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Laws and Regulations

Laws on Allowing Emotional Support Animals in Your Reno Rental Property

Emotional support animals are different from pets. If you don’t know this, it’s important that you understand the difference. The laws around emotional support animals have recently changed, and we want to talk about it with anyone who owns a Reno rental property and may have a resident who claims to need such an animal.Nationally, this is a big thing, especially in the property management industry. We are providing some local expertise today, which can help you avoid making an expensive mistake that may result in a discrimination lawsuit.

Defining Emotional Support Animals

The million dollar question that has been brewing for the last five years is: how do we define and identify an emotional support animal? The Department of Housing and Urban Development () at the federal level has only released ambiguous statements on emotional support animals. They have been overly cautious about clearly defining it and then getting caught up on something. So, we don’t really have a blanket policy that we can use, and it’s been causing more problems than solutions over the last few years as more and more people want to live in properties with their support animals.

Pets versus Support Animals

Pet are not always the most welcome residents in a rental property. Lots of investors prefer not to allow pets because they worry about the potential for damage and the replacement costs that can really be scary. We have all heard horror stories about the damage that a large dog has done or the smell of cat urine that can never be completely eradicated.Not all investors are worried about pets. There are a lot of really good pet owners out there who rent responsibly. Now, when investors are making decisions about whether to allow pets or not allow pets, they have no choice in the matter of service animals and emotional support animals.People who need a support animal must have paperwork and documentation to back it up. When this is eagerly provided and everything checks out, there’s not much you have to do. But, some people abuse the system and try to turn their pets into emotional support animals so they can avoid things like pet fees or pet rent.This makes working within the federal rules and regulations so difficult.

Mynd Uses Petscreening.com to Verify Support Animals

At the end of the day, every landlord and investor and property manager has to follow the guidelines, which were recently updated a month or two ago. There’s more structure to the policy now, but it’s still easy to misrepresent your position on pets and service or support animals. You can get into a lot of trouble if you’re suspected of discriminating against residents who need an emotional support animal.At Mynd, we use a third part service which keeps us very much above the legal dangers involved in emotional support animals.We work with Petscreening.com, which is a great service for Reno investment property owners. The company is comprised of a panel of attorneys who vet the medical professionals who are issuing the documentation residents provide. These days, people can buy certificates online to bypass the need for medical documentation. We want to avoid that and make sure the residents are complying with their own requirements.The screening service is very professional. They call the doctor or medical professional who signed off on the certificate and verify that the patient () needs the prescribed pet for the specific listed reasons. We want to make sure that letter came from the doctor’s office. They are usually happy to verify it when they’re legitimate medical professionals.Companies like this are at no cost to our landlords. It’s a free service we offer at Mynd, and we pay for it by asking the residents to pay a screening fee for their emotional support animal. We disclose the fee upfront. Whatever the outcome, you will be protected.This is a true form of leverage. If you own or manage a property, you don’t want to be the person who has to stay up to date on all the laws and protections. When there’s a professional property manager or an attorney-led screening service who can take care of these things for you, it’s much easier to rent out your property.Basically, Petscreening.com is doing a background check on the animal. They’re verifying that it’s an emotional support animal and they’re following all the regulations that are legally required.This area of the law and the property management industry is still fairly new. You need to understand the difference between therapy animals, service animals, and emotional support animals. As a rental property owner, you can’t say you won’t take these animals. Laws protect both the animal and the owner.Don’t get on the wrong side of this issue. Be transparent and document everything. You don’t want to find yourself on the opposing end of a complaint, which starts at around $10,000 per violationIf you have any questions about emotional support animals or anything pertaining to your Reno rental property, please contact us at Mynd Property Management. We love talking to investors about all things pertaining to real estate.You can also visit our Facebook group of investors, which is called Master Mynd. It’s a real estate investors’ club, where you can exchange ideas with other owners. Check out our weekly podcast as well, called The Myndful Investor. We invite leaders in real estate and property management to talk about their success and, more importantly, their failures. There’s a lot to learn from this relatable content.

