Archive for the ‘Law’ Category

LA Rent Freeze… Dodged that bullet just barely

Friday, May 28th, 2010

Author: Scott Goodman •

If you’re an apartment owner subject to the Los Angeles Housing Department Rent Stabilization Ordinance (LAHD RSO) – commonly referred to as “rent control” – you can stop holding your breath.  Last Friday , May 21, 2010, the LA City Council voted 10 to 5 to send a motion for a 4 month rent freeze back to the Housing Committee, effectually killing it.  An optimist might point out that 4 month moratorium on rent increases is not that big of a deal.  I tend to view this as what started out as a temporary 4 month freeze, would find a way to become permanent.  You may recall that tenant notice requirements for no fault evictions went the same way.  Up until a few years ago in California, landlords were required to give tenants a 30 day notice to vacate, a sort of no fault eviction.  Then a “temporary law” came along requiring a 60 day notice to vacate.  At some point it was supposed to go back to 30 days.  It never did.  The state legislature made the change permanent (see C.C.1946.1(b))  Now you have to give 60 days’ notice to vacate.  So count your blessings.  Los Angeles rent controlled apartment owners can raise rents this year the allotted 3% as prescribe by the LAHD.

Keating Memo

Wednesday, January 27th, 2010

Author: Scott Goodman • Scenic West Property Management

A widely used practice among property managers is to limit occupancy to two people per bedroom, plus one extra person per dwelling. Ever wonder where that came from?

The “Keating Memo” 

In 1999, HUD issued a statement confirming its adoption of the “Keating Memo.” This document is a 1991 internal memorandum from former HUD General Counsel Frank Keating, which states that an occupancy standard of two persons per bedroom will generally be considered reasonable under the Fair Housing Act. Specifically, the memo addresses the problem of occupancy standards used as a pretext for family status discrimination. 

When the Office of General Counsel sent the Keating Memo to HUD headquarters and regional counsel in 1991, Keating claimed that the two persons per bedroom standard was “rebuttable.” The memo also said that HUD officials should not use this standard alone to decide whether a landlord’s occupancy standards are discriminatory. 

HUD has listed several other factors that investigators will use to detect whether an occupancy policy is reasonable. They include the size and design of rooms and units, the ages of a family’s children, and the state and local ordinances dealing with occupancy in the locality where a Fair Housing complaint has been filed. 

Even in cases where a landlord’s occupancy policy is reasonable under the Fair Housing Act, HUD will consider evidence that shows the landlord has made discriminatory statements, set different rules for children than adults, or taken steps to keep families with children out of a certain property. HUD will also pursue claims against landlords who enforce a reasonable occupancy standard against families with children and not against groups of adults. 

For more information:

UCLA hikes up tuition – will that push up occupancy limits?

Tuesday, January 26th, 2010

Author: Scott Goodman • Scenic West Property Management

Despite student protests at UCLA and elsewhere, the University of California Board of Regents approved a 32% tuition fee increase that will push UC tuition above $10,000 per year for the first time, and this doesn’t even include housing and books. 

Since many of the properties we manage are located in Westwood and West Los Angeles, close to UCLA, we rent to a fair amount of students. A typical strategy among students has been for 3 or 4 tenants to share a 2 bedroom apartment, for obvious savings in living expenses. We are predicting that now, because of costlier tuition fees, students will have to get even cozier in their living arrangements, and we may start seeing 5 or 6 tenants applying for a 2 bedroom unit. As landlords, we know that  more people living in a unit equals more wear-and-tear and possibly more noise, but that’s not enough reason to refuse renting to a larger party. So what are the occupancy restrictions?

The Guidelines

HUD, the federal agency which regulates the Federal Fair Housing Act, has never adopted occupancy standards. Rather, it allows for state and local entities to adopt reasonable restrictions on occupancy as long as they apply to all occupants. According to the Los Angeles Fair Housing Department, the rule of thumb is 2 people per bedroom plus one person. This standard, based on the “Keating Memo“, would allow the landlord to restrict occupancy to 3 people in a 1 bedroom unit, 5 people in a 2 bedroom, and so forth. Allowing more tenants to occupy a unit is at the landlord’s discretion. However, according to the Los Angeles Building and Safety Department, the maximum allowable occupancy is 1 person per 200 square feet of habitable area (and that includes bathrooms and kitchens).

The Bottom Line

As a result of a lack of concrete guidelines, owners and managers may develop and implement reasonable occupancy requirements based on factors such as the number and size of sleeping areas or bedrooms and the overall size of the unit.  Consistency is everything. If you decide to adopt an occupancy standard, make sure that it applies to all occupants, and it does not discriminate on the basis of race, color, religion, national origin, sex, familial status or handicap. 

The information provided herein is not meant as legal advice. Please consult with your legal professional to obtain such advice.

Using a Roommate Addendum

Monday, January 11th, 2010

Author: Scott Goodman • Scenic West Property Management

The ever revolving door roommates is a source of aggravation for most landlords. Like a game of musical chairs, roommates are constantly moving in, moving out, or somewhere in between. As many of the properties we manage are close to UCLA, in Westwood, we rent our fair share to roommates. It is important to add a new tenant to an existing lease, or to remove one that has moved out. But given the frequency with which this can happen, it could become a full-time job. This is where the roommate addendum comes in. By using the addendum, there is no need for a new lease agreement every time there is a change in roommate tenancy in a specific unit.  A roommate addendum should state that the new tenant is obligated to all the terms of the current lease agreement, and that the outgoing tenant is released from all lease obligations. Landlords should also provide all legal forms, such as a copy of the lease, to the new tenant.

The other issue that is sometimes unclear to landlords, is the question of the security deposit. The simplest answer is that the security deposit is linked to the unit under lease, and not to any one tenant. When there is a switch in roommates, the reimbursement of the security deposit (or portion thereof) to the outgoing tenant should be settled by the tenants amongst themselves. A landlord is not obligated to refund the security deposit until the lease is terminated. This should also be clearly spelled out in the roommate addendum.

Lastly, always screen an incoming tenant as you would any new tenant. Stick to your standards and rental procedures to avoid future problems and ensure the successful occupancy of your units.

Another Notice for Rent Controlled Properties in Los Angeles

Tuesday, December 22nd, 2009

Author: Scott Goodman •

Another proclamation has come down from the high priesthood called the Los Angeles Housing Department (LAHD).  The notice concerns those buildings built before 1978, commonly referred to as “rent controlled” buildings. Not surprisingly, the notice is about posting a notice – your tax dollars at work.  More specifically, the notice states that landlords whose buildings are subject to the Los Angeles Rent Stabilization Ordinance (LAHD RSO) must post a notice providing information about said Rent Stabilization Ordinance.  The notice must be posted in a visible location of the property – in the lobby, near a mailbox used by all residents, or in or near a public entrance to the property. LAHD will inspect properties and notify owners who fail to post the notice. Landlords have seven days to comply. One thing is for certain, if you don’t comply, you could be fined $250.00 per day.  Check it out at: