Last year, City Council tightened tenant harassment law, making a bunch of changes ‚Äî some of which have already resulted in litigation brought against landlords.
One change, which seeks to increase transparency when landlords try to buy tenants out of their homes, was discussed by the Rent Control Board last week.
The board was to consider whether it or the City Clerk should be the keeper of new agreements (now required before any buyout is finalized) but conversation expanded into propositions of creating stricter requirements.
Because of Santa Monica’s Rent Control Law, landlords cannot raise the rents of most tenants in the city to market rate until their apartment is vacated. For this reason, many long-term tenants pay only a few hundred dollars each month, despite market rates in the thousands of dollars.
In an attempt to raise rates, landlords have been known to offer buyouts. They might offer a tenant $10,000 to leave their apartment, knowing this will allow them to raise rents hundreds of dollars to market rate.
Some renter advocates claim that landlords can be deceptive when making these offer or that they are taking advantage of cash-strapped vulnerable renters.
At halftime of a Santa Monica High School football game last year, Lease Buyout Now unfurled a sign and spoke about their company, which helps tenants negotiate buyouts and takes a cut.
Renters’ rights advocates were outraged and the high school ultimately ended the promotion. The founder of Lease Buyout Now told the Daily Press that he was simply offering tenants an option.
The new tenant harassment law requires landlords seeking buyouts to apprise the tenant, in writing, of his or her rights, including the right to refuse, the right to speak with an attorney, and the right to contact Rent Control Board. After the negotiation process is complete, if the tenant accepts the buyout offer, the agreement must be filed with the city ‚Äî either the City Clerk or the board.
Members of the board seemed willing to take on the responsibility of keeping the agreements, but asked city officials to return with more information.
Boardmember Todd Flora asked if there was a way to restrict landlords from placing time-limits on tenants, requiring them to make a decision in, say, 24 hours. Rent Control attorneys responded that the new agreement would give the tenant 30 days to rescind the agreement.
Flora suggested that offers should not be posted on the tenants’ doors, likening it to the practice of throwing blood on someone’s door.
He further likened buyout offers to inappropriate jokes made at the workplace.
“There is an argument that could be made that the minute a buyout offer is made, a form of harassment has happened,” he said. “Now, that said, in some cases it may be welcome. It may be the joke that is laughed at. It may in fact be quite appropriate for a particular person’s situation but I think we are the right body to, I think, come up with some answers.”
During public testimony, one person suggested that collecting this information would be violation of privacy.
Boardmember Nicole Phillis suggested that city officials consider requiring registration of all offers, not just finalized agreements.
Wes Wellman, of Action Apartment Association, claimed that the number owners offering buyouts is relatively low.
“You’re going to institutionalize the business of tenant buyouts and you’re going to create a buyout industry,” he warned. “When that happens, if the dollar amounts are publicized, people will see how much they’re making. The prices is going to get bid up. As the price gets bid up and there are more people involved, you’ll have more tenant representatives going to tenants and saying ‘I’ll take your transaction on contingency.'”
Landlords, he said, will hire agents, and the third parties will be taking their cuts.
Phillis requested that city officials take unintended consequences, like the ones warned of by Wellman, into account.
Boardmember Steve Duron asked city officials to look into the actual number of buyout offers that have been made in recent years.