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Demystifying Rent Control for Prospective Investors

California is one of the few states to adopt widespread rent control policies. The mere notion of rent control is a foreign concept to many. Some investors shy away from investing in Bay Area real estate as a result. Their fears over rent control, even if real, can lead to missed opportunities.We’re here to help demystify California’s rent control regulations and explain why buying rent controlled properties can actually make a lot of sense. It’s not a foolproof strategy, and certainly isn’t for everyone. Here are a few things investors should be aware of as they weigh the decision to buy rent controlled versus non-rent controlled properties.

Local Ordinances

The state’s Costa-Hawkins Rental Housing Act created a set of baseline limit to rent control regulations that all municipalities are expected to abide by. Most importantly, the law exempts units built after 1995 from rent control. Beyond what’s laid out in the state law, cities are free to establish their own rent control policies if they so choose. A number of cities have set even earlier cut off dates: properties built after October 1978 are exempt in Los Angeles; properties built after June 1979 are exempt in San Francisco; and properties built after January 1983 are exempt in Oakland.Other cities have chosen not to adopt rent control policies at all.Among those with rent control ordinances, most establish eviction restrictions, and limit rent increases (), but allow landlords to charge fair market rents when a unit turns and a new lease is signed. In the Bay Area and Los Angeles, the rate of inflation is historically much lower than increases in market rents, so tenants with a long tenure pay substantially below-market rents.

Advantages of Rent Controlled Properties

This all seems awfully complex, no? Given the variation from city to city, and limits on rental increases, why would any investor consider buying rent controlled property? Despite these challenges, we believe California’s rent controlled real estate can still be a great investment. In fact, rent controlled properties have four distinct advantages:

  • Lower turnover. The longer tenants live in a rent controlled unit the less likely they are to leave. For instance, someone who has lived in the same apartment for 20 or 25 years may only be paying $800 a month for a unit that would otherwise rent for $3,400 a month on the open market. Residents paying sub-market rents have a financial incentive to stay put. Lower turnover can be a good thing for landlords. There are many costs associated with turnover () – not to mention the headaches and stress turnover can cause.
  • Substantial upside when people do move out. Most investors evaluate real estate deals using cap rates. Typically the higher the cap rate, the better the investment. In non-rent controlled markets, investors may be willing to buy properties with a low cap rate if there’s a value-add opportunity that will result in higher rents, and therefore, a higher cap rate in the near future.Buildings with sub-market rents are analogous to value-add opportunities. At some point in the future, every tenant will move out () and rents will re-set to fair market value. When that happens, the effective cap rate will increase.It makes sense to look at two cap rates when buying a rent controlled unit, the actual cap rate based on current rents, and the hypothetical cap rate based on market rents. If the current rents are substantially below market, one might be justified buying a building at a very low cap rate, e.g. 3.5%, knowing that the hypothetical cap rate based on market rents is much higher, e.g. 8.5%. Eventually, the units will turn and the rents will reset to market.
  • Ability to increase rents after making capital improvements. There’s a common misconception around a landlord’s willingness to make capital improvements to rent controlled buildings. Most assume there’s no financial incentive for owners to make those capital improvements if they cannot raise rents to offset the costs of those investments.In reality, most cities allow landlords to increase rents in excess of the annual limit after making capital improvements. In Oakland, for instance, up to 70% of actual capital improvement costs, plus imputed financing, may be passed through to tenants. Capital improvement costs must be amortized over the useful life of the improvement, and passing these costs onto tenants requires approval by the Rent Stabilization Board, but it is possible to do so nonetheless. This mechanism allows owners to continue investing in their property despite the standard limitations on annual rent hikes. These improvements enhance the value of the property, which allows landlords to reap even higher rents when later releasing on the open market.
  • More reliable income. Owning rent controlled property provides a cushion against a decline in rents. Suppose there is a market downturn and rents decline by 20%. In a rent-controlled building, any units where the rent is more than 20% below market value prior to the downturn will still be unlikely to turn over or warrant a rent decrease. Tenants might still be paying submarket rents, but at least these rents are stable. Landlords have built-in padding in the event of a market downturn because cash flow is more predictable.

