News and Events

COVID-19: How the Southland’s Top Property Managers are Working to Get Ready to Exit the Crisis – Will Business Be Different?

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Fed is Deploying It’s “Full Range of Tools” and Challenges Washington To Follow Suit

  Today’s Fed meeting and subsequent press conference by Fed Chair Powell was like no other in history. First off, Powell said, “We are going to see economic data for the 2nd quarter that is worse than any data we have ever seen”, this after the 1 quarter GDP contracted at a 4.8% annualized rate, the worst reading since 2008.  Also, Powell’s speech and Q&A was virtual, with reporter questions being asked via a webinar. He expressed some hope for a significant bounce back in the 3rd quarter as stay at home measures are gradually rolled back. Of course, so much is dependent on the virus. Markets rallied significantly today on positive news regarding a potential treatment.Full Range of Tools: The Fed Funds rate will remain at near zero for a while (possibly for 2-3 years) and the Fed continues to purchase about $10-15 billion per day in Treasuries and $8 billion in mortgage bonds, daily injections of capital into the repo markets. Up next: A Main Street Lending Program will provide 4 year loans to businesses too large to benefit from the PPP program and more purchases of corporate debt. But, Powell noted that the Fed is authorized to “provide loans not grants” and the most vulnerable American individuals and businesses are not in a position to pay back loans as they have been hit so hard by this crisis. “This is the time to use the great fiscal power of the United States to do what we can to support the economy and try to get through this with as little damage to the longer-run productive capacity of the economy as possible”.  Powell declared in a direct message to Congress to provide this aid. He is implying that the fiscal policy so far is good but not enough and he is continuing to push monetary policy to the limit. Focus on central banks continues tomorrow with the ECB’s policy announcement. Bank of Japan opened the week on Monday pledging unlimited bond buying, as the international adoption of Modern Monetary Theory continues. Stay tuned.

Phone: 310.867.2976 Email: dpascale@gspartners.com Twitter: @Pascale_of_GSP DRE License: 01749437

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LIVE Webcast: What We Can Expect from Sacramento and Our State’s Legislature

 

***LIVE WEBCAST - FREE ADMISSION - LIMITED SPACE AVAILABLE*** COVID-19: What We Can Expect from Sacramento and Our State’s Legislature Tuesday, April 28th | 11a - 12p Join us online for an important information session on April 28, 2020 at 11:00 AM. Hear a briefing by Apartment Association of Greater Los Angeles lobbyist, Kate Bell, Partner of Capitol Advocacy in Sacramento, one of the State’s most prestigious lobbying firms. Kate spends much of her time meeting with the Governor and his staff in addition to holding regular meetings on housing policy with members of the State’s legislature. Due to the COVID-19 pandemic, the State Legislature has been on recess and expected to return “with a vengeance” in early May. It is expected that the Legislature will concentrate on housing and assisting those adversely impacted by COVID-19. This is your opportunity to hear about the latest proposed regulations from a true Sacramento insider. Planned Topics Include… Proposed Assembly Bill 828, which would impose a 25% reduction in rent for 12-months and impose unbalanced eviction regulations Governor’s executive ordes and how they impact rental housing providers Statewide rental registry Balcony inspection “fix-it” Bill sponsored by AAGLA Update on Proposition 10, Version 2.0 – The Rental Affordability Act ballot initiative Proposal for Statewide Renter Assistance State Option to Purchase Housing Left Vacant for 90 or More Days Unit Splitting Bill sponsored by Apartment Industry Legislative priorities And much more! As the situation surrounding COVID-19 continues to evolve, in this engaging webcast, we will do our best to address all of your questions! CLICK HERE TO LEARN MORE

THANKS TO OUR TITLE SPONSOR! SCOTT PROPERTIES GROUP Scott Properties Group (SPG) is a proactive property management firm specializing in Southern California commercial and residential properties, including: multi-family apartments, retail, mixed use, shopping centers, office buildings, single family residences and industrial properties. Click here to learn more

Kate Bell, a partner with Capitol Advocacy, has lobbied in the state for over 15 years and is recognized as one of Sacramento’s most effective lobbyists on tax, procurement, and general business issues. Kate’s ability to articulate issues, find solutions, and her knowledge of California’s complicated bureaucracy gets results for the firm’s clients. Kate is widely respected by the Capitol community for her ability to frame issues effectively and knowledgeably. On the tax front, Kate has won several multi-million-dollar settlements, tax refund claims, and new business incentives before the State Board of Equalization, California Department of Tax and Fee Administration, Franchise Tax Board and the Governor’s Office of Business and Economic Development, as well as passed major tax incentive legislation in the state

Daniel Yukelson is currently the Executive Director of The Apartment Association of Greater Los Angeles (AAGLA). As Certified Public Accountant, Yukelson began his career at Ernst & Young, the global accounting firm, and had served in senior financial roles principally as Chief Financial Officer for various public, private and start-up companies. Prior to joining AAGLA, Yukelson served for 12 years as Chief Financial Officer for both Premiere Radio Networks, now a subsidiary of I-Heart Media, and 3 years for Oasis West Realty, the owner of the Beverly Hilton and Waldorf Astoria Beverly Hills where he was involved with the development and construction of the Waldorf.”

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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.

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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

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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.

“Until today, rents in these units could be increased by up to 4 percent annually,” Garcetti said Monday. “As of now, those increases are put on hold by this order until after this emergency period is over.” The action comes after a Los Angeles City Council decision last week to temporarily freeze evictions and give tenants up to 12 months to pay overdue rent... Read More

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Senate Passes $2 Trillion Stimulus Bill That Includes Relief For Retail, Hotels, Multifamily

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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.

To calculate your stimulus payment, use this calculator from the Washington Post What Needs to Be Done to Get your Stimulus Rebate? If you have not filed your 2019 tax return, or unsure what your 2018 AGI is, schedule your appointment now to file your 2019 tax return. Once filed, the IRS will be able to deposit the calculated amount directly into your bank account, using the AGI and the bank information on the 2019 tax return. When Will the Payments Arrive? The IRS says that a direct deposit should be in your bank account in about three weeks. Checks should start arriving in six to eight weeks. Stephen Hall, CEO Robert W. Hall, Founder Robert Hall & Associates 300 W. Glenoaks Blvd #200 Glendale, CA 91202 (818) 242-4888

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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

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My Tenants Tell Me They Cannot Pay The Rent Due To COVID-19 – What Should I Do Next?

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