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SR-9-B (40) J RMo~qJb~ (es qg ~ f \atty\munl\strpts\mJm\charter ten I oL/ - 0'D3 JAN 2 6 1999 City Council Meeting 1-26-99 Santa Monica, California TO: Mayor and City Council FROM City Attorney SUBJECT Proposed City Charter Amendment Protecting Residential Tenants Against EVictIons Based Upon Immaterial or Insubstantial Violations or Upon Terms Which the Landlord Has Waived, Or Is Estopped To Assert and Resolution to Place the Proposed Charter Amendment on the April, 1999 Ballot Introduction At Its meeting of January 19, 1999, the City Council directed the City Attorney's office to prepare a proposed City Charter amendment Intended to protect residential tenants against eVictions based upon Immaterial and insubstantIal Violations of rental agreements and against eVictions based upon covenants or obligations which the landlord has previously waived or IS precluded by conduct from enforCing The Council further directed that staff prepare the documents necessary to place the proposed amendment on the April, 1999 mUnicIpal ballot This Staff Report and the accompanYing documents respond to those directions Background . On a number of occasions In the last two years, the City Council has heard public testimony or otherwIse receIved reports of growing numbers of residential eVictions based 1 q~ JAN 2 6 1999 , upon violatIons of rental agreements which are tnvlal or which relate to conduct by the tenant which the landlord has tacitly approved by Inaction or other apparent assent Many examples Involve pets In one class of pet situatIons, the tenant has had a pet for many years and the landlord knows It and has never objected Suddenly, the landlord serves notice that the tenant must either get nd of the pet or vacate the Unit In these situations, whatever the rental agreement says, the tenant has assumed that the landlord's conduct In allOWing the pet meant that the landlord knowingly assented to Its presence In a slightly different class of reported pet Situations, the tenant lives In a bUilding where other tenants have pets Based upon thiS fact, the tenant acquired a pet In reliance upon the landlord's conduct In allOWing pets and was later seryed with a notice to cure Other kinds of reported Situations Include those In which the tenant makes substantial improvements or modifIcations to the rental unit Such modifications may have been undertaken In reliance upon the landlord's past conduct or the landlord may SImply have assented to the Improvement after the fact Later, the tenant receives a notice to "cure" the "breach" by removing the Improvements or modifications - which may be very costly or difficult Community members have expressed concern that eVictIons undertaken In such Situations are unfair The tenant may lose hiS or her home based upon conduct which he or she reasonably beheved was not objectionable to the landlord Moreover, In addition to losmg 2 his or her home, the tenant may be forced to move out of the City because rents are Increasing and there IS a shortage of available Units California law already recognIzes princIples and defenses which may assist a tenant In these types of situations, For Instance, the Callforma CIvil Code Incorporates basIc precepts of eqUity, including that "He who consents to an act IS not wronged by It," "[a]cqUlescence In error takes away the right of objecting to It;" and "[t]he law disregards trifles. " CIvil Code Sections 3515, 3516, 3533 Moreover, forfeitures are generally disfavored because they work very harsh consequences See, e R., CIvil Code Section 1442 [reqUiring that a forfeiture condItion be strictly Interpreted against the party which It benefits]. Moreover, at least In some contexts, case law recogmzes a variety of defenses which promote fairness Thus, the law may protect a tenant who substantially complies With the terms of hiS or her rental agreement against eViction based on a trivial breach See Union all Co V Chandler, 84 Gal Rptr. 756 (1970) Moreover, a tenant may be able to defend In an unlawful detainer proceeding based upon proof of waiver or estoppel See DRG/Beverly Hills, Ud V ChOpStlX Dim Sum Cafe & Takeout III, Ltd ,35 Cal Rptr 2d 515, 518 (1994) [Waiver IS the intentional relinquishment of a known right after knowledge of the facts, estoppel may arise where the conduct of one Side induces the other to change posItion In such a way that he or she would be Injured If the first party were permitted to , repudiate the conduct] Based upon these pnnclples, a landlord may be unable to eVict a tenant If- (a) the breach IS mInor or merely technical, (b) the landlord has expressly or Impliedly relinquished the nght to enforce the particular rental agreement provISion by 3 previously failing to object to a known breach, or (c) the landlord leads the tenant to believe that stnct compliance will not be required and the tenant acts accordingly to his or her detriment However, despite the fact that they are recognized In California law, the extent to which these protections actually shield reSidential tenants from eViction IS uncertain DIScussion Legal staff communicated Council's direction to Rent Board administration and asked for suggested modifications to City Charter Section 1806 which speCifies what constitutes "good cause" for an eVictIOn from a controlled rental Unit. Subsection (b) establishes that violation of a term or condition of the tenancy, other than the covenant to pay rent, constitutes good cause If the tenant IS given the opportunity to cure The suggested modifications would amend subsection 1806(b) by adding reqUirements of substantiality and materiality and also by precludIng eVictIons where the landlord has expressly or Impliedly relinquished the right to enforce and where the landlord has led the tenant to believe that stnct compliance Will not be reqUired and the tenant has acted accordingly to his or her detriment. Stated otherwise, the proposed modifications would prOVide express, local statutory recognition of defenses based upon the triVial nature of the alleged breach or upon waiver or estoppel The proposed additions to Section 1806 would not preclude tenants from asserting any other defenses which the law may make available to them. For instance, the law presently 4 ----- . recognizes defenses based upon the fact that the lease provIsion In question IS not "matenal" and upon the claim that the landlord has committed fraud Specific references In Section 1806 to defenses based upon the triViality of the breach, or waiver or estoppel would not preclude tenants from assertmg other defenses available as a matter of state law. If the proposed or similar language were added to City Charter Section 1806(b), Rent Board administration advises that the Rent Board would likely promulgate regulations Implementing these protections . In the course of giving staff direction, the Council noted the pOSSibility that proposing the subject amendments might have the umntended consequence of prompting landlords to Immediately undertake eVictions In fear that passage of the proposed measure would diminish their nghts and options One council member asked whether staff could propose any action which could be taken to avert thIs pOSSibility We conferred with Rent Board administration about thiS As of the preparation of thiS report, staff has been able to IdentIfy only two general options eIther prOViding incentives to landlords not to eVIct or attempting to make the modifications retroactive Rent Board administration noted the POSSibility that a tenant could argue that the date of the notice termlnatlng a tenancy might be taken mto account by a court as Indicative of the landlord's Intent to aVOid the , consequences of the proposed amendments However, It IS not clear that the landlord's Intent would be relevant The fact that state law already recognizes the defenses 5 -- -- . established by the subject amendments may also reduce the nsk that this legislation wIll prompt eViction actIOns BudqeUFlnanclallmpact There IS no budget or financial Impact to the CIty as a result of the proposed City Charter amendment. RecommendatIon Rent Board adminIstratIon recommends that the Council place the proposed language on the Apnl, 1999 ballot PREPARED BY Marsha Jones Moutne, City Attorney Joseph Lawrence, Assistant City Attorney Barry Rosenbaum, Semor land Use Attorney 6