Judgment Finalized in Santa Rosa Mobilehome Park Rent Increase Case. Park Owner Owes Residents $47,000.

After a grueling three years of litigation, twelve residents of Sunset Park Community in Santa Rosa, California achieved a partial victory. While unable to convince a jury that their spaces are subject to the City’s rent control ordinance, court did decide that three of the five most recent rent increases imposed by the park were illegal, because the park operator increased their rent for three successive years with less than the 90 days notice required by Civil Code § 798.30.

The park operator admitted that it gave residents less than 90 days notice. It argued that the rent increases were still valid, but should have been implemented a month later, limiting the residents damages to less than a hundred dollars.

We argued that according to the case of Rich v Schwab, rent increases with less than the required notice were completely null and void. The court agreed with the residents, and ruled that all the money the park operator had charged the residents under the invalid rent increases would have to be refunded.

Also, in what I believe is a first in Sonoma County, the court ruled that the rent increase of two of the residents violated Penal Code § 396, the price gouging law, because the park operator increased their rent by more than 10% during a state of emergency following the massive October 2017 wildfires that devastated Sonoma County.

Team Effort Saves Senior Mobilehome Park Residents $248,600 a Year

As a housing attorney with California Rural Legal Assistance, I, along with Garrison Boyd of Legal Aid of Sonoma County, and private attorney Rich Reynolds, represented 74 households of seniors residing at the Youngstown Mobile Home Park in Petaluma, California, in an administrative hearing that successfully prevented the park’s new owner from increasing the residents’ space rent by $301 a month, a 55% increase over their current rent. The park owner sought to pass on to the residents, $192 for its mortgage payments, $94 for its property tax payments, and $15 for its legal fees.

Petaluma’s mobilehome space rent stabilization ordinance permits a park owner to increase residents’ rent by the annual increase in the Consumer Price Index, an increase of 3.2% this year. An increase greater than the CPI, can be granted through an administrative hearing, if the greater increase is warranted under a multi-factor test laid out in the City’s ordinance.

With CRLA and the other attorneys’ assistance, the residents raised $15,000 from residents and community members to hire experts witness to prepare reports to counter the park owner’s expert witnesses. We worked diligently through December obtaining documents through discovery, collaborating with the expert witnesses to prepare reports, and writing and filing a brief to oppose the rent increase.

The arbitration was held on January 12 and 13, 2022, via Zoom. Each side made opening statements. The park’s lawyer presented three witnesses: the park owner, a CPA and an appraiser. The residents’ lawyers presented eight witnesses: a PhD in urban planning, a mortgage broker and retired CPA, and a real estate agent, four Youngstown residents and a resident of a neighboring park as lay witnesses. At the end of the second day of the hearing, both sides made oral closing arguments.

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On February 1, 2022 the hearing officer issued a decision. The hearing officer found that the park owner had not met its burden of proof to show that the requested rent increase was necessary. The hearing officer found that, “[The park owner] has therefore failed to demonstrate by a preponderance of the evidence that the rent increase sought is necessary to provide Park Owner with a fair and reasonable return, or that the guaranteed annual space rent increase based on the CPI is insufficient.” The hearing officer denied the park owner’s rent increase in its entirety, except for the annual 3.2% increase in the CPI, which is automatically permitted under the ordinance.

While the park owner requested a rent increase of $301 a month, but the hearing officer permitted an increase of only 3.2%, which is about $21 a month. Through the efforts of CRLA and our partner attorneys, each resident household saved approximately $280 a month. This translates into an annual savings for each resident of $3,360. The monthly savings for all 74 affected residents is about $20,720, which  is an annual savings for all residents of $248,640.

Here is the hearing officer’s decision. Here’s a local news article about the story: https://www.pressdemocrat.com/article/news/a-huge-sigh-of-relief-petaluma-mobile-home-park-residents-celebrate-afte/

Expiration of State of Emergency in Sonoma County on December 31, 2021, Could Mean Steep Rent Increases in 2022

A state of emergency has been in effect in Sonoma County continuously since October 9, 2017, when wildfire destroyed thousands of homes in Santa Rosa, but the most recent extension of the state of emergency will expire on December 31, 2021.

Penal Code § 396 limits rent increases during a state of emergency to a total of 10% of what the rent was when the state of emergency was declared in October 2017. What will happen to rent in Sonoma County when the state of emergency expires?

  • Rent for single family residences can be raised by any percentage with 60 days notice.
  • Rent for low income housing under the federal Low Income Tax Credit Program, could be raised by 14.4%.

Civil Code § 1947.12 limits how much a landlord can raise the rent for most building to 5% plus the percentage change in the cost of living, or 10 percent, whichever is lower. However Civil Code § 1947.12 does not apply to single family residences or to low income housing.

Therefore, landlords of a single family residence can raise their tenants’ rent by any amount as long as they give 90 day’s notice of the increase. See Civil Code § 827(b)(3).

