Tuesday, September 20, 2016
C.A. Rejects Restriction on Housing Unit Mergers
By a MetNews Staff Writer
A rent control locality may not impose a waiting period on the right of a landlord who has removed a unit from the rental market to merge that unit into others, the First District Court of Appeal ruled yesterday.
Div. Three struck down a San Francisco ordinance that required landlords to wait 10 years before applying for a permit for such a merger. San Francisco Superior Court Judge A. James Robertson II ruled that the enactment violated the state’s Ellis Act, which, among other things, guarantees a landlord the right to evict a tenant in order to remove the unit from the market.
Robertson ruled in a suit brought against the city by the San Francisco Apartment Association and two other groups representing real estate interests, and granted a permanent injunction against enforcement of the ordinance.
Justice Martin Jenkins, writing for the Court of Appeal, rejected the city’s contention that the plaintiffs lacked standing to assert the rights of landlords who were members of the groups that were suing. State law, the justice explained, recognizes the right of an association to sue on behalf of its members, and the plaintiffs established that their members would suffer a remediable injury if the ordinance were not blocked.
Jenkins went on to agree with the trial judge that the ordinance is preempted because it “penalizes landlords for leaving the rental business by banning any mergers in a building for ten years after a landlord removes the property from the rental market under the Ellis Act.”
Such penalties are facially preempted, the trial judge found, “regardless of whether they take the form of formal permits, additional notification requirements, waiver of future rights, or burdens on a landlord’s exercise of his or her rights, because they directly contradict state law by penalizing and discouraging conduct that the Ellis Act expressly authorizes.”
Jenkins rejected the argument that the ordinance was not preempted because it targeted all proposed mergers involving units from which tenants had been evicted without fault, not just those under the Ellis Act. The issue, however, is not which properties are targeted, it is whether the ordinance contradicts the act or regulates in a field which the state legislation completely intended to occupy, he wrote.
“Specifically, we conclude the Ordinance does in fact penalize property owners who leave the residential rental market, at least those property owners leaving the market for the purpose of merging a withdrawn rental unit with one or more of the owners’ other units,” the justice wrote. “In fact, the Ordinance also penalizes owners seeking to merge multiple units of their property for the purpose of selling the property as a single family residence, and not just to exercise their personal right to exit the residential rental market. In both situations, the Ordinance imposes a mandatory 10-year waiting period on the property owners, running from the date on which notice of eviction is served upon the tenant of the unit to be withdrawn from the rental market, before the owners may apply to the planning commission for the appropriate permit to merge the units. In doing so, the Ordinance imposes a mandatory restriction on the rights of property owners that far exceeds the scope of permissible local governance delineated by the Ellis Act.”
The case is San Francisco Apartment Association v. City and County of San Francisco, A144702.
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