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 Should Look Like

Rent stabilization reform in Beverly Hills should hold landlords to account when they violate tenants’ rights. 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. That puts 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.

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.