What to look for in rent controlled apartments:

  • Stabilization Rate: A property is generally considered to be “stabilized” when at least 90% of the units are rented. One investment strategy is to buy a fully-stabilized asset that’s generating positive cash flow from Day 1. Other investors are willing to buy a vacant or partially-vacant property and then take on the risks associated with lease-up. In a rent controlled market, the latter approach makes a lot of sense. Buying a partially-stabilized building allows landlords to charge fair market rents when first leasing vacant units. Someone who buys a fully-stabilized property will have to wait until existing tenants move out to bring those units up to market rent.
  • Existing Tenants: In any market, rent controlled or not, investors should spend some time understanding who currently occupies the building. Who are the tenants? What’s the demographic profile? How long have they lived there? Any problem tenants? These are all common questions. The answers to these questions become critically important when buying rent controlled apartments.

In a non-rent controlled market, owners want as little turnover as possible. Turnover equates to higher expenses. The opposite is true in a rent-controlled market, where regular turnover is considered a good thing because it allows the landlord to bring rents back to fair market value.We caution investors from buying rent controlled properties if tenants have been there for a really long time () and rents are more than 50% submarket. Now, if units are rented at 30% submarket rates today but the property has a history of high turnover, this could be a great long-term investment.

  • Unit Size: In our experience, 2+ bedroom units tend to attract tenants that stay longer than those who lease a studio or 1-bedroom apartment. Again, this matters because turnover is a good thing in rent controlled markets. The more space tenants have, the more likely they are to stay. A young couple might decide to stay and raise their family in the unit; or an empty nester might decide to permanently downsize in your apartment. Turnover tends to be higher among smaller units.
  • Current and Future Cap Rates: Instead of evaluating the property based upon its current cap rate, investors might consider buying a property based upon its potential cap rate if and when rents are raised to market rate.

The trick is predicting when people will move out. If you suspect tenants will move out six months from now, buying a rent controlled property at a 4% cap rate could be a great deal. If you suspect tenants will stay for another 20 years it doesn’t matter that the property has the potential to turn a 7.5% cap rate because you’ll have lost two decades in the process. The question becomes: how much risk are you willing to take?

  • Time Horizon: Buying rent controlled properties can be a great investment strategy for investors with a long term, buy and hold strategy. The real estate market ebbs and flows, with most cycles lasting about ten years (). When the market dips, rents can quickly decline – crippling investors who rely too heavily on the rents they were getting at the market peak. Investors with a long-term time horizon may benefit from the cash flow predictability that rent-controlled units offer.

Many landlords feel skeptical about California’s rent control regulations. We totally get it. There are certainly risks to consider before pulling the trigger. But rent control doesn’t have to be a big, scary black box to avoid altogether. A little due diligence can go a long way, and as many of our property owners have found, can lead to tremendous upside in the long-run.

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San Leandro Inches Closer to New Tenant Relocation Policy

October 10, 2017--Oakland, CA-- For at least the past year, the San Leandro City Council has been weighing whether or not landlords should be required to pay tenant relocation costs. When presented with a draft ordinance in July, the City Council backed off, sending the proposal back to the drawing board for further revision.“I have really not heard anybody say, ‘I like this,’ not from the renters and not from the landlords, and that should say something,” Councilwoman Corina Lopez said at the time. The City Council’s apprehension led some to believe that relocation assistance would be put on the backburner for the foreseeable future.But that wasn’t the case.Earlier this month, the City Council heard a revised proposal concerning tenant relocation costs. Under the terms of the proposal, the “Tenant Relocation Assistance Program” would require landlords to pay tenants up to $7,000 in relocation costs. The City Council voted in favor of the ordinance by a 4 to 2 margin.“I realize that one size doesn’t fit all, but what we’re trying to do is give our renters some assurance here,” explains San Leandro Mayor Pauline Cutter.The new program stipulates that landlords must pay relocation assistance when a tenant decides to move as a result of “landlord-caused” actions. Examples include capital improvements, demolition, owner move-in and rent increases of greater than 12 percent.

