Tag Archive for: real estate

Yes in My Back Yard v. City of Culver City (2023): Court Clarifies Limits on Local Zoning Under Housing Act

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This case involves a challenge under California’s Housing Crisis Act to the City of Culver City’s ordinance reducing the floor area ratio (FAR) permitted for single-family homes. Plaintiffs Yes in My Back Yard and Sonja Trauss (collectively, YIMBY) filed a petition for writ of mandate after the city adopted Ordinance No. 2020-010, which lowered the FAR from 0.60 to 0.45 in the single-family residential (R-1) zone. 

The trial court ruled in favor of YIMBY, finding a violation of the Housing Crisis Act’s prohibition on reducing residential land use intensity. The Court of Appeal of California affirmed, holding that the ordinance’s FAR reduction plainly violated the Act’s definition of “reducing the intensity of land use.” The court also upheld a fee award to YIMBY under California’s private attorney general statute.

Background

California has been facing a persistent housing shortage crisis. In 2019, the state legislature adopted the Housing Crisis Act to address this problem by limiting restrictions on housing development. The Act prohibits cities from enacting zoning changes that reduce the intensity of land use below what was permitted as of January 2018. This includes express prohibitions on reductions to housing density, height, or FAR.

In July 2020, following a study on “mansionization” concerns, the City of Culver City adopted Ordinance No. 2020-010 to amend its single-family residential zoning standards. Among other changes, the ordinance reduced the maximum FAR from 0.60 to 0.45 for primary structures in R-1 neighborhoods. This change decreased the size of single-family homes that could be built by several hundred square feet.

YIMBY submitted comments asserting that the FAR reduction violated the Housing Crisis Act’s proscription against lessening land use intensity. Nevertheless, the city council unanimously approved the ordinance. YIMBY then filed a petition for a writ of mandate seeking to void the ordinance.

Trial Court Proceedings

The trial court ruled in favor of YIMBY after a hearing, finding the ordinance clearly violated the Housing Crisis Act. The court issued a peremptory writ ordering the city to repeal the ordinance. The court also awarded YIMBY $131,813.58 in attorney fees under Code of Civil Procedure §1021.5, California’s private attorney general statute.

Appellate Court Analysis

The Court of Appeal independently reviews questions of statutory interpretation and affirmed the judgment. The court held that the plain language of Government Code §66300 prohibited the city’s FAR reduction. The court explained that the statutory definition of “reducing the intensity of land use” expressly includes decreases to FAR. This unambiguous language reflects the legislature’s intent to broadly limit local policies that negatively impact housing development. 

Though the city argued the purpose was only to restrict density reductions, the court declined to rewrite the statute by reading the language out. The FAR reduction was not exempt as affordable housing policy, nor did the city show the ordinance actually increased density. Given the clear statutory violation, the award of attorney fees was also proper as YIMBY’s action enforced important housing rights and benefited the public interest.

Key Takeaways

  • Cities cannot reduce single-family residential FAR below January 1, 2018 baseline levels per the Housing Crisis Act.
  • Plain statutory text controls over arguments about legislative purpose.
  • The Housing Crisis Act broadly limits policies that reduce land use intensity.
  • Substantial attorney fee awards are available under California private attorney general law.
  • Ordinances violating state housing laws face heightened scrutiny.
  • Zoning changes must ensure no net loss of residential density.

Summary

In Yes In My Back Yard v. City of Culver City (2023), the Court of Appeal of California affirmed a ruling that the City of Culver City’s ordinance lowering the permissible floor area ratio in single-family zones violated express provisions of the Housing Crisis Act prohibiting reduced land use intensity. The appellate court upheld the trial court’s order to repeal the ordinance and substantial attorney fee award under California’s private attorney general statute. 

This precedent reinforces cities’ limited authority to alter single-family housing zoning regulations in a manner that lessens residential development capacity, absent special exemptions. Additionally, the availability of fee recovery provides incentives regarding legal challenges enforcing housing laws against zoning actions that run counter to state policy objectives. Given the clarity of the statutory text, courts are likely to strike down similar municipal FAR reductions without much deference.

Fitness International v. KB Salt Lake III: California Court Rejects Tenant’s Covid Defense as an Excuse for Unpaid Rent

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In a September 2023 decision, the California Court of Appeals affirmed a judgment in favor of a commercial landlord who prevailed on summary judgment in an unlawful detainer action against a tenant fitness center that stopped paying rent during COVID-19 closure orders. The Second Appellate District ruled in Fitness International, LLC v. KB Salt Lake III, LLC that the tenant could not establish defenses based on doctrines like force majeure, frustration of purpose, and impossibility. 

