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Eviction Moratoriums & Landlords

California is known for being a tenant-friendly state, and now the eviction moratoriums make it feel like it’s Free Rent For All!  It is particularly hard on the mom-and-pop landlords who live on their rental income and who are conflict-adverse, which puts them in a position where they just have to eat it.

Tenants are required to detail in writing why they can’t pay the rent, but is that all you can do?

From the AAOA:

While the recent CDC moratorium on evictions requires that tenants sign a declaration under penalty of perjury, detailing why they can’t keep up with rent payments and their efforts to seek assistance, the reality is that many tenants will still falsify their declarations. Even without tenant declarations, or with lawful reasons under the CDC mandate, many courts are refusing to enforce evictions across the board. What is a landlord to do?

Tenants who are taking advantage of CDC’s COVID mandate simply should not get a free pass. With credit reporting their account, they won’t. There is no moratorium on accurately reporting the state of a tenant’s account.

By credit-reporting tenant accounts, renters can’t put off the consequences of non-payment.

Where a tenant is truly impacted by COVID, and the landlord wants to work with that tenant, then the tenant can be reported positively. Where the tenant is taking advantage of the CDC mandate, the power is back in the hands of the landlord to let the Credit Bureaus know that the account holder is not living up to their financial obligation.

There are companies that will help landlords with reporting to credit bureaus:

Link to AAOA article

Carlsbad View Fixer

Are you looking for a smaller one-story view home to re-finish?

Do you like being at the top of the hill on a quiet single-loaded culdesac?

The insurance company did the remediation of a water leak, but expect these seniors to manage their own reconstruction project. We’d rather you do it your way! The house has a roof, newer sliders and windows, and shutters  – do you mind doing the rest?

Here is the last sale of this floor plan – it closed at $842,500:

https://www.zillow.com/homes/4615-BUCKINGHAM-LANE,Carlsbad,-CA_rb/16650813_zpid/

We’re asking $750,000!



https://www.zillow.com/homedetails/4559-Picadilly-Ct-Carlsbad-CA-92010/16650835_zpid/

Coronavirus Eviction Moratorium

Tom T. and I were lamenting earlier this week about the plight of the mom-and-pop landlords due to the ban on evictions – because some tenants are taking advantage.  The ban might get extended too:

Senator Elizabeth Warren (D-MA) and Representatives Jesús “Chuy” Garcia (D-IL) and Barbara Lee (D-CA) introduced legislation on June 29 that would extend and expand a nationwide eviction moratorium to protect tenants who have been impacted by the coronavirus pandemic. The “Protecting Renters from Evictions and Fees Act of 2020” would extend the federal eviction moratorium until March 27, 2021, one year after the date of enactment of the “Coronavirus Aid, Relief, and Economic Security (CARES) Act,” and expand the moratorium to cover all renters. The bill would also prohibit fees, fines, and extra charges due to nonpayment of rent.

The federal eviction moratorium included in the CARES Act covers fewer than 30% of renters, and it is set to expire on July 25, 2020. Advocates warn of a surge in evictions and a spike in homelessness if Congress does not intervene. The “Protecting Renters from Evictions and Fees Act of 2020” aims to ensure renters will not lose their housing if they experience economic hardship during the crisis and need additional time to make payments.

“Without a significant federal intervention, there will be a rash of evictions and a spike in homelessness across the country,” said NLIHC President and CEO Diane Yentel. “Ensuring housing stability for all is both a moral imperative and a public health necessity. I applaud Senator Warren and Representatives García and Lee for introducing legislation today that will keep renters in their homes and give them the security and stability needed to stay safe throughout the duration of the pandemic.”

Read Senator Warren’s press release at: https://bit.ly/2Bvj5Xz

Read a fact sheet on the bill at: https://bit.ly/3eTk8Pu

If you, or someone you know, is thinking about disposing of a property that is tenant-occupied, contact me today.  I have a wealth of experience in convincing tenants to move!

Rents During Coronavirus

When an average or median price is moving less than 1%, let’s call it unchanged.

San Diego, which saw rent increases slow last year after a period of skyrocketing costs, continues to absorb drops following the start of the coronavirus pandemic.

ApartmentList.com, in its National Rent Report for June, reported that in the region, median rent stands at $1,573 for a one-bedroom apartment and $2,041 for a two-bedroom. Affordability remains an issue for county renters. The national median for two-bedrooms, by comparison, is $1,192.

Recent trends show that:

  • Rents in San Diego have decreased by 0.3% month-over-month, and are down 0.6% since the start of the pandemic.
  • Year-over-year rent growth in San Diego currently stands at 0.4%, lower in June than in the recent data.

The researchers noted that the pandemic “put a halt to normal moving activity.” That, combined with job losses, has “dampened the demand for rental housing across the country.”

“The economic fallout from the pandemic does not appear on track for the quick V-shaped recovery that many had originally hoped for,” the researchers wrote. “and this economic weakness is reflected in our rent data.”

This is normally peak season for rental activity. From 2014-2019, rent growth from March to June in San Diego averaged 1.2%.

North County rents are up sharply, year-over-year. The median price for a two-bedroom in Oceanside rose to $2,351. Though rents in Carlsbad fell the most, by .3% in the last three months, median rent for two-bedrooms there remains the most expensive in the county at $2,540.

Median rent in National City is the most affordable for a two-bedroom, at $1,323. It has fallen .8% in the last year, but just slightly since May.

San Francisco leads the nation in rent declines since March, followed by Orlando, Fla. and New York City.

