Sonoma County Lawyer Blog

The U.S. Supreme Court may be prepared to hear a case that could potentially outlaw rent control. New York City landlord James Harmon contends the City's rent control law constitutes a physical taking of property in violation of the Fifth Amendment. The Court has not yet announced whether it will hear the case but has asked the state and city of New York to respond to Harmon's argument.

Harmon, 68, lives on Manhattan's Upper West Side in a five-story brownstone that has been in his family since his grandfather bought it in 1949. In 1969, the building became subject to New York City's Rent Stabilization Law, which caps the percentage that a landlord may raise rents each year.

By the time Harmon and his wife took full ownership of the brownstone in 2005, three of the six units were renting at rates that were 59 percent below-market to tenants that Harmon claims did not need the discount.

Harmon argues that he and his wife effectively have been financing the approximately $1500 monthly mortgage payments on the Long Island home of one of their rent stabilized tenants who pays $951.22 monthly rent. According to his petition, Harmon has spent two years and more than $30,000 in legal fees trying to recover possession of one rent-stabilized apartment for one of his grandchildren.

The U.S. Supreme Court now wants to review records on this case from two lower courts that previously rejected Harmon's petition and may decide to hear arguments some time before October of this year.

For further information on this case and on rent control in general, use the links below.

Washington Post Article

Wall Street Journal Article

The Law Offices of James V. Sansone is located in Santa Rosa, California and litigates numerous landlord tenant disputes including evictions, contract and lease disputes, evictions after foreclosure, and problem tenants, throughout Sonoma County, Mendocino County, and Lake County, including Santa Rosa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport, and Kelseyville.

It is well established that the holder of a first mortgage can't modify the terms of the loan if the loan is on his primary residence. However, what if the mortgage is on a rental property which is not the debtor's primary residence, can the terms of the first mortgage be modified? Yes in a Chapter 13 bankruptcy, subject to strict rules.

You can use a Chapter 13 bankruptcy to cramdown the mortgages on your investment properties. Investment property generally means any property other than your principal place of residence such as rental or commercial properties. You cannot use a mortgage cramdown to reduce the balance of your mortgages on your principal residence. However, you may still be able to get rid of your second mortgage on your principal residence in Chapter 13 bankruptcy through a process called lien stripping.

I have advised debtors that, under certain very specific circumstances, to move out of the home, rent it out on a month to month basis, rent an apartment, file a chapter 13 bankruptcy, cramdown their first mortgage, and then move back into their home. (Since the debtor rented their home on a month to month basis, they can terminate the tenancy at any time). Is this bad faith? That can only be answered on a case by case basis.

This brings up the very next question, at what point in time is it determined if the subject piece of property is the debtor's primary residence or rental property not his primary residence?

Continue reading "Mortgage Cramdown In A Chapter 13 Bankruptcy?" »

Do retailers, such as Walmart, owe their customers a duty of care? Yes they do. Land owners owe a duty of care to all invitees. The class of persons designated as invitees includes those who have come upon the land at the express or implied invitation of a possessor for the purpose of transacting some business within the scope of the invitation.

The duty of exercising ordinary care for the safety of business visitors may require one who invites the public to his/her premises to purchase goods to take measures different from those required of one inviting others to his/her private residence.

A land owner is required to maintain its property in a reasonably safe condition and has a duty to exercise due care to protect invitees from conditions that can result in injury. Whereas, a land owner has no duty to protect invitees from open and obvious dangers. However, even if a danger is open and obvious, a landowner owner may still owe a duty to protect an invitee if the risk of harm remains unreasonable.

A possessor owes an additional duty towards an invitee to exercise reasonable care to make the land safe for the reception of his/her invitee, or ascertain the actual condition of the land so that by warning the invitee, the possessor may give the invitee an opportunity to decide intelligently whether or not to accept the invitation or permission.

This Black Friday saw a lot of mob like mentality. Some of the issues were created by people's greed, while others were created by retailers' own negligence. Nevertheless, people were injured because of this greed or negligence. Are the stores at fault?

The Law Offices of James V. Sansone is located in Santa Rosa, California and serves clients with their civil litigation needs throughout the North Bay area of California, including Sonoma County, Mendocino County, Lake County, Santa Rosa, Napa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport and Kelseyville.

What is the single most important skill you should look for in a property management firm? The ability to screen out high risk applicants and rent to the good ones. This is critical to avoid potential expensive litigation in the future.

You should always find a manager who knows how to screen prospective renters. The property management company should have a written policy that is given to prospective renters. Having a policy can prevent the company from illegally discriminating, even unintentional discrimination. Other questions to ask include (1) is the written policy adhered to?, (2) How are exceptions made?, and (3) Does the supervisor review every decision?