Exemptions to landlord-caused actions include:

  • Tenant breach of rental contract or engaging in illegal activity on site;
  • When the property becomes uninhabitable through no fault of the landlord ();
  • Tenant’s lawful termination of employment, if that was a stipulation of the lease;
  • When temporary repairs are being made to the property and landlord is willing to provide suitable short-term housing as an alternative; or
  • When the landlord had given tenants notice of renovations prior to the tenants signing leases ().

Applicability

San Leandro’s new tenant relocation assistance ordinance applies to all rental properties with two or more tenant-occupied housing units. Rental houses with recorded affordability restrictions are exempt, as are single family homes or individual condos offered for rent.

Calculating Relocation Payments

San Leandro landlords will be obligated to pay relocation assistance equal to three times the tenants’ current monthly rent, OR three times the current federal Fair Market Rent for the region – whichever is higher. Households with children under the age of 18, residents over 65 years old, or residents with disabilities may qualify for an additional $1,000 per rental unit.However, as mentioned above, tenant relocation assistance may not exceed $7,000.For example, if a unit is rented for $3,000 per month, the formula would indicate the landlord is obligated to pay $9,000 (). Because of the cap, the landlord will only have to pay the $7,000 maximum. This provision is somewhat unique among tenant relocation programs within the Bay Area, which often stipulate the landlord pay the equivalent of three months’ rent, regardless of what that total amount may be.Landlords will be expected to pay relocation assistance in two payments: 50% within five days of serving tenants with notice to vacate; and the remaining 50% within five days of the last day of tenancy.A few additional provisions have been added to protect San Leandro landlords. For instance, if there are damages to the rental unit that exceed the amount of the security deposit being held, the landlord may withhold that amount from the final relocation payment. And if the tenant decides to return to the unit after renovations or capital improvements are complete, the tenant will be required to reimburse the landlord for any tenant relocation payment received.Finally, the ordinance allows landlords and tenants to reach a mutually agreeable solution in lieu of tenant relocation payments as long as both parties are acting in good faith.

Notice Required

Under the new program, San Leandro landlords will be expected to give tenants notice of their relocation benefits. There are two types of notice landlords should be aware of:

  1. For landlord-caused terminations, the landlord will be required to attached a relocation notice to the tenants’ termination notice at least 90 days prior to termination of tenancy; and
  2. For landlord-caused terminations resulting from rent increases in excess of 12 percent, the landlord must attached relocation notice to the rent increase notice at least 60 days prior to the date the rent increase will become effective, in accordance with State law.

The ordinance requires notices to be delivered in English, Spanish and Mandarin.

Next Steps Toward Implementation

With the 4-2 vote, the San Leandro City Council authorized the City to go back and formalize the language in the ordinance. It remains to be seen when the ordinance will be formally adopted and submitted to the Municipal Code, but the final language is unlikely to differ much from what has been approved to date. San Leandro landlords should brace themselves for these impending changes and plan accordingly.

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Hayward Planning Commission Votes to Loosen Restrictions on In-Law Apartments, But Will it Matter?

Earlier this year, the State of California passed first-of-its-kind legislation in an attempt to increase housing supply. The law requires cities and towns to allow homeowners to build in-law apartments as of right, without having to go through a cumbersome permitting process.

