The Ins and Outs of the City of Richmond’s Rent Ordinance

The Ins and Outs of the City of Richmond’s Rent Ordinance

Ordinance for Fair Rents, Just Cause for Eviction and Homeowners Protection

Life is full of surprises, and when it comes to dealing with the City of Richmond’s Rent Control Ordinance, most of them are distinctly unpleasant for landlords.

The City of Richmond’s (“Richmond”) Fair Rent, Just Cause for Eviction and Homeowners Protection Ordinance went into effect December 30, 2016. The ordinance made sweeping changes to a landlord’s obligations for properties located in Richmond, including controls over rent increases and “just cause” requirements for evictions. Unlike other cities, the ordinance also includes a retroactive base-rent level that required controlled units to revert rent amounts to those in effect on July 23, 2015, or the first rental amount in effect for a particular unit if the tenant took possession after July 23, 2015.

This article will discuss what properties fall under rent control and some of the common pitfalls that landlords owning property in Richmond now face. In this commentator’s opinion, the title of the ordinance is a misnomer as there is very little protection for the homeowner.

Rent Control in Richmond

What Units are Covered?

All residential rental units in Richmond are subject to rent control and eviction control unless they fall under one of the exemptions stated in the ordinance.

What Units are Exempt?

The exemptions include hotels and units primarily rented for periods of fewer than 14 days; hospitals; certain dormitories; government subsidized or owned units; single family dwellings that are exempted by the State of California Costa-Hawkins Rental Housing Act;[1] “accessory dwelling units“ (known as “ADUs” – think inlaw units – and those built for short-term tenants/AIRBNB provided they are properly permitted). For a complete list, see Chapter 11.100.030 and 11.100.040 of the Richmond Municipal Code, which is available at the Richmond Rent Program’s website: http://www.ci.richmond.ca.us/3364/Richmond-Rent-Program.

Evictions: Defining “Just Cause”

Exempt Units

In addition to being exempt from rent control, that is, locally controlled rent increases, some units are also exempt from the eviction control mechanisms in the ordinance. In simpler terms, these units do not require a “just cause” reason for termination of a tenancy, and can be terminated pursuant to state law. These exemptions are listed in Chapter 11.100.040 of the ordinance and include (a) temporary rentals, (b) accessory dwelling units (or small second units) that are in compliance with permitting requirements, and (c) room rentals where the tenant shares a bathroom or kitchen with the homeowner, also known as lodging.

Staying Exempt

Temporary rentals have a number of exacting written requirements to avoid falling under ”just cause,” i.e., that the landlord must provide the tenant in a temporary rental situation at the inception with written notice of the length of the tenancy; that the tenancy may be terminated at the end of the term; and that relocation assistance shall not be required. Temporary tenancies are also limited to 12 months or less and the homeowner must also be the “primary resident” of the property for the exception to apply. The “primary resident” requirement also applies to accessory dwelling units/small second units as well as to lodging/ room rentals. If all of these requirements are not met, then the unit is not exempt from the ”just cause” eviction restrictions and in some cases will also be liable for rent control.

Rude Surprises: Registration, Fees and Reporting

Registration and Fees

There are many housing providers that may fall into legal “traps” created by the requirements of the ordinance. In my experience, these housing providers tend to be small scale landlords who were renting units or houses, prior to the passage of the ordinance. Some may also be absent landlords who live in different cities or even states and are not even aware that the ordinance went into effect. Accordingly, they may have failed to register their rental properties with the rent program, which is required under the ordinance and is a basis for a tenant to withhold rent.[2] Also, landlords may be unaware that they now need to acquire both a business license and pay a registration fee, and a Residential Housing Inspection Fee to the Richmond’s rent program to be in compliance with the ordinance. Landlords may also have attempted to raise the rents, or actually raised the rents, only to find out after the fact that they violated the rent control provisions of the ordinance, and then have to return the overcharges to the tenant.

Reporting

Landlords may also be unaware of reporting requirements. For example, all rent increases, or changes to the terms of the tenancy, including termination notices, must be filed with the rent program to be enforceable and can cause many problems for the unaware landlord. Richmond has its own forms, usage of which is mandatory in many circumstances.