It is not recommended that you require the property management firm to contact you prior to accepting a new resident. This can lead to a fair housing compliant.

In order to locate good renters you should set up criteria well before your search. Some of the more popular requirements include:

Continue reading "Selecting a Property Manager, Screening Renters, Maintenance Concerns & Fees" »

As reported by CBS 5,

As the California rental market heats up, landlords need to do their homework.

Connie Cook bought a Sonoma County property eleven years ago, hoping to spend her retirement years there. Her plan was to rent out the converted barn to help pay the mortgage.

That plan was working well, that is until a single mother moved in with her teenage son in 2009.

Soon afterward, Gwen Smith, the new tenant, started complaining that a gas leak and unhealthy water were making the apartment uninhabitable.

Then, Smith stopped paying rent. But when Cook tried to evict her, Smith, who has a law degree, fought back in court by filing motion after motion - all while paying no rent.

A judge eventually ruled that Smith's conduct was "malicious," and her numerous court filings amounted to "tactical delay." He awarded Cook $49,000. But, unfortunately for Cook, Smith appealed the judgment, and that case is still pending.

It turns out this wasn't the first time Smith had stopped paying her rent.

As Connie Cook's finances dwindled, she turned to her local legal aid office, which told her they knew Gwen Smith. They called her "notorious."

Sebastopol homeowner Barbara Wilt rented part of her house to Smith in 2008.

A few weeks after moving in, Smith allegedly changed the locks, and began complaining that the apartment was uninhabitable.

But, when Wilt tried to enter the house to fix the alleged problems, she was met with a nasty surprise: the police.

Smith had called the police claiming someone was trying to break in. In one encounter, Smith even pepper sprayed Wilt.

"I just felt this liquid on my face, started swelling up, couldn't see, it was horrible," said Wilt.

When Wilt took Smith to court, Smith countersued, claiming she and her son suffered "property damage, illness, infections, and emotional trauma" - all from living in Wilt's "hellish basement."

Wilt eventually won a default judgment for more than $42,000. But Smith appealed that judgment as well.

A month ago, after three years of legal battles and a trip to the Supreme Court of California, the Supreme Court ruled in Wilt's favor, upholding the judgment against Smith.

And that's just two cases. CBS 5 found a total of eight judgments in eviction proceedings against Smith in four states.

Smith's law degree helped her work the system, but experts say California's tenant protection laws worked to her advantage.

According to attorney Jim Sansone, tenants can withhold rent while a case is pending. Faced with motion after motion, most landlords, he said, simply give up.

"I have a lot of landlords who come to me and say, you know what, I am going to figure out what the cost of defense is, and I am going to offer that to the tenant and waive all my rights," said Sansone.

CBS 5 offered Smith a chance to share her side of the story. After two weeks we tracked her down to the small town of Forestville.

Smith wouldn't speak with us, and her most recent landlord didn't want his name used. But, he did tell CBS 5 that Smith stayed for three months without paying rent.

The day after our encounter with Smith, she moved out of the Forestville home. Her whereabouts now are unknown.

Meanwhile, Barbara Wilt is still waiting to collect on her judgment.

"I still am just so flabbergasted and shocked and so disappointed and disillusioned with our justice system," Wilt said.

Connie Cook is still waiting for her money too. But, even if she gets it, it is already too late. Living on Social Security and with no rental income, Cook fell behind on her mortgage payments and lost her farmhouse to foreclosure.

"It breaks my heart, just breaks my heart," Cook said.

Continue reading "North Bay Tenant Accused Of Evading Rent For Years - Santa Rosa Landlords Beware!" »

I just recently successfully filed suit against Bank of America to enjoin a pending foreclosure sale based on their bad faith behavior by not negotiating a loan modification in good faith. A federal court in Massachusetts apparently agrees with me.

In an unrelated case, a federal court in Massachusetts has enjoined a foreclosure action in order to give the homeowner a chance to prove that the lender should be required to negotiate a loan modification in good faith. In denying the lender's motion to dismiss the homeowners' complaint, Judge William G. Young found that their common law claim of equitable estoppel was not preempted by the Home Owners Loan Act. (Dixon vs. Wells Fargo Bank)

Continue reading "Federal Court Enjoins Foreclosure - Santa Rosa Bankruptcy " »

According to the LA Times, the number of Californians entering foreclosure is at its lowest level since 2007. Notices of default against California homes dropped 17% in the second quarter from the first quarter and 19.2% from the second quarter of 2010. Banks repossessed 10.9% fewer homes than a year ago and 1.4% fewer than in the first quarter. The problem with statistics is that they can prove anything except the truth.

While this may seem like good news, this statistic is similar to how unemployment is calculated.

