Extended Time Periods for Tenant Eviction Notices Effective September 1st

Effective September 1, 2019, weekends and court holidays will no longer count in calculating the time periods for the following tenant notices:

• Notice to Pay Rent or Quit (C.A.R. form PRQ)
• Notice to Perform Covenant (Cure) or Quit (C.A.R. form PCQ) 
• The five-day period in which a tenant has for filing an answer to an unlawful detainer summons 

Under existing law, when a tenant fails to pay rent on time or commits a curable breach of the lease the landlord may issue a three-day notice to pay rent or quit or a notice to perform covenant or quit.  Currently, it is calendar days that are counted, which may include weekends or court holidays.   

However, starting on September 1st the three days must exclude weekends and court holidays.  For example, under the current law, a tenant who is given a three-day notice to pay rent or quit on a Friday would be required to pay by Monday.  Under the law effective September 1st, Saturday and Sunday would not be counted towards the three days, so the tenant would have until Wednesday to pay.  

The new law also applies to the five-day period that tenants have to respond to service of an unlawful detainer summons and complaint.  A tenant served with an unlawful detainer summons will now have five days excluding weekends and holidays to respond.  The law does not impact the notice periods for 30 or 60-day termination notices, or notices based on uncurable breaches such as illegal use, unauthorized subletting, nuisance or waste (C.A.R. form NTQ).  

Rent Control Measures Passed in Sacramento City and Culver City

The Sacramento City Council approved a rent control and tenant protection measure in August
and moved up the date it will take effect in an attempt to prevent landlords from evicting tenants
before the new regulations are implemented.

The ordinance will create a set of renter protections for tenants who live in housing built prior to February 1, 1995. It will cap the amount that landlords can increase rent each year at 6 percent plus inflation, prohibit landlords from evicting tenants without a reason and create a process where
tenants can report landlords who violate the act.

Culver City 
Culver City council members passed in August a one-year rent freeze and just cause eviction ordinance. Under the new rules, rent increases over the next year will be capped at 3% in most apartments. Single family houses, condos and townhomes will not be covered. Landlords will also need to provide a “just cause” for evicting a tenant, such as failure to pay rent or creating a nuisance. 

The rules will only apply to apartments built before Feb. 1, 1995. In Culver City, that includes 84% of all apartment units, according to an economic study commissioned by the city.  Source: LAist 

$10,000 HUD Approved Settlement Against Brokerage Accused of Discriminating in the Sale of Real Property: Testers Used by Non-Profit Group Provided Basis for HUD Complaint

The U.S. Department of Housing and Urban Development (HUD) announced in July that it approved a $10,000 Conciliation Agreement between a California fair housing group, and various brokers, agents, and a mortgage company. The agreement settles allegations that Boardwalk Townhomes discriminated against African American home seekers. Read the Agreement.

The case came to HUD’s attention when The Fair Housing Council of Riverside County (FHCRC), a HUD Fair Housing Initiatives Program agency, filed a complaint alleging that fair housing tests it conducted showed that real estate agents for CADO Real Estate Group treated testers posing as African-American home seekers less favorably than testers posing as white home seekers. Specifically, FHCRC alleged that its tests showed that African American testers were told that there were no homes available when there were and were required to meet tougher pre-qualification requirements than white testers. CADO Real Estate Group, LCG Harrington, LLC, and their agents deny having engaged in any discriminatory behavior.

Under the terms of the agreement, CADO Real Estate Group will pay $10,000 to FHCRC, and its agents will attend fair housing training.

FHA Brings Back Spot Approvals for Individual Condo Units

The Federal Housing Administration (FHA) has published final regulations allowing certain individual condominium units to be eligible for FHA mortgage insurance even if the condominium project is not FHA approved. The policy will become effective October 15, 2019. Additionally, FHA’s new condo rule and the new Condominium Project Approval section of the Single-Family Housing Policy Handbook, provide a comprehensive revision to FHA condominium project approval policy. Read FHA’s new condominium approval regulation.

FHA’s new condominium policy is part of a broader Administration objective to reduce regulatory barriers that currently restrict affordable homeownership opportunities. FHA’s new rule:

• Introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing;
• Extends the recertification requirement for approved condominium projects from two to three years;
• Allows more mixed-use projects to be eligible for FHA insurance.

The vast majority (84 percent) of FHA-insured condo buyers have never owned a home before. While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s mortgage insurance programs.  As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually.