A termination notice that has not been filed with the rent board within two business days is a complete defense to an unlawful detainer action. Furthermore, the ordinance permits attorney fees to be recovered by a tenant who prevails in a civil action against the landlord for overcharges in excess of the maximum allowable rent. And where it is shown that the landlord acted willfully or with oppression, fraud or malice, the ordinance allows recovery of treble damages. Lastly, the landlord may also be subject to other fines,[3] as violations of the ordinance are considered misdemeanors.

Non-Exempt Units: What is a “Just Cause” for Terminating Tenancies?

The ordinance lists eight “just cause” reasons for terminating a tenancy. The first four are situations where the tenant is at fault. The remaining four are for “no fault” terminations.[4]

Tenant-at-Fault Terminations:

Failure to Pay Rent. The tenant fails to pay the rent. A three day notice to pay or quit may be issued. Note that the notice must be uploaded to the Richmond Rent Program with a proof of service within two business days otherwise the tenant can assert the failure as an affirmative defense to an unlawful detainer action.

Breach of Lease. This cause can be asserted for a breach of the material terms of the rental agreement other than failure to pay rent, however a written notice to cease must first be presented to the tenant. The breach must also be substantial, and must be a material term of the lease, meaning not a trivial breach, but something that is truly a “deal breaker,” such as having pets where the lease specifically prohibits them, or assigning or subletting the property in excess of maximum occupancy limits under state law.

Nuisance. This cause can be asserted for causing damage to the property or continuing to allow, or causing, a nuisance to persist at the property. Again, in most cases a notice to cease must be presented first, however where law enforcement has found probable cause of certain criminal activity affecting health and safety or that poses a threat of harm, no notice to cease may be required and a landlord can move forward with a notice pursuant to state law. See Chapter 10 section 1003 of the Rent Board’s adopted regulations.

Failure to Give Access. “Just cause” exists where a tenant unreasonably prevents a landlord to access the property to show to prospective buyers or for making repairs. A notice to cease is also required prior to serving a notice to terminate.

No Fault Terminations

Temporarily Vacate for Substantial Repairs. The landlord can request a tenant temporarily vacate the premises to undertake substantial repairs, such as repairing code violations that affect health and safety and where the repairs cannot be completed while the tenant resides on the premises. Note that the landlord will be responsible for paying for hotel fees, daily meal allowances and laundry pursuant to the Rent Program’s schedule. Also, the landlord cannot collect rent while the unit is being repaired.

Owner Move-In. The landlord wants to move either themselves, or a spouse, child, parent or grandparent into the unit. This also requires a relocation payment to the tenant in an amount determined by the Rent Program’s fee schedule and is based on the number of bedrooms. In certain cases, a “qualified tenant” cannot be evicted under this “just cause” reason if they are elderly, disabled, or terminally ill and has resided in the unit for more than five years, unless the landlord or their relative also meets such criteria. The landlord or relative must reside in the unit for at least three years, otherwise the landlord must offer the rental unit back to the original tenant at the same rental rate paid at the time that the landlord or relative vacated the unit.

Withdrawal from Rental Market. A landlord may remove a property from the rental market as a basis for a “just cause” termination of tenancy. These terminations also require a relocation payment pursuant to the Rent Program’s fee schedule which is updated each year. Qualified tenants (senior, disabled or tenants with minor children) are also entitled to a 120-day notice. Tenants will also be entitled to a right of return if the property is returned to the market within 10 years of such a termination of tenancy.

Temporary Tenancy. A landlord who has leased their primary residence as a temporary tenancy of 12 months or less, that was disclosed in writing at the inception of the tenancy can recover possession without paying relocation fees.

It is important that all notices seeking to terminate tenancy must state the basis of the termination. Any failure to comply with the requirements of the ordinance can be used as an affirmative defense in an action to recover possession.

Common Pitfalls

In summary, failure to comply with reporting and registration requirements is fatal in Richmond to recovering possession in almost all circumstances. Failure to provide notices to cease bothersome or illegal activities can force the landlord to have to completely start the process over from the beginning for evictions based on nuisance, breach of lease, and failure to provide access, even where there is a legitimate basis.

Even for landlords familiar with rent control/eviction ordinances in other cities, it is critical to consult with an attorney familiar with Richmond’s Rent Control ordinance before attempting to terminate a tenancy for any reason.

[1] California Civil Code section 1954.52 et seq.
[2] See City of Richmond Municipal Code Chapter 11.100.060(s).
[3] Richmond Municipal Code section 1.04.100, See also: See 11.100.100(d).
[4] City Of Richmond has only eight “just causes” – other cities have many more.

 

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