Some cities and towns have been slow to respond. Hayward isn’t one of them.Hayward Planning Commission VotesLast month, the Hayward Planning Commission voted 4-0 to endorse new building and zoning codes that would give homeowners more flexibility in building these in-law apartments, otherwise known as “granny units” or more formally, as “accessory dwelling units” (). are defined as independent dwelling units with permanent provisions for living, sleeping, eating, cooking and sanitation located on the same property as a single-family home. come in many forms: they can be internal (), attached () or detached in a standalone structure.The Commission’s decision comes in response to the state law, which invalidated the City of Hayward’s longtime restrictions on .According to the proposal, the Planning Commission voted unanimously to support, will be allowed in all three forms. They can be no larger than 1,200 square feet in size or half of the living space of the main house, whichever is smaller, and homeowners must have at least one parking space per bedroom within the ADU in addition to whatever parking is already required under local regulations. Two bedrooms is the maximum that would be allowed at any ADU. will only be allowed at owner-occupied single family homes, though the homeowner would be allowed to live in the ADU instead of the main home, allowing the main home to be rented. In either case, the ADU cannot be rented for short-term rentals such as those advertised on websites like Airbnb.Before the proposal can become law, it must go before the Hayward City Council for final approval—which will be no easy task.Several City Councilors have already expressed concern over relaxing ADU regulations.“I think we’re all committed to more housing options and building more affordable housing,” said Councilor Mark Salinas earlier this year, “but I think this is going to change the way our neighborhoods look. Councilor Marvin Peixoto also expressed his reservations. “Essentially what we’re doing is converting single-family developments into multi-family developments .”The City Council is expected to vote on the ordinance in October.Demand for granny units highlights Hayward’s limited housing supply and excess demand. In the past year alone, the city’s median sales price has climbed a whopping 13% and median rent now eclipses $2,750 per month. Allowing would increase the housing stock—particularly in terms of smaller units, which are inherently more affordable than larger, more traditional single family homes.Before real estate investors get spooked: there’s little reason to believe Hayward will be flooded with . As one resident pointed out at a Planning Commission hearing, local construction costs and the City’s exorbitantly high permitting fees will be cost prohibitive for most homeowners, particularly for those who lack construction experience.“The whole basis of this is that it’s a housing issue, but no one’s going to get these things permitted because of the fees,” said Eduardo Padilla.If he’s right, the number of new that come online will likely be limited, even though homeowners have the ability to construct if they so choose. As a result, we suspect Hayward housing stock to remain constrained. Given existing supply and demand, that’s a positive sign for Hayward real estate investors looking for rent growth over the foreseeable future.

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Doubling the Standard Deduction and Axing the Investment Income Surcharge - How Trump's Tax Reform Plan Will Affect Real Estate Investors (Part III)

While we certainly cannot predict the future, our experience in the real estate industry provides some insight as to how the tax reform plan President Trump released last week will impact rental property investors.In this final post in a three-part series, we look at how doubling the standard deduction and eliminating the 3.8% surcharge on investment income will affect real estate investors – a group of people who are monitoring the President’s proposal closely.

Doubles the standard deduction.

The current tax code allows any individual who does not itemize their deductions to take a “standard deduction”. In 2016, the standard deduction for an individual was $6,300. This would double to $12,600 under President Trump’s plan for tax reform.How this change affects real estate investors seems to be a mixed-bag. Some argue that doubling the standard deduction removes the incentive to invest in real estate. National Association of Home Builders Chairman Granger MacDonald noted that “doubling the standard deduction could severely marginalize the mortgage interest deduction, which would reduce housing demand and lead to lower home values.”While this may be true for individuals looking to buy their primary residence, doubling the standard deduction is unlikely to deter real estate investors from buying rental property. Investors with any sizable portfolio will likely exceed the threshold through deductions anyhow, thereby necessitating itemization. If anything, doubling the standard deduction may benefit landlords and real estate investors who may realize increased demand from renters ().Regarding lower home values: this would certainly hurt those who invested in real estate for appreciation, but this could also benefit real estate investors who had been priced out of expensive core markets such as the San Francisco Bay Area.

Removes the 3.8% surcharge on investment income.

In order to pay for the Affordable Care Act, the Obama Administration enacted a 3.8% surcharge on investment income. Trump’s tax reform plan would remove that surcharge, and would cap capital gains at 20% versus the nearly 40% that some tax brackets are subject to today.On the whole, this seems to benefit real estate investors. Paying a lower capital gains tax is always a good thing, particularly for real estate investors who fix and flip properties.*****The changes are seemingly positive for real estate investors. But there are still a lot of unknowns.The plan released on Wednesday does not include any detail on what will happen to a number of key business tax deductions, including 1031-exchanges and “active investor” status. Investors are watching closely. A “blueprint” released by the House this past summer suggested eliminating all special interest tax deductions, so we’re on the edge of our seats wondering where President Trump will come down on these issues. As of now, we still remain in the dark.But barring any major changes to the tax code other than what the Trump administration released earlier this week, we feel like the changes to the tax code could prove a boon for real estate investors. We will continue to monitor reform efforts as new details are released.Want to learn more about how Trump’s tax reform plan will affect real estate investors? Read Part I and Part II of this series where we share our insight about the other proposed changes.

