Category: Rent Control

Los Angeles Rent Control | Systematic Code Enforcement Program [SCEP]

SCEP is an acronym for ‘Systematic Code Enforcement Program’. Through the SCEP program, LAHD housing inspectors conduct a site visit to every single Los Angeles rental income property with two or more units on a three-year revolving basis. LAHD has roughly ~175 inspectors. In addition to their regularly scheduled SCEP inspections, LAHD inspectors also respond to tenant complaints they receive (LAHD recieves approximately ~15,000 tenant complaints each year and responds to 87% of them within 72 hours).

SCEP was created in 1998 to ensure that the Los Angeles rental housing stock is safe and habitable. SCEP is basically an anti slum lord program. Many multi-family property owners are upset by SCEP because LAHD’s inspectors routinely write citations for minor cosmetic issues and misquote building codes that they do not understand. LAHD inspectors are not LADBS inspectors– and they usually do not have a construction background.

LAHD inspectors will be checking that the property meets  Section 1941.1 of the California Civil Code, the Uniform Housing Code of the State of California, or the Los Angeles Municipal Code. 

Since SCEP’s introduction they have reported more than 3.6 million code violations and have accounted for more than $2.6 billion in capital reinvested in the City’s housing stock. LAHD wrote a SCEP Pre-Inspection Guide that gives some advice for landlords on preparing for a SCEP inspection.

  • Lack of proper maintenance or unsanitary conditions in a building or on its premises, including any infestation of termites, roaches, rodent or other such nuisance conditions
  • Deteriorated or defective interior walls, ceilings, floors or floor covering. 
  • Broken or missing windows, window screens.
  • Lack of quick-release mechanisms on security bars over sleeping room windows. 
  • Defective, missing or improperly installed smoke detectors.
  • Lack of required light, ventilation, required minimum floor area, or required ceiling height in a habitable room.
  • Defective or missing required light fixtures, electrical outlets, switches, etc. or exposed/unsafe electrical wiring
  • Deteriorated, leaking, or missing plumbing items. Lack of required hot water. Lack of required heat.
  • Illegal Units, and unpermitted construction. 

LAHD will try to mail apartment owners SCEP inspection notice 30-days in advance of the regularly scheduled inspection. Shorter time frames may be imposed for properties referred by a tenant complaint or other enforcement agency such as the Health Department, the Department of Building and Safety, Los Angeles Housing Department Code Enforcement Unit, or the Fire Department.

scep 5-7 day notice

A secondary notice is posted at the site 5-7 days prior to the inspection to inform the tenants of the date and time to anticipate the arrival of the inspector. If the inspector finds that a property does not meet City and State codes, a “Notice to Comply” is issued. Property owners are given 30 days (or less depending on severity of the violations) to have the needed repairs completed. If you get one of these, As a landlord you are best off doing anything on this list right away. A re-inspection is done afterwards to verify that the corrective work was done.

If deficiencies are not corrected in the time specified on the Notice to Comply, you will be summoned to an administrative hearing (known as a “General Manager’s Hearing”) to determine the reason for non-compliance. At the hearing an LAHD employee puts on a robe and pretends to be a judge. They are not a judge. They usually are very bias in favor of tenants rights and will probably place your property in REAP, and may sentence you to mandatory property management training classes.

 

The SCEP fee is $43.32 per unit, per year. As landlord you will have to pay this fee upfront, but you can recover 100% of this cost by passing it along to the tenant in the form of a monthly rent contribution of $3.61- just write this is additional charge in your lease when you are writing it up.

SCEP Fee pass through

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Los Angeles Rent Control Registration

The LAHD requires Los Angeles Rent Control buildings to register every unit each year.

You may register by mailing them a 1 page form,LAHD Rent Control Registration Application, and paying the registration fee of $24/unit.

NEW!! LAHD Allows Landlords to pay for their Registration Online now:

New LAHD online payment site

https://lahd.lacity.org/Billing/Open/login.aspx

Registration fees are due between January 1 and the end of February to avoid any late fees. You are still required to pay the fee even if you don’t receive a notification in the mail- they just expect you to know this. Beginning March 1st, $14 late fee is added per rental unit, and if that isn’t paid by July 1st, another $14 late fee is added.

