NHLP Memorandum Re: Does California Civil Code section 1954.535 which requires an owner to provide a 90 day notice to a tenant of a termination or failure to renew a government contract apply to federally assisted tenant-based contracts for units in non-rent control jurisdictions?May 5, 2001 ISSUE Question: Does California Civil Code section 1954.535 which requires an owner to provide a 90 day notice to a tenant of a termination or failure to renew a government contract apply to federally assisted tenant-based contracts for units in non-rent control jurisdictions? CONCLUSION Yes. The 90 day notice and restriction on rent increases provided for in section 1954.535 applies to owners with federally assisted tenant-based contracts in jurisdictions without rent control. DISCUSSION California law requires an owner with a contract or recorded agreement with a governmental agency that has rent limitations who terminates or fails to renew the contract or agreement to give a 90-day written notice to the tenant. During the 90 day period, the tenant’s portion of the rent cannot be increased.
The statute provides in pertinent part as follows:
The statute is applicable to tenant-based contracts. The legislature intended that section 1954.535 apply to the Section 8 tenant-based program./2/ The legislative materials accompanying section 1954.535 repeatedly state that "the bill requires a landlord to give Section 8 tenants at least 90 days written notice of the effective date of the owner’s termination or nonrenewal of a ‘Section 8' housing agreement . . . ."/3/ The statute is applicable to contracts with "rent limitations." The Section 8 Housing Choice Voucher contract contains rent limitations./4/ The rent for a unit under a Housing Choice Voucher contract must be reasonable in comparison to other comparable units./5/ The federal voucher statute further provides that a PHA must review both the initial rent and all subsequent rent increases to determine if they are reasonable./6/ Significantly, the PHA may not make housing assistance payments if it determines that the rent is not reasonable./7/ The HUD required Section 8 Housing Choice HAP contract further provides that after the PHA approval and during the initial lease term, the owner may not raise the rent./8/ To determine if the rent is reasonable, the PHA must compare the owner’s rent for the unit with the rent for other comparable unassisted units taking into consideration the "location, quality, size, unit type and age of the contract unit" and "any amenities, housing services, maintenance and utilities provided and paid by the owner." /9/ The PHA must redetermine rent reasonableness when the owner increases the rent, if there is a 5% reduction in the published fair market rent, when required by HUD and at anytime at the PHA’s discretion./10/ To help ensure compliance with the rent reasonableness standard, the owner certifies that the rent charged the holder of the Section 8 voucher is comparable to the rent charged by the owner for other comparable units in the premises and agrees to provide the PHA with information on the rent charged by the owner for other units within the premises or elsewhere./11/ The owner must also certify that during the contract term, he or she will not collect from any source any payment for rent in excess of the approved rent./12/ The Section 8 tenant-based lease addendum which is Part C of the HAP contract contains similar provisions regarding PHA approval of the rent and also requires that the owner notify the PHA at least 60 days prior to the effective date of any proposed rent increase./13/ The statute is applicable in non-rent control jurisdictions. Civil Code section 1954.535 is applicable in non-rent control jurisdictions. Section 1954.535 was enacted as a part of SB 1098. That bill contained four sections. The first one dealt with trespass and tenants’ rights to access to information, the second provided amendments to the law affecting rent control jurisdictions, the third set forth the 90 day notice provision and the fourth precludes discrimination based upon source of income. Section two of the bill expressly includes references to rent control and is described throughout the legislative materials as a provision affecting rent control jurisdictions; thus it is limited in applicability to rent control