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News and Events
AM I MY – OR MY MANAGEMENT COMPANY’S – RESIDENT MANAGER’S KEEPER?
By Gary Ganchrow I never have actually counted them, but the California Labor Code contains what feels like a gazillion laws governing the employer- employee relationship, and the California Government Code contains several more. Most seem intended to protect the employee’s rights. Despite this fact, my experience – as someone who frequently represents property owners and management companies in connection with resident manager employment claims – is that many property owners do not think of themselves as employers (or of their resident managers as employees). In a way, this is unsurprising. After all, resident managers frequently also are tenants, do not necessarily engage in activities we traditionally think of as “work,” and may or may not receive a paycheck or payment beyond some type of rent credit or free lodging. It is a mistake, however, to not recognize that your resident manager possesses the same employee protections that would, say, an office worker – potentially a very costly one if your relationship with your resident manager sours. I have written extensively in the past about these issues and how to avoid them; they are not the subject of this article. But there exists another, often overlooked, implication to the fact that the law views your resident manager as your employee. Specifically, no matter how much (or little) work your resident manager performs, and regardless of whether you consider him to be legally mandated space- filler or someone who plays an important role in managing your property, that resident manager is your legal agent. In other words, for all intents and legal purposes, he or she is you.1 This can be a dangerous proposition when your resident manager serves as your chief point of contact with your sometimes-cantankerous tenants. After all, there exists a reason companies hire polished public relations experts with years of schooling and advanced degrees to serve as spokesmen. In fact, that is the entire premise behind 25 CCR §42, which may require an owner to place a manager on site in the first place. Please turn to page CS-45 Just as an employer can be held vicariously liable for its employees’ conduct, you may be liable for your resident manager’s conduct. For example, if your resident manager sexually harasses a tenant, you – the property owner – may be liable. If your resident manager discriminates against a tenant, you may be liable. If your resident manager is a gossip and discusses one tenant’s private information with another, you could be liable. The nature of the claims you could face are limited only by the legal creativity of the tenant’s lawyer. I have seen claims asserted for housing discrimination, Unruly Act violations, breach of contract, breach of the covenant of quiet enjoyment, defamation, invasion of privacy, public disclosure of private facts, intentional infliction of emotional distress, retaliatory eviction and constructive eviction. It also is worth mentioning that your insurance likely does not provide coverage for several of these claims. Absentee or very-hands-off owners may be particularly vulnerable because they likely provide resident managers with even greater responsibility and latitude. But what if you hire a property management company to manage your multi-unit property? Surely then you have insulated yourself from these types of claims, right? Right? Not so fast. Many property management contracts designate the resident manager to be the owner’s employee. As an aside – and I don’t want to make any property management companies mad at me, least of all those I represent – I have never fully understood the point of doing this. At the very least, the law will consider the property management company to be the resident manager’s joint employer along with the owner. A joint-employer relationship exists when two or more employers exert significant control over the same employees. Such a relationship exists if an entity, i.e., the property management company in this case, retains the right to direct the activities of the worker or the manner and method in which he performs the work – which clearly is true with respect to a management company and resident manager. In addition to asserting the resident manager is the owner’s employee, a property management company is likely to point to an indemnity provision in its property management contract in which the owner agreed to indemnify the management company for claims arising from its property management. Therefore, a property management company will turn around and tender to the owner any tenant claim made against the resident manager. As a result, even if the owner does not have direct liability, he will end up financially responsibility for any liability anyway. Now that I have articulated the potential issues, what can you do about them? For one thing, choose your resident managers carefully and run background checks on them. Should problems arise, you do not want to learn after-the-fact that a simple background check would have exposed a history of prior problems. And if you are an owner that is contractually responsible for the resident manager’s conduct, do not allow your property management company to hire him or her without your approval. Second, take seriously tenant complaints about the manager. That does not mean you must give credence to every kvetch of every disgruntled tenant, but if a tenant complains about mistreatment at the hands of your property manager, look into it. You must do this because if a similar problem recurs, either with the same tenant or a different one, you will be deemed to have been on notice. Furthermore, document (in writing) the steps you have taken to investigate, what follow-up steps you have taken to address the complaint, if any, and why you took no action if you decide to do nothing. This will be particularly important if a tenant makes a legal claim and seeks punitive damages against you, as employer, on the basis that you “ratified” the manager’s misconduct. “Ratification” does not necessarily require you to stamp “approved.” Cases find ratification when an employer fails to intercede in a known pattern of misconduct or fails to investigate or discipline an errant employee once the misconduct becomes known. Lastly, if the circumstances suggest you need to terminate your resident manager, then do so. I have witnessed way too many examples of owners and employers whose kindness towards their resident managers was not in the end reciprocated, and the result was costly – emotionally and financially. As I sometimes tell clients, “no good deed goes unpunished.” Do what you need to in order to avoid learning this lesson the hard way.