A second category of buildings not protected by Civil Code § 1947.12, are buildings receiving Low Income Housing Tax Credits (LIHTC) through the California Tax Credit Allocation Committee. Rent in these buildings is determined by a percentage, usually, 30% to 60% of the Area Median Income (AMI) as calculated for the county where the building is located. This means that residents of LIHTC properties in counties with high median incomes pay more rent than residents in buildings located in counties with low median incomes. For example, at 2021 levels, a one bedroom apartment at 60% of AMI is $1,309 in Sonoma County, $2,055 in San Francisco County and only $803 in Stanislaus County.

The AMI is calculated yearly, and if there has been an increase in median income in a county, the rent for LIHTC properties there goes up the same percentage. In Sonoma County LIHTC rent has gone up an average of 5.9% each year since 2018. The cumulative increase since 2018 has been 18.5%.

Year 60% AMI
1 BD 
Annual
Increase
Cumulative
Increase
2021 $          1,3092.4%18.5%
2020 $          1,2785.2%15.7%
2019 $          1,21510.0%10.0%
2018 $          1,105
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Increase in LIHTC Rent in Sonoma County 2018-2021

Due to the ongoing state of emergency in Sonoma County, the cumulative increase has been capped at 10% total. This means that as of 2021, there is an 8.5% increase in AMI, that LIHTC landlords have not been able to pass on to low income tenants.

In 2022, with the state of emergency expired, LIHTC landlords will be able to increase their tenants’ rent by the 2022 increase in AMI, plus the unclaimed 8.5% increase from prior years. If the 2022 increase is similar to the average past increases of 5.9%, then low income residents will be facing a 14.4% rent increase (8.5% plus 5.9%) rent increase next year.

Low income seniors subsisting only on social security, will find it difficult or impossible to pay this rent increase. Social Security increases by the Cost-of-Living Adjustment (COLA). The Social Security Administration has announced a 5.9 % increase in social security benefits for 2022, however it remains to be seen if the COLA increases, which determine retirees’ income, will keep pace with the increase in AMI, which determines affected retirees’ rent. Over the last four years, COLA has increased by an average of only 2.9% — less than the 5.9% average increase in AMI.

$172K Lien on Client’s House Reduced to $18K Through Chapter 13 Bankruptcy

A client took out a home equity line of credit on her home fifteen years ago. After five years the payments switched from interest only to interest plus principal, a jump from $300 to $1,200 a month. Client couldn’t afford it, so stopped making payments.

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After ten years, the servicer began foreclosure proceedings, filing a notice of default that client was $45K behind on her payments and owed a total of $172K. We filed a Chapter 13 bankruptcy the day before the foreclosure sale. Then we filed a motion to avoid the servicer’s lien, based on the fact that client’s house had three senior loans and the resale value of the house is restricted. The servicer did not oppose the lien strip motion and the court approved a bankruptcy plan where the client would pay $500 a month for 3 years, after which the entire $172K loan would be removed from the client’s house.

Sonoma County Apartment Complex Stops Price Gouging, Credits Rent

I recently had the opportunity as part of my work for California Rural Legal Assistance to help all of the 80 families living in a Low Income Housing Tax Credit apartment complex in Sonoma County save $200 a month in rent for the rest of this year and get a month’s rent credit.

Our client lives in an 80 unit LIHTC property. The management company increased rent in March 2020 and January 2021 in violation of Penal Code § 396, which limits total rent increase since declaration of state of emergency to 10%.

We wrote management company a letter pointing out that a state of emergency has been in effect continuously since October 2017 and was extended again in December 2020, through the end of December 2021. Because the March 1, 2020 rent increase raised the rent by 20% over the 2017 rent, and the January 1, 2021 rent increase raised the rent by 30% over the 2017 rent, both of these rent increases were illegal.

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After some discussion with the company’s lawyers, the management company rescinded the last two rent increases, reduced the client’s rent from $1,230 to $1,030 and issued her a rent credit of $1,190. Client saved $200 a month rent for at least a year. Total benefit to client was $3,390.

The other 79 tenant families in the complex received the same letter reducing their rent and crediting their overpayments. Total benefit to all 80 families in the complex is estimated to be $271,200.

Small Axe Mangrove Has Great Courtroom Drama

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Law Office of Evan Livingstone Not Accepting New Clients

I am currently working full time as a staff attorney for California Rural Legal Assistance, Inc. Therefore, I am not accepting new legal clients.

You may contact me at:

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California Rural Legal Assistance, Inc.
1160 N Dutton Ave Ste 105
Santa Rosa CA 95401
(707) 528-9941

CRLA has eligibility requirements.

Lawsuit for Failure to Maintain Mobilehome Park Settled

The Law Office of Evan Livingstone settled a lawsuit against the operator of a mobile home park in Sonoma County. Tree roots from a common area of the park cracked the driveway and concrete pad of the mobile home park resident. Despite repeated demands to fix the damage, the park ignored the homeowner’s request. After we filed suit for failure to maintain common areas of the park and driveways, park management quickly agreed to fix the damage, trim the tree roots and pour a new concrete pad.

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For more information about the Mobilehome Residency Law: https://mhphoa.com/mrl/

Case Dismissed – Lack of Speedy Trial

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2005 Case Dismissed for Lack of Evidence

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