The court underscored that the closure orders did not prohibit commercial construction or prevent the tenant from paying rent. Further, the tenant remained in possession of the premises. The Fitness International decision demonstrates the courts’ reluctance to accept COVID-19 as broadly excusing a commercial tenant’s obligation to pay rent.

Background

The dispute arose from a 2016 amended lease between KB Salt Lake III, LLC (“KB Salt Lake”), the landlord, and Fitness International, LLC (“Fitness International”), which operated an indoor gym and fitness center in Chatsworth, California. The lease required Fitness International to renovate and expand the existing gym. In November 2019, Fitness International commenced renovations that were estimated to take approximately eight months to complete.

In March 2020, COVID-19 closure orders issued by the City and County of Los Angeles shut down indoor gyms and fitness centers but allowed commercial construction to continue. Fitness International nevertheless ceased construction at the Chatsworth location, invoked the lease’s force majeure clause, and stopped paying rent starting in April 2020. The former gym space remained unfinished and could not reopen.

In October 2021, after Fitness International failed to pay over $200,000 in back rent, KB Salt Lake brought an unlawful detainer action. Fitness International asserted defenses based on the closure orders. The trial court rejected Fitness International’s defenses and granted KB Salt Lake’s summary judgment motion.

On appeal, the Court of Appeal affirmed. The court explained that the plain language of the closure orders unambiguously exempted commercial construction. Though Fitness International claimed it reasonably believed “retail” construction was prohibited, the court reiterated that interpreting ordinances and regulations is strictly a legal question. The court then methodically rejected each of Fitness International’s defenses stemming from its flawed premise.

Regarding the lease’s force majeure clause, the court held it only excused an obligation where the triggering event hindered or prevented the performance of a specific required act. Though COVID-19 qualified as a force majeure event, Fitness International failed to show it hindered or prevented Fitness International from paying rent.

The court also concluded the doctrine of frustration of purpose did not apply because Fitness International did not attempt to terminate the lease and remained in possession of the premises. Further, temporary impossibility or impracticability requires an obligation to be rendered highly impractical due to excessive, unreasonable cost. Fitness International failed to produce evidence that paying rent during closure orders met this demanding standard.

By upholding summary judgment for the landlord, the Fitness International decision underscores that courts will narrowly construe doctrines like force majeure and will require significant evidence before relieving a commercial tenant of its rent obligations based on circumstances like temporary COVID-19 restrictions. The court made clear that closure orders neither prohibited construction nor prevented entities with the ability to pay from doing so. 

Key Takeaways

  • This case provides guidance on defenses for nonpayment of rent during COVID-19, limiting the applicability of various legal doctrines. It underscores tenant obligations to pay rent if the ability exists and possession continues.
  • The case involves a commercial landlord’s unlawful detainer action against a tenant fitness center for nonpayment of rent during COVID-19 closure orders.
  • The court held that COVID-19 closure orders did not prevent commercial construction, so they did not excuse the tenant’s failure to pay rent under force majeure, frustration of purpose, and impossibility/impracticability doctrines.
  • The closure orders exempted commercial construction, and the tenant admitted it had funds to pay rent, so it was not delayed, hindered, or prevented from paying rent by closure orders.
  • Doctrines like the frustration of purpose end a contract, but the tenant remained in possession, so they still had to pay rent. Impossibility requires performance to be impossible or highly impractical, which was not shown.
  • COVID-19 did not broadly excuse commercial tenants from paying rent under various legal doctrines where tenants had the ability to pay, and occupancy continued. Force majeure clauses are interpreted narrowly.

Summary

The Fitness International decision makes clear that COVID-19 closure orders did not provide commercial tenants with a broad excuse for nonpayment of rent under legal doctrines like force majeure and impossibility. The court underscored that public health restrictions neither prohibited commercial construction nor prevented financially capable tenants from paying rent. Further, by remaining in possession, the tenant could not assert frustration of purpose. The ruling puts tenants on notice that they face a heavy burden when invoking COVID-19 to avoid clear rent obligations and that courts will narrowly construe such virus-related defenses absent evidence of a tangible impact on the duty to pay.

How Environmental Regulations Can Affect Property Owners in California

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Environmental regulations are aimed to preserve ecosystems and improve the quality of the environment, including wildlife. The management of natural resources by the state government and the related environmental regulations can have a significant impact on ranchers, loggers, farmers, and property owners in California.

Impact of Environmental Regulations on Property Prices

Stringent environmental regulations are often imposed on the suppliers of housing and other property. This makes it possible for these laws to have a substantial impact on the housing market. The extent of the overall impact is measurable in terms of the changes in the number of houses available for sale and the property prices.

