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The Rent Control Board has clarified existing rules stipulating landlords may not take rent-controlled apartments off the market and later rent them at market rate.

The Rent Control Board voted unanimously Thursday to clarify that a previously rent-controlled unit that is no longer on the rental market will become subject to rent control if its owner decides to put it back on the market. The board’s action comes two months after a final ruling in a legal battle between the board and a landlord that brought a 13-unit apartment building at 1041 20th St. back under rent control.

In 1993, the building’s owner applied for a permit to take the rent-controlled building off the rental market on the grounds the property was uninhabitable and would be too expensive to maintain.

The board granted the permit, and the board’s staff incorrectly stated that the permit rendered the property exempt from rent control in perpetuity.

Unbeknownst to the board, property owner James Corrigan continued renting the units at market rate until 2016, when tenants contacted the board to complain about large rent increases.

Corrigan filed a lawsuit against the board when it tried to bring the building back under rent control.

The board lost at trial in January. A judge said its efforts to reassert rent control on the property were “capricious” and ordered it give Corrigan $7,500 to cover legal costs.

But several months later, the California Court of Appeals overturned that verdict and held that the board was correct when it determined that granting a removal permit only allows an owner to take a rent-controlled unit off the market and does not “remove rent control” from a unit that remains on the market.

On Thursday, the board voted to adopt three regulations that make the appellate court ruling explicit in Santa Monica’s rent control charter and establish expiration dates for removal permits. The regulations also stipulate that a landlord may evict tenants after the board grants a removal permit.

“I think these regulations are common sense and conform our charter to the Court of Appeals ruling,” said board vice-chair Nicole Phillis.

Daniel Yukelson, executive director of the landlord’s organization Apartments Association of Greater Los Angeles, said the regulations will not affect most property owners.

“Since the passage of the Ellis Act, which is a state law that allows property owners to go out of business, owners haven’t needed to apply for removal permits,” Yukelson said. “These regulations apply to probably a half dozen properties.”

madeleine@smdp.com

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1 Comment

  1. Not only do the regs apply to even fewer than half a dozen properties. The description of what they are trying to do, all of it retroactively, is completely wrong.

    In the case at the Court of Appeal–which is not final as the article states, since the owner’s Petition for Review at the Supreme Court is still pending–the Board did NOT give a removal permit to remove units from rental housing, also as the article says.

    Instead, it granted a removal permit to allow the owner to rehab the building more than the law would otherwise allow and rent it at rents the owner set, free from rent control. The Board did that specifically to keep the units in the rental housing market rather than having them demolished because the Board had already found that under rent control he could not collect the rents he needed to make a fair return.

    The owner did nothing the Board was not aware he was going to do when it granted the permit.

    Talk about “fake news.”

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