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Eliminating the Estate Tax, AMT and Most Personal Deductions - How Trump's Tax Reform Plan Will Affect Real Estate Investors (Part II)

Real estate industry experts have expressed mixed emotions about President Trump’s proposed changes to the tax code. The changes will certainly affect homeowners differently than they affect real estate investors.In Part II of this three-part series, we break down the key components of the tax reform plan released last week by the Trump administration. This post looks specifically at how we think eliminating the estate tax, the alternative minimum tax, and most personal deductions will affect real estate investors.

Eliminates the estate tax.

The estate tax, otherwise known as the “death tax,” seems like a positive thing for real estate investors, who can now pass their real estate portfolio on to heirs without worrying about the portfolio’s value being whittled away by taxes.

Eliminates the alternative minimum tax ().

This is another change that should benefit real estate investors. The was originally enacted in the 1960s to prevent wealthy people from using deductions to reduce their tax liability to nearly zero. For instance, Trump’s own tax return from 2005 revealed huge losses from real estate investments, which he deducted. Were it not for the , Trump would have paid next to nothing in taxes. But because the ignores most deductions, Trump wound up paying taxes at the 24% rate – still far below the top rate, but much higher than without the . Eliminating the would allow people in a similar situation to write off losses to reduce their tax liability once again.

Eliminates most personal deductions, including deductions for state and local income taxes, but preserves deductions for mortgage interest payments () and charitable contributions.

At one point in time there was speculation that President Trump might try to eliminate the deduction. Thankfully President Trump, himself an avid real estate investor, came to his senses and preserved this deduction in the plan released on Wednesday.Any change to the deduction would have been terrible for the real estate industry. Really terrible. It would have been awful for landlords, investors and homeowners alike. Real estate is perhaps the most tax-advantaged industry, and the ability to write off mortgage interest payments saves owners thousands of dollars each year. Real estate investors have built their pro formas around the assumption that this tax advantage would hold. Changing the policy could dramatically impact a person’s return on investment.*****In Part I of this series, we shared why real estate investors should be cautiously optimistic about Trump’s proposal to consolidate tax brackets into just three and to reduce taxes for corporate and pass-through businesses.Stay tuned for Part III of this series in which we’ll analyze how we believe doubling the standard deduction and eliminating the investment income surcharge will impact real estate investors.

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Fewer Tax Brackets and Lower Corporate Taxes - How Trump's Tax Reform Plan Will Affect Real Estate Investors (Part I)

He made a promise on the campaign trail to cut taxes for individuals and businesses alike—and last week, the Trump administration unveiled a tax reform plan that would do just that. Treasury Secretary Steven Mnunchin and National Economic Director Gary Cohn briefed reporters on the plan at the White House earlier this week. Although details about the plan remain sparse, real estate investors should be cautiously optimistic about what's known about the plan so far.In this 3-part guide, we provide a rundown of the proposed changes, as well as a recap of how we believe the changes may affect real estate investors.

Consolidates tax brackets from seven to just three ().

Generally speaking, this seems like a good thing. It will certainly simplify things for everyone who files. But in terms of impact on real estate investors, we do not believe this change will have a major impact one way or another.

Reduces corporate taxes from 35% to 15%.

The U.S. corporate tax rate is currently the highest in the industrialized world, which some say has caused a massive exodus of U.S. companies to lower-tax nations. Reducing the corporate tax rate to 15% would make it one of the lowest in the world. The goal is to incentivize companies to come back home.Again, we don’t see this change as having a major impact on real estate investors specifically. But on the whole, it seems like good policy to incentivize businesses to stay in the U.S. where they can grow jobs and strengthen the national economy. A strong economy usually translates into a healthy housing market.

Applies a 15% tax rate to “pass-through” businesses.

