple of examples.

The problem: When landlords must provide notice to the the city of any involuntary termination within a week after serving the tenant. However in some cases that does not happen. Unless notified by the tenant the landlord can mark the tenant’s departure as voluntary and raise the rent.

The Municipal Code explains the landlord’s obligation:

Written notice provided in accordance with state law shall be given to any tenant in order for a landlord to terminate the tenancy of a rental unit subject to this chapter. — Municipal Code § 4–6–6 ‘INVOLUNTARY TERMINATION OF TENANCIES BY LANDLORDS’

It is important that landlords notify the city because it is in the public interest to monitor the incidents of no-just-cause termination. It is disruptive to tenants and sometimes used as a workaround in lieu of for-cause evictions by the landlords (as they themselves say). The involuntary termination can also be a ploy to raise the rent unlawfully afterward.

If the landlord does not notify the city, then there is an opportunity to use the termination to advantage. Without the city’s watchful eye, for example, the landlord that did not notify the city could cast a tenant’s departure as voluntary unless she herself has made a formal complaint. The landlord could serve the tenant with a notice that is not even lawful (for example a notice that specify a final day fewer than 60 days from service. (Yes, it happens.) Sometimes calendar days are mis-counted too. The city’s watchful eye could catch such instances even when a tenant does not.

The solution: The city could deem any notice of termination not valid unless it is both lawful and noticed to the city as required. Even better, require the landlord to gain city approval before notifying the tenant. Only when the notice is lawful and the city properly notified should the tenant even have to make plans to move.

More to the point, in any instance where the landlord does not meet the notice-to-city requirement there should be a substantial penalty to discourage game-playing. It will remind landlords that involuntary termination is a serious matter to tenants even though City Hall has, for too long, not taken it seriously.

The problem: The landlord fails to pay a relocation fee on or before the tenant moves, which leaves the tenant in a financial bind having fronted the entire cost of relocation herself. Having the tenant front that cost would appear to run afoul of city’s intent for requiring the fee: “[To] assist the tenant with the cost of obtaining and moving into a different rental unit” (Urgency Ordinance February 21, 2017). But there is no such assistance after-the-fact, of course, and arguably even payment on day of departure is not much help to the tenant.)

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? This is where the civil remedy comes in: the tenant has to take the landlord to court. That’s what the Municipal Code says. There is no penalty specified in that ordinance section. And so we see landlords withholding the fee. Sometimes for many months.

The solution: Specify a money penalty and other sanctions right there in the ordinance. And that money penalty should escalated each day the fee is unlawfully withheld. And under no circumstances should a landlord be able to re-rent the unit until the fee and penalty are paid. We’ve seen evidence that in the most egregious case the city may step in with an administrative process (and maybe eventually a penalty), but this offers no timely remedy to the tenant: she’s out, and she’s out her relocation fee.

The problem: A buyout offer (i.e., ‘cash-for-keys’) may prompt a tenant to consider relocating, but she who is not cognizant of her rights under the law may not realize the maximum buyout available. There are many ways to get a tenant to take a lowball buyout. For example, the landlord can simply offer less in buyout than what would be owed the tenant were she terminated involuntarily. The landlord can bully the tenant with a threat of a 60-day notice. Or the landlord can simply inform the tenant that he’s remodeling and she has to go.

In each scenario, any cash offer looks better to the tenant if she’s not cognizant of her right to stay in the unit or receive a relocation fee benefit. Some bad-apple landlords will take advantage of a tenant’s unknowingness of the law until the tenant contacts the city and learns better.

Problems attend to tenancy terminations and buyouts because our rent stabilization ordinance has nothing to say about it. Other cities do regulate buyouts, stipulating that any offer must exceed the relocation benefit otherwise obligated if that benefit is to be waived by the tenant — and at the tenant’s discretion.

However the Beverly Hills Municipal Code does specify how the fee waiver can be a penalty paid by the tenant. Should a tenant overstay by even one day her noticed day of departure, the code says, she “shall be deemed to have waived all rights to any relocation benefit to which he or she is otherwise entitled…” (Municipal Code § 4–6–9 (G) Waiver Of Relocation Fee) That’s a big penalty for a small infraction!

It is also worth noting that code section 4-6-4 (WAIVER OF PROVISIONS) explicitly does not apply to relocation fees. In other words it is not against the law in Beverly Hills for the tenant to voluntarily waive the relocation fee. That opens the door to an unscrupulous landlord practice like hoodwinking the unknowing tenant out of a fee in exchange for a lesser buyout amount.

The solution: City should regulate buyout offers and specify in the rent stabilization ordinance that it shall be unlawful for landlords to offer a buyout that is less than the otherwise obligated relocation fee. Currently buyouts not regulated at all; they are untracked. They should be: our Rent Stabilization office should know when a voluntary agreement is made to depart the unit for cash because it is in the public interest to ensure there are not abuses.

To that end, the city should mandate that any offering to include a notice to tenants of her rights under the law (as is provided at the outset of a tenancy). We know of instances at 121 South Elm, for example, where a new buyer went apartment-to-apartment with a buyout offer. But those tenants were unaware of the law and what negotiating power they actually had. Landlords like it that way. Again it goes back to ’information asymmetry.’ The landlord typically knows much more about the law than does a tenant.[1]

There are many more fixes to our rent stabilization ordinance that are needed than will be pondered by City Council this fall. As we look ahead to October study sessions, and ultimately a final rent stabilization ordinance beyond, we remained concerned that the city has narrowly-scoped the issues under consideration. The eight to be discussed include relocation fees and no-just-cause terminations and those are important.

But nowhere in the discussions have we touched on important and related protections as outlined here. No time is too early to consider adding penalties and sanctions to ensure we are able to realize the protections that we do have and to reshuffle the deck so that it is not stacked against tenants.

  1. Landlords have forms, guides, online forums and in-person seminars hosted by their industry association, Apartment Association of Greater Los Angeles to educate them about the specifics of the law. But we tenants get no such education in Beverly Hills (though they do in Santa Monica and West Hollywood which each hold pro-tenant seminars).  ↩

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