You can pass on 50% of the registration fee to the tenant in the month of July ($12) but I have never heard of it being done because it is somewhat of a chore to go through to collect such a small amount. To pass on a portion of the rental registration fee to the tenants, you need to post 30 day written notice and they will probably be confused because that monthly will have a different amount than their usual rent.

An owner cannot legally collect rent from a tenant of a Los Angeles Rent Controlled unit unless they have registered the unit that year. A tenant might use the fact that their rental unit is unregistered in court during an eviction hearing, to which the judge would ask the landlord “why isn’t this unit registered?” The case will delayed, costing you potentially another month of lost rent, while you go back to LAHD and register the unit.

Owner Occupied Units and units occupied by an onsite manager must file a LAHD Rental Registration Exemption 2013 each year with LAHD and are exempt from the Registration Fee.

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Los Angeles Rent Control for Beginners

Rent Control is overseen by the Los Angeles Housing Department – their web address is: www.lahd.lacity.org

Information from LAHD on rent stabilization ordancence (RSO) can be found here:

http://lahd.lacity.org/lahdinternet/RentStabilization/tabid/247/language/en-US/Default.aspx

All buildings that have two or more units in the city of Los Angeles built before 1978 are under rent control. Why the seemingly arbitrary year or 1978? Because that is when the Los Angeles Rent Control Ordinance was passed.

How do I know if my property is located in the city of Los Angeles?

Westside

Area’s in tan are city of Los Angeles, white areas are private cities or unincorporated areas of Los Angeles

View the LA City Boundary Map. If your two more unit property is within the boundaries of LA City and built before 1978 then you are subject to Los Angeles rent control. One thing you will notice from the map, is that there is no rhyme or reason to the shape of the city. I think its shape looks like a drum stick. Cities were annexed into the city of Los Angeles piece meal over the last 100 years. Review the boundary map to determine whether the subject property is within the boundaries of the city of Los Angeles.

Notable exclusions to the city of Los Angeles on the Westside are: Beverly Hills, Santa Monica, Culver City, and West Hollywood. These are separate municipalities and have their own rent control laws. (Santa Monica has one of the strictest  rent control laws in the country, Beverly Hills has one of the most lenient, Culver City has no rent control).Unincorporated area of Los Angeles are part of Los Angeles County. Los Angeles County has no rent control.

Burbank and Glendale are both separate municipalities.

Los Angeles boundary Map not accurate enough? Expert tip: Log onto the Los Angeles GIS system know as Zimas http://www.zimas.lacity.org/ and type in the property address. If a no results screen comes up in Zimas, it is not in the city of LA. Every property in the city of LA is in Zimas Database.

zimas

Your Search Returned NO RESULTS

Rent Control places a limit on the amount landlords can legally raise rents each year. The increase amount is based on the Consumer Price Index. The yearly percentage can be no lower than 3% and no higher than 8%. Below is a table of the annual percentage rate for the last eight years:

2011 3%
2010 4%
2009 3%
2008 5%
2007 4%
2006 3%
2005 3%
2004 3%

 

*It is important to note that if you don’t use your annual rent increase you lose it. So Rent Control units that have not had their rent raised in many years, can’t have rents raised retroactively. This is why you will see many rent control units with below market rents. Unfortunately for the new owner there is very little you can do to get those below market rents to current market, except arrange a vacancy agreement and pay the tenants to leave.

-I know what you may be thinking, well couldn’t you just evict the under market tenants and raise rent to current market? The answer is no- Rent Control Stipulates 12 legal reasons for evictions. Evicting a tenant to raise the rent is not a legal reason and would be considered an unlawful eviction. In addition, some reasons for eviction require relocation assistance, which can be quite a large expense (anywhere from $7,000 to $18,000 depending on the circumstances.

Read LAHDs “landlord tenant handbook” to learn rent control in detail.