President Trump wants to be sure small businesses and professional organizations receive the same tax treatment as corporations—and that means lowering taxes for “pass-through” businesses, as well.This would really benefit real estate investors. Pass-through businesses include everything from barber shops to hedge funds, as well as LLCs created to invest in real estate. Some say that President Trump is pushing for this change for his own benefit; he has more than 500 pass-through entities that contain his real estate holdings. In any event, reducing the pass-through tax rate () will certainly benefit landlords, real estate investors and other real estate-related professional service companies.*****On the whole, we see these proposed changes as being relatively beneficial to real estate investors. Stay tuned for Part II and Part III of this series, in which we look at other tax reform provisions and how those might impact the future of real estate.

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Proposed Legislation Would Crack Down on Illegal Owner Move-In Evictions in San Francisco

San Francisco wants to crack down on illegal evictions that plague residents in rent-controlled units.

Yesterday, two pieces of legislation were filed with the Board of Supervisors. Each took aim at how “owner move-in” evictions are handled.Under San Francisco’s existing rent control ordinance, landlords can only evict tenants for a few reasons. The most common are non-payment of rent, breach of lease, and to perform capital improvements that will make the unit temporarily uninhabitable. Another common reason: when the landlord or an immediate family member wants to occupy the unit.Landlords are only required to use good faith when evicting someone on the grounds of an owner move-in. The landlord () is expected to use that unit as his principal residence for at least 36 consecutive months thereafter.The problem is, nobody really checks to ensure the landlord or his family is actually living there.Last year, an NBC Bay Area investigation revealed a lack of oversight and enforcement of eviction laws in San Francisco. The Rent Board submits a random sampling of 10% of all owner move-in eviction notices each month to the San Francisco District Attorney’s Office for examination. But over the past decade, not a single landlord has been prosecuted for a fraudulent owner move-in.It’s not that all landlords are following the rules. NBC reporters followed up on 100 of the owner move-in eviction notices filed with the Rent Board in 2014 and found that in at least 24 instances, the owner or relative who was supposed to have been living there was not, in fact, living there.The two new pieces of legislation, one filed by Supervisor Mark Farrell and the other by Supervisors Aaron Peskin and Jane Kim, would require any property owners who file an “owner move-in” eviction notice to sign a declaration under oath that they or a family member plan to use that residence as their primary residence for the next three years.The legislation would also require landlords to include the existing maximum rent on the notice to vacate. If the landlord is caught charging more than the prevailing rent on the notice to vacate during the three-year period after the eviction, he could be prosecuted by the District Attorney’s Office.Tenants’ rights advocates lauded the Supervisors for their attention to the matter, but acknowledged what we already know: there’s really no way to enforce this legislation, either. Neither the Board of Supervisors nor the District Attorney’s Office has the capacity to follow up on owner move-in evictions. And few former tenants will go through the effort of trying to collect information and build a case against a landlord who illegally forced them out.District Attorney spokesperson Max Szabo echoed this sentiment, saying a California Supreme Court decision makes prosecuting illegal owner move-in evictions “nearly impossible”.Until the discrepancies between City Hall and the state’s Supreme Court are resolved, we don’t see this legislation going anywhere. We will continue to monitor it closely, and will keep readers apprised of any new developments.

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Mountain View: New Rent Control Laws

On election day, November 8, a bunch of Bay Area cities considered ballot initiatives that all related to rent and eviction controls. Important new rules passed in four of those municipalities: Oakland, Alameda, Richmond and Mountain View. In this third of o8r mini-series, we’ll take a closer look at the impact of those new laws on each city. Now up: Mountain View.

