Just Cause Evictions in Santa Cruz

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Just Cause Evictions

I recently attended an all-member meeting of the Santa Cruz County Association of Realtors.  We have these meetings once or twice a year, to discuss what’s new and changing in the real estate eco system.  The headline issue at this meeting was the new rent control measures now in effect in Santa Cruz.  Chief among these is what’s known as just cause evictions.  This page is based off a series of notes I made from the presentation at that meeting, given by local Santa Cruz Real Estate attorney Terry Rein.

A little background: Santa Cruz Ordinance 2018-04 is an emergency interim ordinance put in place to establish “just cause evictions” while citizens of the city gather signatures and funds to put the issue of rent control up for a vote in the November election.  The measure on the November ballot will include provisions very similar to what we have in this interim ordinance.  You can download a copy of the full text of the Santa Cruz Rent Control Act of 2018 here.

Before we got any further, It goes without saying that although these are my notes from a presentation given by a local real estate attorney, what follows is not legal advice.

Notes on Just Cause Evictions

When you’re looking landlord/tenant law you have to know first what the current state of affairs is. Historically, a landlord could pick any tenants they chose, as long as they didn’t violate fair housing laws. In a lease, a landlord could require that the property would only be leased to specified tenants, specifically listed.  Landlords could control subtenants, they could increase rents, they could do credit checks on subtenants, and to terminate a tenancy, a lease can simply run out at the end of the lease term, with proper notice to the tenant about it not being renewed.

With this new ordinance, the status quo will be changed dramatically.  With just cause evictions, to get a tenant out of a property, a landlord may have to pay relocation expenses, which are six times the fair market rent.  Landlords will have to pay for the cost to create and establish a rent control board.

Unlike the efforts surrounding rent control (which thanks to Costa-Hawkins can only apply to apartment buildings built prior to 1995), just cause evictions applies to all apartments, all single families residences, all condos and units even if they’re built after 1995. Most likely, if there is a tenant in Santa Cruz they’re going to understand that their tenancy is subject to the new just cause eviction process.

The good news is, just cause evictions don’t apply to short-term rentals, such as a vacation rental, and it does not apply to a home owner’s rental of a room if they’re just renting out their room within their house.

Just Cause evictions will, however, apply to most landlord tenant relationships, and it severely restricts the ways which a landlord can terminate a tenancy. There are now only a few ways that a landlord can get a tenant out of their property, and I’ve listed most of those below.

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Way to Evict a Tenant under Just Cause Evictions

#1:  Failure to pay rent. Yes, you can evict for failure to pay rent. That’s probably going to be the most likely reason that an eviction takes place, and that one’s easy. If the premises are permitted, habitable, and the tenant is not paying rent the landlord has to give a notice to cure, and then a move on to eviction.

#2: Breach of the lease. If there is a substantial violation of the lease after receiving written notice to cure, the landlord can terminate the lease. That’s great, but there are now fewer was a tenant can be considered in breach of the lease.  For example, the obligation to leave the premises at the end of the lease term is not a violation of the lease. In other words, tenants are entitled to stay on after the end of the lease term.

This is going to be a problem for landlords who rent to college students during the school year and have very posh vacation rental income during the summer. It’s looking like those days are totally over, at least for now. They will not be able to get the students out if the students want to stay.

The landlord cannot terminate the lease if there is a subtenant if a tenant continues to reside on the premises. As long as one of the main tenants is there, if a subtenant moves in, that cannot be considered a breach of lease.

And check this out: a relative or a domestic partner of any of the tenants on the lease is allowed to take up occupancy without question. Say you lease your home to five people, and each one of them brings in a partner or a relative to live there –  that’s completely legal under this ordinance. The landlord cannot ask for a credit check of any of its subtenants if the subtenant will be paying rent directly to the tenant, and not to the landlord.

Of course, this new ordinance says that you can terminate a lease if the total number of occupants is more than the maximum number of occupants allowed under section 503(b) in the Uniform Housing Code.

Historically, the maximum number of occupants has been calculated as two people to a bedroom, plus one person. In a three bedroom home you could have seven people on the premises (3 bedrooms x 2 per room +1 = 7).  Under this new housing code standard, that’s headed for the ballot this year, the occupancy standards more than doubles the number of allowed occupants.