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12 legal reasons for evictions

Rent Control is overseen by the Los Angeles Housing Department – their web address is: www.lahd.lacity.org

Information from LAHD on rent stabilization ordancence (RSO) can be found here:

http://lahd.lacity.org/lahdinternet/RentStabilization/tabid/247/language/en-US/Default.aspx

Twelve Legal Reasons for Evictions

  1. The tenant has failed to pay rent
  2. The tenant has violated the lease
  3. The tenant is damaging property or creating a public nuisance to other residents
  4. The tenant is using the rental unit to carry out illegal purposes
  5. The tenant refuses a written request by landlord to execute a lease renewal for a further term of like duration with similar provisions
  6. The tenant has refused landlord reasonable access to the unit for the purpose of making repairs or improvements, or for inspection, or to show the unit to prospective purchaser.
  7. The person in possession of the unit at the end of the lease Is a subtenant who is not approved by the landlord
  8. The landlord seeks in good faith to recover the rental unit for Owner Occupancy, or a residential Manager
  9. The landlord seeks to recover possession of the unit to undertake primary renovation work and the tenant has failed to relocate
  10. The landlord seeks to regain procession of the rental unit to demolish or remove the unit permanently from rental use
  11. The landlord is forced by government order to vacate the building as a result of the Los Angeles Municipal Code
  12. The Secretary of Housing and Urban Development is both the owner and plaintiff and seeks to recover possession in order to vacate the property prior to sale
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Owner Occupancy Eviction

(If you want to demolish the property or permanently remove it from the rental market, this is legal eviction reason#10, also known as the ellis act, and has different set of rules)

Visit www.lahd.lacity.org to get started.

Under Rent Stabilization Ordinance (RSO) there are 12 legal reasons for evictions. Reason #8 pertains to owner evictions:

Reason #8

The landlord seeks in good faith to recover possession of the rental unit
for use and occupancy by the landlord, or the landlord’s spouse, children, or parents,
grandparents, grandchildren provided the landlord is a natural
person (not a corporation or LLC). The landlord may
use this ground to recover possession only once at a time for that person.

 

A landlord cannot owner evict if a comparable unit is already vacant. Also, the landlord must evict the most recent tenant to occupy a unit with the needed number of bedrooms (if you have enough units to have a choice), unless the landlord needs a particular unit because of medical necessity as certified by a treating physician (for instance: the downstairs unit for ease of access).

 

Some tenants cannot be owner evicted:

  1. Tenants who have resided in the rental unit for at least ten years AND are at least 62 years of age or disabled.
  2. Tenants who are terminally ill as certified by a treating physician.

 

If you meet all these requirements, you are ready to proceed with an Owner Eviction. Start by posting a “60 Day Notice to Quit” and Declaration of Intent to Evict on your tenants door and file the “Landlord Declaration of Intent to Evict” form with LAHD.

 

Next, get ready to write a check. Owner evictions require Relocation Assistance, to be paid by landlord within fifteen (15) days after the posting of the Notice to Quit. The Relocation Assistance amounts are per unit not per tenant.

Note, you can qualify for a reduced owner eviction relocation fee if you are considered a “Mom and Pop” outift. The reduced Mom and Pop fee applies if the property is 4 units or less, the landlord owns no more than one other single-family home on a separate lot in Los Angeles, and the eligible relative moving into the rental unit does not own residential property in the City.

 

*Relocation Amounts Effective July 1, 2010 thru June 30, 2011 are:

 

 

Type of Tenant Less Than 3 years 3 years or more Less than 80% HUD Average Medium Income “Mom and Pop” Owner Eviction **4 units or less**
Eligible $7,300 $9,650 $9,650 $7,050
Qualified $15,500 $18,300 $18,300 $14,150

HUD 2010 Area Median Income Limits 80% AMI (Los Angeles):

1 Person 2 Person 3 Person 4 Person 5 Person
$46,400 $53,000 $59,650 $66,250 $71,500

 

 

 

A “qualified” tenant is any tenant who is 62 years of age or older; or handicapped
as defined in Section 50072 of the California Health & Safety Code or disabled as
defined in Title 42 United States Code Section 423; or is a person residing with
one or more minor dependent children (as determined for federal income tax
purposes. This means under the age of 18)

All other tenants are “eligible” tenants.

There is a filing fee for a Relocation Application with the city.

It is $473 for Eligible tenants and $723 for Qualified Tenants.

The only way to file the paperwork (Declaration of Intent to Evict) is by going into LAHD headquarters in person- if you are anywhere in the city of Los Angeles- this is where you must go to file regardless. The office address is:

1200 W 7th Street, 1st floor

Los Angeles 90017

http://lahd.lacity.org/lahdinternet/AboutUs/ContactUs/tabid/69/Default.aspx

 

The door will be on the immediate right if you are entering the building from 7th Street. There will be a maze of cubicle walls leading back to the desk where you pay the application fee and file. They accept credit cards and personal check. Note that they do not have computers or printers for you to access there, so if you haven’t printed out your paperwork- The closest fedex Kinkos are:

554 South Grand Avenue, Los Angeles, CA

(213) 623-8129 ‎

181 South Central Avenue, Los Angeles, CA

(213) 617-0710 ‎
 
 

The other general thing I’d like to make you aware of, is that you probably will want to get the clock started on the 60 days as soon as possible. So have your real estate agent request from the title company/title rep before closing to get a copy of the grant deed when it is recording- that way when you go in to LAHD, you can prove that you are the new owner of the property and file the same day the property closes.