Link to Times of San Diego

Proposed Rent Relief From State

A relief package is being considered – excerpts from the SF Chronicle:

State Senate leaders proposed a massive economic relief package Tuesday to guide California through its coronavirus budget woes by encouraging residents to prepay their future state income taxes and offering struggling tenants more than a decade to make up the rent they owe.

The rent stabilization program would give tax credits to landlords to forgive the rent of tenants who cannot pay because of financial hardships related to the coronavirus, keeping them from being evicted.

The tax credits would be equal to the amount of rent, spread out over 10 years starting in 2024, though landlords who needed immediate cash could sell them to other taxpayers. Tenants would pay back their rent interest-free to the state, also over the course of 10 years starting in 2024. Those who continued to struggle financially would be given exemptions.

Major details of the program, including how many months of rent would be covered, still need to be worked out. But Senate officials said it could benefit about 2.3 million renter households that have at least one worker in a sector of the economy that has seen major job losses during the pandemic. Forgiving that rent would cost the state between $300 million and $500 million annually, if none of it were paid back by tenants.

“This is not a giveaway to anyone. It’s not a free ride,” said Sen. Steven Bradford, D-Gardena (Los Angeles County). “The Senate is giving tenants and landlords a hand up, not a handout.”

The California Apartment Association, which represents owners and developers of rental properties, said it would work with the Senate to refine the proposal.

“During these unprecedented times, we appreciate the Senate pro tem’s creative effort to help tenants and rental property owners,” Tom Bannon, chief executive officer of the apartment association, said in a statement.

Other rent relief proposals that lawmakers have floated include AB828, by Assemblyman Phil Ting, D-San Francisco, which would freeze evictions and allow courts to set up repayment plans for tenants, and SB1410 by Sen. Lena Gonzalez, D-Long Beach, which would create a fund to cover at least 80% of the rent that a tenant could not afford because of the pandemic, for up to seven months, if the landlord forgives the rest.

Link to Article

Fix Zoning

There aren’t many (if any) of the larger parcels left for big developments, but if the government was an easier and cheaper component, then new infill projects and the repurposing of commercial/industrial properties into residential could benefit – an excerpt from a CalMatters commentary:

If we want to begin to climb our way out of this housing crisis, where do we start? We can begin by fixing zoning, curbing the worst abuses of legacy environmental laws and lowering the mandatory fees that stifle homebuilding at the permit counter.

(more…)

ADU State and Local Law

We’ve been long-time supporters of the Pacific Legal Foundation, a nonprofit legal organization that defends Americans’ liberties when threatened by government overreach and abuse. My brother worked there after he and the PLF Executive Vice President, John Groen went to school at Claremont Men’s College (the three of us played on the rugby team for two seasons!).  Our good friend Larry Salzman is their director of litigation, and I appreciate him passing along the latest links to the ADU laws below.

AB68 is the state law that overrides local building and zoning codes, requiring ADUs to be permitted throughout the state subject to various conditions about health, safety, and nuisance.  It allows for one attached, and one detached ADU be added to every SFR property. Here is the law:

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB68 

The was augmented last year by AB 670, which prohibits homeowner’s associations from unreasonably withholding their permission to allow their members to develop ADUs in HOA-run communities.

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB670 

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PLF just petitioned this case to the California Supreme Court, asking it to decide whether all power to restrict ADUs is preempted by state law or whether local governments retain some discretion to deny the permit applications that meet state law standards.

The city of San Marino adopted building code restrictions that forbid homeowner Cordelia Donnelly from adding an ADU over her garage. Because state law dealing with ADUs fully preempts local restrictions, Cordelia has asked the California Supreme Court to recognize her right to create more housing. Story here:

https://pacificlegal.org/case/donnelly-v-city-of-san-marino/

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Larry has also found a ADU builder he likes who has just opened a local office:

https://www.gjgardner.com/orange-county-home-builders/granny-flats.aspx

ADU As Investment Property

A two-year-old, Culver City, California-based startup called United Dwelling aims to tackle the affordable housing problem using data, creativity, and underutilized garages and backyards.

United Dwelling plans to eventually build thousands of Accessory Dwelling Units, which are basically 369-square-foot studio homes. The company said its units benefit homeowners who are looking for ways to supplement their income as well as tenants looking for low-cost housing options.

United Dwelling uses data to identify potential lots that would be suitable for its units. It targets mostly low-and middle-income neighborhoods, with some exceptions for workforce housing. The company at first was going to just remodel garages but discovered quickly it’s much easier to tear down old ones and start fresh. So that’s what it does. It replaces those garages with small, affordable and zero net carbon homes in low-density neighborhoods with no out-of-pocket costs to property owners.

It then sets a rental price for the newly built unit and manages the property on the homeowner’s behalf, keeping a share of the rental income. Upon completion of construction, United Dwelling gives the homeowner the option to buy the unit back from the company for just under $88,000. To keep the costs of construction down, United Dwelling aims to build at least five units within a two-mile radius in the same time frame. Its initial focus is on the Los Angeles region with plans to eventually expand to the Bay Area and other locations once its solidifies its process, according to Dietz.

Specifically, the company plans to build over 150 of its detached studio homes in Southern California in 2020 and over 1,500 in 2021 (assuming construction can continue moving forward as an essential function per Los Angeles COVID-19 policy).

“Affordable housing is one of the most daunting challenges facing California and other parts of the county that is both entirely man-made and completely solvable,” Dietz said. “Here, we can do something that’s incredibly relevant. The opportunity is truly immense. Affordable housing is pretty easy. All you need is inexpensive land and construction, and capital.”

Link to Article

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