The Results

Mountain View voters were pretty clear about their preferences: they opted for rent controls and limits on evictions by a whopping margin of six percentage points: 53% to 47%. Thus, going, forward, the maximum annual rent increase will be set at the 12-month increase in the Bay Area Consumer Price Index () - with a minimum of 2% and a maximum of 5%.Some Good...Some BadThere’s a big “however” that is landlord-friendly: The owner or landlord can “bank” rent increases. That is, if there is no increase in a particular year, that unimplemented increase can be added to the next year’s hike () Not so good: the so-called base rent will be set at the rent tenants paid in October 2015, so many owners will have to roll rents back to that level before increases.()Consider This…The new measure also establishes a five-member rental housing committee, which will set the base rent, establish new regulations, and determine allowable rent adjustments and penalties for noncompliance. Landlords - and tenants - can petition the committee for adjustments to rent increases: tenants because of unacceptable maintenance of the property, for example. Owners? They can petition for adjustments if they can show that an increase is necessary to provide a fair rate of return on their investment.Evictions?Under the new law, evictions must be based on “just cause.” That means if the tenant fails to pay rent, breaches the lease, engages in criminal activity or other problem behavior. Or, if the owner decides to move into the unit or take it off the rental market or demolish it.Owners also must provide relocation, in the event of an eviction, under certain circumstances."A majority of the population that rents in Mountain View can finally breathe a sigh of relief," Daniel DeBolt, spokesman for the Mountain View Tenants Coalition, told the Mountain View Voice.In addition, on November 15 the Mountain View city council approved an urgency just-cause eviction ordinance, in order to prevent property owners from evicting tenants before the new law takes effect on December 23. So owners, you may want to put all eviction plans on hold for the moment ().

The Bottom Line For Landlords

Tread lightly when it comes to evictions - beginning now. The City of Mountain View is putting on two workshops for landlords to learn about the new laws. Details are here.

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New Berkeley Eviction Control Laws: Good for Tenants. Landlords? Not so Good.

For property owners, it always seems to be something.On Election Day, November 8, multiple Bay Area cities considered ballot initiatives related to rent and eviction controls. Significant measures passed in four of them—Oakland, Alameda, Richmond and Mountain View. A smaller, but still important measure—and one that landlords and property owners can’t afford to ignore—passed in Berkeley.

The Details...

As you might have guessed, rent and eviction control is popular in Berkeley. And this ballot measure was no different: voters overwhelmingly supported a measure strengthening existing laws by a margin of 73% to 27%.To be sure, Berkeley already had tough laws on the books, banning evictions that were not based on a “good cause.” Such causes, as landlords in the area know, can include failure to pay rent after a 3-day notice, violations of the rental agreement by a tenant, willful and substantial damage to a rental unit by a tenant, unlawful activity by a tenant, and a few other conditions.()

More Ways Out

As per the existing laws—and typical of other eviction control laws in the Bay Area—and owner could evict a tenant if the owner or a close relative of the owner planned to move into the unit.But there are—and read this closely—some exceptions. They include:

  • If the tenant has lived in the unit for five or more years and the landlord has a 10% or greater stake in 5 or more rental units in Berkeley
  • If the tenant is at least 60 years old or disabled and has lived in the unit for 5 years and the owner has a 10% stake in 4 Berkeley units

On top of all that, sorry, a landlord had to pay a $4,500 relocation payment to low-income tenants that are evicted in these cases.

The Latest?

The new measure passed last month makes it even more difficult and expensive to evict a tenant because of an owner move-in.Believe it or not, now an owner must pay a whopping $15,000 to tenants evicted in these cases. And, there’s an additional $5,000 that has to be thrown in for low-income, disabled, elderly, and families with minor children. Or... tenancies that began before 1999.If that wasn’t enough for property owners to get their heads around, the new law also prohibits owner move-in evictions of families with school-age children during an academic year. In other words: landlords have to wait to take action until school is out for summer.Finally, the new law clarifies how much you should pay out on security deposits. Interest should be at a rate equal to the 12-month average of the average rates of interest paid on six-month certificates of deposit by banks doing business in Berkeley. That’s a mouthful - and costly. ()

Landlord Bottom Line: Call Your Attorney

What was difficult then is now, well, more difficult.If you’re planning to evict a tenant for any reason at all from your Berkeley rental, proceed with extreme caution! Landlords need to follow both Berkeley and California laws to the letter. Failing to do so could cost you dearly. In fact, your best bet is to consult a lawyer before doing anything. And make sure your property manager is on board as well—and understands the new, beefed-up regs.Who ever said it was easy to be a landlord in Berkeley?

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