As an owner doing an owner eviction, you must move into the unit within 3 months of vacancy and intend to occupy the unit for at least 2 years. The landlord is required to file a re-rental notice with LAHD within 3 months of owner evicting the tenant, and on the 1st and 2nd year filling anniversary after the tenant vacates the unit, state that you still occupy the unit.

 

Hopefully the tenant uses the relocation assistance and voluntarily vacates the unit you are owner evicting and you are good to go. If they refuse to leave you may start the eviction process.

 

I’d advise you to call the Rent Hotline at 866-557-7368 or visit LAHD’s website to learn more about the owner eviction process

http://lahd.lacity.org/lahdinternet/RSOPublicationsandForms/tabid/264/language/en-US/Default.aspx

 

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Los Angeles Annual Allowable Rent Increase

Allowable Rent Increases 6-6-11 ca update

Multi family property built before 1978 in the City of Los Angeles falls under Los Angeles rent stabilization ordnance (RSO) otherwise known as rent control. Rent control limits the amount you can raise rents, as a result landlords who do not keep up with annual increases will end up with below market tenants in their building that dramatically lower their property’s sale value. If you have trouble raising rents as a landlord, hire a property management company to do it for you.

At some point as an owner of a rent controlled building, you may have a tenant, who is having economic difficulty, and you want to cut them some slack on the rent. Unfortunately as a income property owner, you could really be doing a number on yourself. Consider that when you decide to sell your property, the product of the Gross Rent Multiplier will be much smaller as a result of the below market rent in one or more units.

EXAMPLE:

If your building has a gross rent Multiplier of 12, and you are giving your tenant a $100 break on rent:

12 GRM x ($100 below market rent/mo. x 12 months) = $14,400

You lose $14,400. Staggering that doing a small a favor as saving them $100 a month on their rent isn’t costing you the $1,200 of lost rent upfront- but could be costing you $14,400 when you decide to sell. In this situation, I always recommend that you continue serving your below market tenants rent increase notices each year, but let them know you have no intention on enforcing it- that way you can keep as high a monthly gross as possible on your rents and keep up with RSO. Remember, if you don’t exercise the right to do a rent increase in a given year- you lose it.

Example Rent Increase Form:

Rent Increase Form

Rent Increase Form

 

You do NOT need LAHD approval to raise rents that are the annual allowable increase.

 

The annual increase may be imposed only if twelve (12) months or more have passed since the last such rent increase. Landlords are required to serve tenants with a written 30-day notice before the increase may be collected

Historic Rent Increase Table

Date Annual Allowable Rent Increase
5/1/79 – 6/30/85 7%
7/1/85 – 6/30/86 4%
7/1/86 – 6/30/87 5%
7/1/87 – 6/30/88 4%
7/1/88 – 6/30/89 4%
7/1/89 – 6/30/90 5%
7/1/90 – 6/30/91 5%
7/1/91 – 6/30/92 5%
7/1/92 – 6/30/93 5%
7/1/93 – 6/30/94 3%
7/1/94 – 6/30/95 3%
7/1/95 – 6/30/96 3%
7/1/96 – 6/30/97 3%
7/1/97 – 6/30/98 3%
7/1/98 – 6/30/99 3%
7/1/99 – 6/30/00 3%
7/1/00 – 6/30/01 3%
7/1/01 – 6/30/02 3%
7/1/02 – 6/30/03 3%
7/1/03 – 6/30/04 3%
7/1/04 – 6/30/05 3%
7/1/05 – 6/30/06 3%
7/1/06 – 6/30/07 4%
7/1/07 – 6/30/08 5%
7/1/08 – 6/30/09 3%
7/1/09 – 6/30/10 4%
7/1/10 – 6/30/11 3%
7/1/11 – 6/30/12 3%
7/1/2012 – 6/30/2013 3%

 

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