Single Family Policy Handbook Guidance
FHA’s new Single-Family Handbook sections provide the additional requirements that lenders and other industry participants need in order to implement FHA’s new policy, including requirements for single-unit approvals, minimum owner occupancy requirements, and commercial/non-residential space limits. 
Single-Unit Approvals
As of October 15, FHA will insure mortgages for selected condominium units in projects that are not currently approved.  An individual unit may be eligible for Single-Unit Approval under the following conditions:
• The individual condominium unit is located in a completed project that is not approved;
• For condominium projects with 10 or more units, no more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.

Minimum Owner-Occupancy Requirements
FHA will require that approved condominium projects have a minimum of 50 percent of the units occupied by owners for most projects.

FHA Insurance Concentration in Condominium Projects
FHA will only insure up to 50 percent of the total number of units in an approved condominium project.

Commercial/Nonresidential Space Limits
FHA will require that the commercial/non-residential space within an approved condominium project not exceed 35 percent of the project’s total floor area.

Class Actions Against Brokers for Alleged Do-Not-Call/Auto-Dialing Violations Surge

C.A.R. has been alerted to the existence of three class action lawsuits filed against real estate firms in March and April for alleged Do-Not-Call/auto-dialing violations. Two of these class action cases are against brokerages in California. 

Auto-Dialed Calls and the Do Not Call List

1. Auto-Dialed Calls
 Under the federal Telephone Consumer Protection Act (TCPA), a brokerage using an auto-dialing system can easily violate the law even where the calls are ultimately handled by a live agent.
The TCPA broadly prohibits: 
• Prerecorded voice messages to landlines.
• Prerecorded voice messages to mobile phones without consent. 
• Auto-dialed calls and text messages to mobile phones without consent.
While most businesses are informed of the FTC Do-Not-Call prohibitions, it is the auto-dialed calls to mobile phones without consent where real estate brokerages may be especially vulnerable. The damages can be substantial. $500 for each call placed negligently and $1500 for each call placed willfully. This may not seem too onerous by itself, but the total claims can rise quickly since damages are uncapped and per call, and importantly, multiplied by the number of calls for each class action plaintiff. Lastly, since the definition of an auto-dialing system is a question of fact, a jury trial will always be sought.

What is an auto-dialer? 
More recent cases have tightened up the definition of what constitutes an “auto-dialer,” but it is still alarmingly broad and includes a system that has the present ability (as opposed to the potential capacity) to store or produce random numbers. Nowadays, many different types of devices can function as an auto-dialer.

What can brokers do to protect themselves?
• Humans, as opposed to machines, should place calls. However, if a person does not actually dial a number, at the very least, a person must “intervene” to place a call such as through the click of a button.  
• Work with vendors to determine whether the technology triggers the TCPA and what can be done to avoid your system being treated as an auto-dialer.
• Get consent. Prior consent is required for auto-dialed calls to cell phones.  Be especially careful with re-assigned mobile numbers. You get one free call to attempt to obtain consent from the new subscriber.
• Make sure your system recognizes any and all attempts to revoke previously given consent.
• Scrub your call lists. The TCPA’s consent requirements do not apply to autodialed calls to landlines. But landline numbers can be routed to mobile phones and some consumers provide cell numbers as home numbers.

2. The Do-Not-Call lists
Although these most recent suits focus on auto-dialing violations, the Do-Not-Call lists provide a separate legal basis for these claims. Brokers should be sure to check the registry by “scrubbing” their call lists periodically. “Scrubbing” means cross checking the do not call registry with your own call list and dropping from your call list the telephone numbers of people who have registered.  You must scrub your call list at least once every 31 days and maintain records documenting this process.

Brokers are sometimes surprised to learn how easy it is for a consumer to make a complaint to the Federal Trade Commission (FTC). Here is the link to the national Do Not Call Registry where you can see for yourself. 

MLS Rules against using MLS information to solicit sellers on expired listings.
Aside from the do-not-call rules, real estate agents cannot use information from the MLS to solicit expired listings. Rule 12.11 of the C.A.R. Model MLS Rules states: “Participants and Subscribers are expressly prohibited from using MLS information for any purpose other than to market property to bona fide prospective purchasers or to support market evaluations or appraisals.” This rule stems from a recognition “that the purpose of the MLS is to market properties and offer compensation to other Broker Participants and R.E. Subscribers for the sole purpose of selling the property, and that sellers of properties filed with the service have not given permission to disseminate the information for any other purpose.”  

Most MLSs are presumed to have adopted this rule but check your local MLS rules to determine whether it’s in place at your local MLS. Some who have systematically used MLS data to solicit sellers on expired listings have found out about this rule the hard way after disgruntled sellers have complained of bombardment by agent telemarketing commencing the moment their listing showed as expired on the MLS. While the Code of Ethics would not prohibit a REALTOR® from contacting a seller on an expired listing, it is the mining the MLS for such a purpose which exceeds the scope of permissible use of MLS information and is not allowed.