Garcetti seeks unprecedented suspension of rents, mortgages for LA residents
Via The Real Deal In his State of the City speech, the mayor said thousands of municipal employees will likely be furloughed because of the pandemic Los Angeles Mayor Eric Garcetti wants to suspend rent and mortgage payments for Los Angeles residents, and wants federal funding to help do it. Garcetti addressed the issue during his State of the City speech on Sunday, in which he outlined a bleak financial outlook, and detailed the city’s plan to weather the coronavirus pandemic, according to the Los Angeles Times. Some of the grim news included the city having to furlough thousands of workers, he said...Read More
Garcetti bans rent hikes for rent-stabilized units
By Tina Daunt Via The Real Deal Los Angeles Mayor Eric Garcetti is banning landlords of rent-stabilized units from increasing rents during the coronavirus emergency.
Senate Passes $2 Trillion Stimulus Bill That Includes Relief For Retail, Hotels, Multifamily
By Dees Stribling, Via Bisnow
The Senate, voting unanimously just before midnight, passed the economic aid package. The bill had been expected to pass that afternoon, but it was delayed after a group of Republican senators aired objections about its unemployment insurance provisions. The House of Representatives is expected to vote Thursday before sending the bill to the White House... Read more
CARES Act Stimulus Update
By Stephen Hall, CEO; Robert W. Hall, Founder, Robert Hall & Associates President Trump signed into law on March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act, (the CARES Act, HR 748), a $2 trillion stimulus package to mitigate the impact of the COVID-19 pandemic. The CARES Act provides stimulus payments of $1,200 for each individual and $500 for each child, defined by the child tax credit rules as under age 17. The stimulus payments are not available to those without an SSN, nonresident aliens, or adult dependents. Who and How Much?
- Single. Individuals with AGIs up to $75,000 a year are eligible for the full $1,200 payment. The payment is reduced by $5 for every $100 in income above $75,000. The payment amount is entirely phased out at an AGI of $99,000.
- Married filing joint couples with AGIs up to $150,000 a year are eligible for a $2,400 payment. The payment is reduced by $5 for every $100 in income above $150,000. The payment amount is entirely phased out at an AGI of $198,000 (if the taxpayers have no dependent children). Married couples also will receive an additional $500 for every dependent child under 17 and are phased out of the payment at a slightly higher AGI.
- Head of household filers with AGIs up $112,500 a year are eligible for the full $1,200 payment and an additional payment of $500 for each dependent child under age 17. The payment is reduced by $5 for every $100 in income above $112,500. Head of household taxpayers will also receive an additional $500 per dependent child under age 17. With no eligible children, a head of household filer is phased out at AGI of $137,000. With one eligible dependent child, a head of household filer is entirely phased out of the payment at AGI of $146,400.
Mortgage Forbearance under the CARES Act
By Gary Ganchrow, Parker, Milliken, Clark, O'Hara & Samuelian, a Prof. Corp. I received several questions last week about potential relief for property owners (especially in light of the need to accommodate tenants under the emergency laws), so I believe the synopsis below may be of interest to you. It is not intended to be legal advice for your particular situation. As you probably know, President Trump signed into law last Friday the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Under section 4022 of that Act, consumer borrowers with federally backed mortgages on properties designed principally for the occupancy of 1 to 4 families can receive a 180-day loan forbearance (plus up to an additional 180 days upon request) by affirming that they are experiencing a financial hardship directly or indirectly related to COVID-19. During this time, no fees, penalties, or interest will accrue beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full. Under section 4023, consumer borrowers with federally backed mortgages that were current as of February 1, 2020 on properties designed principally for the occupancy of 5 or more families can receive a forbearance ending either on the termination date of the national emergency or December 31, 2020 - whichever is sooner. The forbearance is for up to 30 days initially, but can be extended for two more 30 day periods as long as the borrower timely requests. A borrower that receives such a forbearance may not, for the duration of the forbearance, evict or initiate the eviction of any tenant for nonpayment of rent, or charge any late fees, penalties, or other charges for late payment of rent. The borrower also cannot require a tenant to vacate until at least 30 days after the date on which the borrower provides the tenant with a notice to vacate. In general, under the CARES Act, lessors may not initiate a legal action between March 27, 2020 and July 25, 2020 to recover possession from a tenant for nonpayment of rent or other fees or charges, or charge fees or penalties to the tenant related to nonpayment of rent. This prohibition is distinct from the provisions in Section 4023 mentioned above. Gary Ganchrow, Attorney-at-Law Parker, Milliken, Clark, O'Hara & Samuelian, a Prof. Corp. tel. (213) 683-6535 gganchrow@pmcos.com
My Tenants Tell Me They Cannot Pay The Rent Due To COVID-19 – What Should I Do Next?