For unemployment purposes, persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Thus, if you have not actively looked for work you are not counted as unemployed. People who don't actively look for work can reduce the unemployment percent, but are still unemployed, statistic or no statistic.

Continue reading "The Number Of Californians Entering Foreclosure Is At Lowest Level Since 2007, Is This Good News For Santa Rosa Homeowners? " »

The good news is that the 1st District Court of Appeals dealt Gwendolyn Smith and her attorney Gary Levinson a loss. The bad news is that according to reports that have come into my office, Gwendolyn Smith is back in Sonoma County. Two callers reported to me that they saw her in Sebastopol living with a friend of hers who purports to be a yoga instructor. Landlords remember to perform background checks on your potential tenants.

Here is what the court of appeals had to say.

Defendant Gwendolyn Smith and her attorney failed to appear for trial in an unlawful detainer action. The trial court entered a default judgment. Defendant moved to set aside the default judgment under Code of Civil Procedure section 473. The trial court denied the motion, finding the failure to appear was part of a pattern of delaying tactics. Defendant contends she was entitled to relief.

We disagree and affirm.

Continue reading "Santa Rosa Landlord's Can Rejoice, Gwendolyn Smith Loses Appeal Against Sebastopol Landlord Barbara Wilt" »

A tenant must use ordinary care for the preservation of the premises in safety and in good condition [see CC § 1928 ], and must repair all deteriorations or injuries to the premises occasioned by the tenant's want of ordinary care [see CC § 1929 ]. A tenant must use leased property in such a way as to avoid waste.

Waste occurs when the party in possession commits an act that substantially or permanently diminishes or depreciates the market value of property. Further, unauthorized alternations made by a tenant to premises may constitute waste, even though they enhance the property's value, because the policy is that the premises ought to be returned on the lease's termination in the same condition as when leased. However, a tenant may be able to make minor alternations to the premises without violating a lease provision that specifically prohibits alterations by the tenant. Whether an alteration is material or minor is a question of fact to be determined by looking to the lease as a whole and any specific provisions regarding alterations.

Ordinarily, the amount of damages recovered for a tenant's waste is the pecuniary measure of the diminution of the estate or the value of dilapidations amounting to more than ordinary wear and use. Although by statute treble damages may be recovered against a tenant who commits waste, treble damages are not mandatory in character, and contemplate a showing of willfulness or malice. Whether the damages should be trebled is left to the court's discretion.

The Law Offices of James V. Sansone offers a full range of landlord tenant legal services, including evictions, evictions after foreclosure, eviction defense, contract and lease disputes, landlords in bankruptcy, and especially enjoys dealing with problem tenants. We are located in Santa Rosa, California and serve clients throughout Sonoma County, Mendocino County, and Lake County, including Santa Rosa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport, and Kelseyville.

The Fair Employment and Housing Act makes it unlawful discrimination and harassment to discriminate against a person because of a disability, which includes but is not limited to, any physical or mental disability as defined by California Law.

In an action for housing discrimination under the FEHA, if the court finds that a discriminatory housing practice has occurred or is about to occur, the plaintiff may be awarded actual and punitive damages and the court may grant other relief, such as injunctive relief. The court also has the discretion to award the prevailing party, other than the state, reasonable attorney's fees and costs, including expert witness fees, against any party other than the state.

In order to establish discrimination based on a refusal to provide reasonable accommodations, a party must establish that he or she (1) suffers from a disability as defined in the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.); (2) the discriminating party knew of, or should have known of, the disability; (3) accommodation is necessary to afford an equal opportunity to use and enjoy the dwelling; and (4) the discriminating party refused to make this accommodation.

Continue reading "A Santa Rosa Landlord's "No Pet" Policy May Create Liability Under California Law And The American with Disabilities Act" »

Imagine that you or your property management company is suddenly hit with a civil lawsuit. The suit is filed under the Consumer Protection Act for violating the Environmental Protection Agency (EPA's) Lead-Based Renovation, Repair and Painting Rule.

A large amount of suits have been filed against landlords and contractors accusing them of being responsible for the effects of lead paint in the older properties they own. Disturbing lead within the building structures while work is being performed - typically lead paint on windows and doors - can result in significant liability on the part of the owner doing the repairs or the contractor through both bodily injury and clean-up exposures.

In other instances, if a subcontractor causes a pollution issue and does not have adequate environmental insurance coverage, the property owner may have to defend himself against claims relating to work for which they were responsible due to hiring of the subcontractor.

As of April 22, 2010, federal law now requires that renovation firms and individuals doing work on pre-1978 properties must be certified under EPA's Renovation, Repair and Painting Rule. This is why you need to know the facts about lead paint and how disturbing it poses serious health risks to the people in your building, especially children. You can visit the EAP website to learn about the dangers and how to hire a Lead-Safe Certified contractor, and how to make sure your own maintenance staff is doing the right thing. California Apartment Association affiliates also offer certification training.