jurisdictions. The third section which added section 1954.535 to the California Civil Code, contains no reference to rent control jurisdictions and is therefore not limited in its applicability./14/ The legislative materials confirm the position that the 90 day notice provision is not limited to rent control jurisdictions. These materials cite the tight housing market for low-income housing and reason that the 90 day notice is not unduly burdensome while achieving a beneficial purpose of alerting the tenant to the changing circumstances and providing increased time to respond and prepare./15/ The California legislature was concerned with problems of a tight housing market in both rent control and non rent control jurisdictions. The jurisdictions cited in the legislative materials as having steeply rising rental cost are equally divided between rent control and non rent control jurisdictions./16/ Those with no rent control include San Mateo, Marin and Contra Costa counties and the Sacramento region. Those counties with rent control, in part if not all of the jurisdiction, include Santa Clara, San Francisco, Los Angeles and Alameda./17/ Faced with tight housing markets in numerous jurisdictions with no local rent control as well as those with rent control, the legislature acted to address the unique statewide problem that escalating rents create for tenants with government subsidies and provided protections applicable in both types of jurisdictions. In addition, the legislative materials support the position that the 90 day notice provision is applicable statewide through the description of existent law providing for a 30 day notice to terminate a month-to-month tenancy which is applicable in both rent control and non rent control jurisdictions. The 90 day notice provision proposed to change that statewide law. In the discussion of the proposed change, there is no limiting reference in the legislative materials to rent control jurisdictions./18/ Moreover throughout the legislative materials, the 90-day notice provision most often is presented and described in a paragraph separate and distinct from any discussion and reference to rent control jurisdictions./19/ Finally, codification of the 90 day notice provision in the Costa-Hawkins Rental Housing Act does not limit its applicability to rent control jurisdiction. It is logical that the 90 day notice provision is codified within Costa Hawkins, as the legislature had previously referenced the Section 8 program in that Act./20/ Moreover, the Section 8 program is a federal program and thus there is no unique place within the California statutes to codify such a provision. Also, to the extent that Costa-Hawkins deals with rent control, the Section 8 program is a form of rent control thus it is a logical place for this provision to be codified. Nothing in the definitions or other provisions of the Costa Hawkins Rental Housing Act, limits its application to municipal rent controlled tenancies. Civil Code §1954.51 sets forth the definitions applicable to the Costa-Hawkins Act. "Residential real property" is defined to include "any dwelling or unit that is intended for human habitation."/21/ . "Tenancy" is defined to include "the lawful occupation of property and includes a lease or sublease."/22/ Even if Costa Hawkins is limited only to rent-controlled tenancies, nothing limits its application only to tenancies governed by city- or county-mandated rent controls. It applies to all residential rent controlled properties, including federally-governed rent controlled tenancies Termination of the HAP contract. For Section 8 tenants, a termination of the lease terminates the HAP contract. Federal regulation provides that the term of the HAP contract begins on the first day of the lease and ends on the last day of the lease term. /23/ The HAP contract terminates if the lease is terminated by the owner./24/ REQUIRED ACTION FOR PHAs Section 8 tenant-based owners must use leases that are consistent with state and local law. /25 The HAP contract provides that each owner certify that the lease used for the voucher tenant is consistent with state and local law./26/ Due to the recent change in state law, PHAs must review owner’s leases to determine if they are in compliance with California Civil Code section 1954.535./27/ PHAs must also instruct owners who want to terminate or fail to renew the Section 8 HAP contract that they must provide tenants with a 90 day notice. The notice should inform the tenant that the tenant share of the rent will not increase during the 90 days. Section 1954.535 is applicable to all the Section 8 tenant based programs including but not limited to the following:
Supportive Housing Program (24 C.F.R. § 583) (where grants are used to pay rent the rents must be reasonable, § 583.115) Footnotes:/ 1/Cal. Civ. Code section 1954.535 (West Supp. 2000). This provision became effective January 1, 2000./ 2/California law requires owners of project-based Section 8 housing and/or federally insured multifamily housing to provide tenants with a nine-months notice of termination of a subsidy contract or prepayment of the federally insured or federally held mortgage indebtedness. Cal. Govt. Code section 65863.10 (West Supp. 2000)./ 3/See e.g. Senate Rules Committee, SB 1098, amended April 7, 1999, page 2; see also Senate Rules Committee, SB 1098, amended August 31, 1999, page 2 and id at page 1 ("Subject: Landlord and tenant law: rights of parties upon termination of Section 8 contracts")./ 4/Housing Assistance Payments Contract (HAP Contract) Section 8 Tenant-Based Assistance Housing Choice Voucher Program, HUD-52641 (3/2000) (hereinafter HAP contract), Part A ¶ 6, Part B ¶ 6 and 8 and Part C ¶ 4, 5 and 15 (HUD requires that the HAP contract be used without modification. Id. at Instructions for use of HAP Contract, column one) and 24 C.F.R. § 982.507 (2000); see also California Health and Safety Code section 50675.2 (West Supp. 2000) which refers to units with "rent limitations" in the context of the California Multifamily Housing Program./ 5/42 U.S.C. § 1437f(o)(10)(A) (West Supp. 2000)./ 6/Id. at § 1437f(o)(10)(B) (West Supp. 2000); HAP contract, Part B, ¶ 6a./ 7/42 U.S.C. § 1437f(o)(10)(B) (West Supp. 2000./ 8/HAP contract, Instructions for use of PHA Contract, second column, Part A ¶ 6 and Part B ¶ 6a./ 9/Id. at Part B, ¶ 6b and 24 C.F.R. § 982.507(b) (2000)./ 10/24 C.F.R. § 982.507(a)(2) (2000) and HAP contract at Part B, ¶ 6c./ 11/HAP contract at Part B, at ¶¶ 6d and 8c; 24 C.F.R. § 982.508(c) (2000)./ 12/HAP contract at Part B, at ¶ 8d./ 13/Id. at Part C, ¶ 4 and 15./ 14/City of Napa Inter-office Memorandum from Thomas B. Brown, City Attorney to Don Dehorn, Housing Program Coordinator, August 8, 2000./ 15/Senate Judiciary Committee, SB 1098, as amended April 7, 1999, hearing date April 13, 1999, page 5. This is not the first time that the legislature acted to require additional notice to tenants faced with a potential loss of a housing subsidy for their unit. Tenants who are residents of assisted housing developments are entitled to a nine months notice if an owner decides to terminate the housing assistance contract. Cal Gov. Code section 65863.10(b)./ 16/Senate Judiciary Committee, SB 1098, as amended July 13, 1999, hearing date July 13, 1999, page 4./ 17/Id. In Alameda county there is rent control in Berkeley, Hayward and Oakland. In Santa Clara county, there is rent control in the city of San Jose; in Los Angeles county, there is rent control in Santa Monica, West Hollywood, Beverly Hills and the city of Los Angeles./ 18/Senate Judiciary Committee, SB 1098, as amended April 7, 1999, hearing date April 13, 1999, page 3./ 19/Senate Judiciary Committee, SB 1098, as amended August 31, 1999, page 2 and 4./ 20/California Civil Code section 1954.51 (West Supp. 2000)/ 21/Cal. Civil Code § 1954.51(e) (emphasis added)/ 22/ Id. at § 1954.51(f). The Chapter 2.7 heading is "residential rent control." This title reasonably encompasses Section 8 rent units which are rent controlled. But if the title is deemed to be limiting, titles of statutes do not control their meaning or application. Da Fonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 602 ("Title or chapter headings are unofficial and do not alter the explicit scope, meaning, or intent of a statute.")./ 23/24 C.F.R. § 982.309(b) (2000); see also 24 C.F.R.§ 982.451(a)(2) (2000)./ 24/24 C.F.R. § 982.309(b) (2000)./ 25/42 U.S.C. 1437f(o)(7)(B)(ii)(I) (West Supp. 2000)./ 26/HAP contract at Part B, ¶ 2d(3)./ 27/24 C.F.R. § 982.308 (2000) (PHAs may review the lease and decline to approve a tenancy if the PHA determines that the lease does not comply with state or local law.)
|