Via AAGLA
On March 16, 2020, California Governor Gavin Newsom issued an Executive Order allowing local jurisdictions to enact eviction protections for renters that experience substantial financial hardships as a result of a tenant’s medical expenses, childcare, loss of wages, layoffs or reduction of hours relating to COVID-19 (Coronavirus). Following the Governor’s order, cities like Los Angeles, Oxnard, West Hollywood, Beverly Hills, Santa Monica, Camarillo and many others have issued executive orders or have passed ordinances barring certain residential evictions.
So, what should you do if a renter tells you that he or she do not want to pay their rent? Here are a few ways to approach this delicate and challenging issue:
1. Communicate With Your Renter:
First, communicate with your renter. Empathize with them and let he or she know how you feel about these unprecedented circumstances. Explain that all of us are in the same situation and because you want to ensure you can continue to provide them with a safe, well-maintained home, that would be impossible without receiving the rent you depend on to maintain the building and to support your own family.2. Offer Deferment Of Rent...
Next, when necessary, consider offering a full or partial deferment of rent. But let your renter know any reduced or deferred rent is not forgiven rent, and that they will have to repay you.
READ MORE. . .
COVID-19 GUIDELINES
Via CBRE We wanted to reach out to you directly to inform you on how COVID-19 is effecting multifamily and provide some tips and guidelines to help you. The COVID-19 virus has presented extraordinary challenges that were hard to imagine a few months ago. We know that you might be struggling with the same issues of your multifamily units. We stand ready to provide tips and guidelines through this unprecedented time and have established a real-time resource center at www.cbre.com/covid-19 for the most up-to-date information and insights. Please see below for some tips and guidelines:
- Property Management/ Repairs & Maintenance considered
essential business services. - It is important to keep up on all building maintenance and management issues.
- Apartments can be shown and leased during quarantine.
- Please exercise social distancing by keeping 6 feet apart when doing all management business.
- Existing leases are still in full effect.
- Current and Existing evictions can still be processed.
- Rent is due on April 1st.
Although the Assessor is not the Tax Collector, this notice is a courtesy on behalf of the Tax Collector
Statement from Keith Knox, Treasurer and Tax Collector on COVID-19 and April 10 Property Tax Deadline
Si desea obtener información adicional sobre este aviso o si necesita la información traducida en español, por favor llame al 1(213) 974-2111 entre las 8:00 a.m. y 5:00 p.m. Tiempo Pacífico, de lunes a viernes, excluyendo los días festivos del Condado de Los Ángeles. "I understand that this is a very stressful time, especially for those suffering direct effects from this public health crisis, and my office is committed to helping in any way we can. Los Angeles County property owners affected by the COVID-19 virus may have late penalties cancelled if they are unable to pay their property taxes by the April 10 deadline. We have no authority to extend the April 10 deadline, as outlined by State Law. However, beginning on April 11, the day after property taxes are due, people unable to pay on time for reasons related to COVID-19 may submit a request for penalty cancellation online. The department has set up a special team to process these requests for those who demonstrate they were affected by the outbreak. We encourage all property owners who can pay their taxes on time to do so. This revenue helps keep the government running and providing vital services that the public relies on, especially in times like these. Since County buildings are currently closed to the public during this emergency, there will be no in-person payments. Instead, taxpayers can pay online, via telephone or by mail. There is no cost for e-Check payments online. For online credit/debit card transactions, our card payment processor charges a 2.25 percent service fee. We have developed responses to our most Frequently Asked Questions (FAQs). Please click here for our FAQs Taxpayers can also visit https://ttc.lacounty. gov/, to review payment methods and several other online self-service options. Taxpayers may also call (213) 974-2111 for additional information" 
