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Santa Monica City Council Passes Avalanche of New Owner Restrictions

1. Housing Status as a Protected Classification (SMMC 4.28.030(a), (b), (c)): Discrimination based on housing status, including homelessness or lack of rental history, is strictly prohibited. California has passed a provision that makes “housing status” a protected class, which is the first of its kind in the state. Only one other jurisdiction in the US has implemented a similar law. In 2022, Washington, D.C. passed an ordinance that bans all forms of discrimination against homeless people. This new provision will significantly limit a property owner’s ability to assess whether a prospective tenant will be able to pay rent on time. The new approach will give more weight to factors such as stable job histories, higher credit scores, and annual income while considering a tenant’s application.

2. Permanent Relocation for Economic Displacement (SMMC 4.36.020(a)(5)): If a renter receives notice of a rent increase exceeding the lesser of the change in the Consumer Price Increase (CPI) plus 5% or 10%, an owner must pay a permanent relocation fee if the renter chooses to move within 120 days.

This proposed ordinance offers protection to tenants residing in units that aren’t covered by local or state rent control laws, including newer units and single-family homes. It applies to all tenants, even those who can afford to rent mansions in Santa Monica. As a result, the proposed ordinance will cost owners tens of thousands of dollars, if not more.

3. Additional Reasons for Permanent Relocation Fees (SMMC 4.56.020): The following are new reasons for a tenant receiving permanent relocation fees: (i) tenant elects to relinquish a tenancy after a temporary relocation lasting at least six (6) months; (ii) Code Enforcement determines that the tenant has been forced out due to landlord misconduct; (iii) the Building Officer determines that health and safety conditions in the unit exist that cannot be fixed; (iv) the tenant elects to relinquish the tenancy in a bootleg unit that cannot be permitted for residential use.

4. Permanent Relocation for Other Reasons (SMMC 4.36.010(a)(6)-(8)): A tenant may be entitled to permanent relocation fees when a he or she vacates a unit claiming that it was due to harassment, illegal lockout, uninhabitable conditions, or other constructive eviction situations, an owner may be required to pay a permanent relocation fee.This lack of clear distinctions between harassment and uninhabitable conditions may lead to the abuse of loopholes.

5. Expansion of Buyout Code to Non-Rent Controlled Units (SMMC 4.57): The buyout agreements code is to be expanded to cover ALL units subject to rent control or local Just Cause regulations, providing additional protections for renters and covering more renters.

6. Minimum Buyout Amount Requirement and Defense for Non-Registration (SMMC 4.57.020(b)(7), (c)(3)): Owners will be required to offer buyout agreements (a/k/a, “cash for keys”) for no less than the permanent relocation fee amount, and failure to file a buyout agreement with the City can be raised as a defense to eviction. This is something that small mom-and-pop housing providers CANNOT afford.

7. New Disclosure Language (SMMC 4.57.020(b)(7), (8)): Written disclosure forms will be required to include statements regarding bad faith tenant harassment and tenants’ entitlement to the permanent relocation fee amount.

8. Evictions Based on Bad Faith Excessive Rent Increases (SMMC 4.27.090): Renters will have a defense to an unlawful detainer lawsuit (eviction) if the owners impose excessive rent increases in bad faith, including within six (6) months of an unsuccessful eviction attempt or lawful complaints about habitability. The proposed language provides that evidence of bad faith includes but is not limited to: (i) imposing a rent increase within six (6) months of an unsuccessful just cause eviction attempt; (ii) imposing a rent increase within six (6) months of a renter’s complaint regarding health and safety issues, harassment, or discrimination; and (iii) imposing a rent increase when price gouging protections are in effect.

9. Prohibited Activities (SMMC 4.56.020(a), (k), (m), (n)): Unlawful activities such as self-help eviction, refusal to accept rent, retaliation, refusing to cooperate with a renter’s request to lawfully replace an occupant who has moved out, and offering to buy a renter out within six (6) months after having been informed by the renter in writing that s/he does not want to be bought out are now to be explicitly defined as harassment when done in bad faith.

10. Potential Penalties (SMMC 4.56.040(c)): The maximum potential civil penalty for violations increased from up to $10,000 to up to $20,000 per violation.

11. Section 8 Discrimination (SMMC 4.28.030(i)): Landlords may no longer refuse to accept housing vouchers or neglect required repairs after Housing Quality Standards inspections.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

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