It also removes the ability of landlords to look at reasonable occupancy limits based on actual conditions of the property, such as no parking, limitations in the sewer or septic system, etc., which a landlord normally would look to in order to not have a terribly over-used property.  Landlords can no longer avail themselves of these methods to limit occupancy.

Further confusing matters on the quantity of occupnats, the California supreme court has read that the number of people in a room can sometimes affect the right to privacy, and sometimes involves discrimination on familial status. For example, it may be culturally appropriate for some people to have all their family members living under one roof.  If you as a landlord have a problem with 17 family members in a one bedroom house, you may be powerless to stop it, as that could be a discrimination issue as well.

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#3: Nuisance.  A landlord can evict a tenant for being a nuisance,  after the tenant has been given written letters to cure, and if they’re causing substantial damage, or creating unreasonable interference to the other people within the complex or neighborhood.  But how is a landlord going to prove that?

Remember, with just cause evictions, the burden of proof is on the landlord. If the landlord has to go to trial, he has to line up witnesses.  These witnesses are usually the very neighbors of the people who are going to be testifying against.  Who has the time to stand up for the landlord in an adversarial proceeding to denounce a neighbor as being a nuisance?  Getting a tenant evicted for being a nuisance can be harder than it sounds.

#4: Illegal purpose.  Good news!  You can still evict a tenant for running a meth-lab.  Running a meth-lab is pretty easy to prove, but there are all kinds of other activities which are illegal that are more difficult to prove.  Remember that the tenant is innocent until proven guilty and it the landlord’s onus to prove to the court that illegal activity is occurring on the premises.  And remember, if a landlord observes an illegal activity, they have to provide notice  to the tenant so they have an opportunity to cure.  And if you do go to court, getting witnesses to swear they’ve witnessed the illegal acts is difficult.

#5: Failure to give access. If the tenant refuses to give access to the landlord without good cause, then the landlord can evict.

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#6: Refusal to execute a new lease. This one sounds good – but the terms of the new lease have to be pretty much on the terms of the previous lease.  For example, if the old lease didn’t mention anything about having pets, and you want the new lease to not allow pets because the tenant had a buddy with a poorly trained dog move in – you can’t change the lease to disallow pets. What’s more, when presenting the tenant a new lease, you have to notify the tenant n writing that they don’t have to accept new terms in a new lease.

#7:  Evict a sole un-approved sub-tenant. Let’s say you have a single tenant on the lease, and this tenant adds a sub-tenant.  If they co-habitate, you can’t evict the sub-tenant.  But if the sub-tenant ends up being the only one occupying the property, then that sub-tenant can be evicted (and I think the original tenant too).

#8: Vacate an un-permitted rental unit. A landlord can vacate an un-permitted rental unit to allow a family member to move in.  But read the fine print: the relative must move in with in 90 days, and must live there for 36 consecutive months. If they don’t move in within 90 days then you must re-offer the premises to the tenant who had been evicted, and you have to pay their six months relocation plus living expenses.

#9: Necessary and substantial repairs requiring a temporary vacancy.  You can temporarily displace a tenant for substantial repairs.  If the tenant has to be out more than 30 days then, the tenant gets first right to return to reoccupy the premises, at their former lease rate. If the landlord has a whole bunch of other rental units, the tenant has the right to move into one of the other units.

#10:  Temporary tenancy. This is a situation where a landlord might have a daughter who is sick somewhere out of state, and the landlords know that they’re going away for six months or a year and they can lease it out for a short period of time. Landlords are thankfully able to leave for short periods of time, and evict a tenant after  as long as the tenant was given proper notice in that original lease that they will be returning, and if the lease is less than one year.

Conclusion

This ballot measure is a nightmare for landlords.  Ironically, it’s also a bad deal for tenants, as it will inevitably reduce the amount of rental stock available.  Given how onerous just cause evictions and rent control are, many landlords will decide to withdraw their rental properties from the market, or just sell them to wealthier folks who will become owner occupants.

California’s housing crisis is not that rents are high – it’s that there’s a critical shortage of housing, which is causing high rent.  Sadly, the proposed initiative will surely exacerbate that problem in Santa Cruz.  Landlords and tenants alike are being held hostage by the city’s no growth policy, and decades of failure to meet the city’s affordable housing goals.  Tenants in Santa Cruz need relief, but rent control is not the way to get it.

 

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