Landlord/tenant law can be very complex, even in simple disputes of rent and contract law. Whether you are a landlord seeking eviction or you are a tenant looking to protect your rights in an eviction dispute, it is important to consult with an experienced landlord tenant attorney as soon as possible. At the Law Offices of James V. Sansone, of Santa Rosa, California, we take a strategic approach to best protect your rights and achieve solution in your favor in all aspect of landlord tenant law.

Just like California, residents of Oklahoma may not opt to exempt property from the bankruptcy estate under the federal set of exemptions, but are limited to claiming exemptions under state law.

In the case of In re Nestlen, the Debtors filed a petition under Chapter 7 of the Bankruptcy Code on December 1, 2009. On their Schedule C, they claimed their homestead, which they valued at $275,000, as fully exempt under Oklahoma law. One of their creditors, Dykstra, objected to the exemption, arguing that the debtors had increased their equity in the property during the 1,215-day period prior to the Petition Date, and therefore their homestead exemption was limited in amount to $136,875 by virtue of 11 U.S.C. § 522(p).

11 U.S.C.S. § 522(p)(1) provides that a debtor may not exempt any amount of interest in a homestead that was acquired by the debtor during the 1215 day period preceding the date of the filing of the petition that exceeds in the aggregate $136,875 in value. Arguing that the Debtors were not entitled to exempt the entire value of their Homestead, Dykstra invoked § 522(p)(1), that caps equity acquired in the 1215 day period to $136,875.

Since the debtors paid down loans on their home within the 1215 days look back period, Dykstra argued that by investing non-exempt funds in their Homestead within the 1,215-day prepetition period the Debtors increased their equity in the Homestead in an amount in excess of the $136,875 ceiling established by § 522(p), and therefore the equity exceeding $136,875 was not exempt.

Continue reading "Statutory Homestead Cap Is Doubled in Joint Bankruptcy Filings, At Least According To The 10th Circuit Court Of Appeals" »

The laws regarding foreclosure in California depend upon two things, (1) whether the lender chooses to foreclose by a judicial foreclosure or a non-judicial foreclosure, and (2) whether the loan being foreclosed qualifies as seller-provided financing or a "purchase money" mortgage

Judicial Foreclosure is very rare in California and requires the lender to sue the owner in foreclosure and proceed with a trial in a court of law. The entire process can take at least one year, probably longer if the borrow has the legal ability to put up road blocks and argue over the “true” fair market value of the property.

As such, appraisals and other items are required, and there is still an auction. The owner has the right of redemption allowing them to buy it back from the successful bidder at auction for 1 year after the sale, if the lender requests the right to go after a deficiency judgment.  This one year right of redemption makes the property unmarketable. 

So why would any lender opt for a judicial foreclosure?  Simple, if the loan is non-purchase money, they can go after the borrower for a default judgment.  However, this is not as good as one may think. 

The deficiency is not determined by the difference between the loan amount and sale price.  Any deficiency following a judicial foreclosure permitted against the borrower is subject to a “fair market value” limitation. In particular, the deficiency amount is calculated as, and limited to, the difference between the loan balance due on the date of the foreclosure sale less the greater of the foreclosure sale price or the “fair market value” of the property on the date of the sale.  Oh, let’s not forget, if the lender presents a “full credit bid”, this would bar a deficiency against the borrower. 

However, the fun does not stop there.  Let’s say a lender decides to get greedy, this is an actual example from case law, and decides to bid a very low amount of money to preserve their right to chase the borrower for a deficiency.   Well, remember that one year right to redeem?  To redeem, a borrower is only obligated to pay the sales price of the property at auction.  Thus, if the lender under bids the property, the borrower has one year to purchase the property back at that very same price the lender bid. 

What does all this mean?  A lender on a residential property mortgage would be insane to proceed with a judicial foreclosure, absent a potential 7 figure deficiency. 

Because of the cost, length of time, and complications of a judicial foreclosure, lenders usual elect instead to initiate the non-judicial foreclosure process.  The problem for a lender is that a non-judicial foreclosure releases the borrower from liability for any deficiency that results from foreclosing on the property. With the exception of an adverse impact on your credit rating and possible tax consequences, it is as though the loan was "paid in full".

The bottom line on all this is simple.  If you don’t have a vested interest in your home, the lender does not have as much leverage as you think! 

DISCLAIMER: THIS IS NOT INTENDED TO BE A PRIMER ON HOW TO AVOID YOUR DEBTS AND LOAN LIABILITY.  CONSULT WITH A BANKRUPTCY SPECIALIST AND TAX ADVISER.