Environmental laws primarily impact the supply of land, which is a chief input for property development. Some regulations can change the price of lumber and other inputs as well. In this way, the regulatory regime has a major impact on the supply of housing. Prices of property will naturally go up if it takes more time to build housing units. The same holds true if environmental laws increase the likelihood of litigation faced by housing developers.

On the other hand, if environmental regulations are effective, they can improve the quality of the land and its surroundings, giving impetus to property prices and demand. This is particularly true in the case of residential properties.

NIMBY and Anti-Development Quagmire

There is a rise in California’s rental and housing markets. This is particularly true in the Silicon Valley Bay Area, which is the state’s economic engine. With many Not-In-My-Backyard (NIMBY) backlashes, local elected officials and housing advocates are scurrying to find affordable solutions. There is a severe housing supply-demand mismatch because of the California Environmental Quality Act (CEQA.)

Using political pressure and misinformation, housing communities across the Golden State have successfully managed to prevent numerous new development projects. Property owners routinely use the CEQA as an onerous public policy intimidation tool. NIMBYism opposes the development of new projects near one’s own property.

Everything from social noise to developing brownfields is used as an excuse to prevent a new property from getting developed. This has become a huge problem for local governments since it typically forces them to approve non-comprehensive, inefficient, and ad hoc development plans.

All residential property owners are not against development. However, it is still prudent for developers to speak with a skilled local real estate attorney before starting any new projects. NIMBY property owners demand slow growth focusing on the intrinsic feel of the neighborhood and preserving its culture. It flatly opposes any large government or development projects.

Misuse of CEQA by Property Owners

The California Environmental Quality Act was signed by Ronald Reagan in 1970 for protecting the natural environment in the development of both private and public projects. Unfortunately, it is routinely misused for stopping or delaying housing construction.

Anti-housing residential property owners in affluent communities use CEQA to block multi-family and high-density projects. They argue that such projects would alter their neighborhood’s bucolic ambiance. Construction unions routinely extract wage concessions from property developers by misusing CEQA.

Legislators and governors routinely grant CEQA exemptions in the absence of comprehensive reforms for particular projects. This is usually the case for narrow categories of housing or sports arenas. There is an increase in CEQA misuse with courts becoming a battleground over its application.

How Can Property Developers Make the Process Smooth

CEQA should not be treated as a direct land use or zoning regulation. There are no explicit restrictions placed on the development. However, the California Environmental Quality Act has become a major obstacle for property owners, developers, and businesses.

Environmental impact assessments are usually time-consuming and costly. Development can quickly grind to a halt during litigation if a lawsuit gets filed during the process. Developers should ideally do the following to make the process smooth:

  • Ensure the administrative record is strong. This will help in dissuading and defending against potential judicial challenges.
  • Get involved in the preparation and review of environmental documents (as much as the city allows). This will ensure that the records are accurate and complete.
  • Get your project approved faster with recent and developing legislation. This will provide you with better opportunities and standards from a planning perspective. It may also allow for a less rigorous CEQA review.

You should develop a plan for addressing potential environmental challenges before starting any major real estate project. An experienced land use and zoning attorney in California can help you navigate the multiple regulations.

There are several requirements from a CEQA perspective that property developers need to satisfy. In addition, there are also local regulations and planning and zoning laws that can make the task challenging.

Talk to a Skilled and Knowledgeable Real Estate Attorney – Book Your Consultation Today

The attorneys at Peterson, Martin & Reynolds LLP have a history of providing the right advice and solid legal representation to clients and achieving successful outcomes. To request your consultation, call us at (415) 399-2900 or complete this online form.

 

Understanding Real Estate Legal Matters Within Trust Administration

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Many estate and trust disputes in California involve the allocation of real property or real estate among multiple beneficiaries. A trustee usually has the discretion to sell real estate and distribute the proceeds to all beneficiaries in equal shares. They may also allocate the property to one or more beneficiaries if there are no objections to the proposed distribution. But without an experienced real estate attorney on your side, trust and probate administration may hit a litigious wall.

Allocation of Assets

If a real estate parcel gets distributed on a pro-rata basis among two siblings, both will get 50% undivided interest in the property if they have an equal remainder share through the trust. This is commonly treated as a tenant in common. In the case of a pure pro-rata distribution of assets, both siblings would get equal interest in the real assets distributed through the trust. Any administrative expenses would be paid first though.

A pro-rata distribution can be rife with conflict. Tenants in common share an equal right to property but may not be able to allocate the use. For instance, which sibling gets Christmas week?

Non-pro rata distribution is the other form of asset allocation. The beneficiaries will receive a proportional share in the total value of assets instead of getting an equal interest.

The sibling that wants the real estate may receive it and the other sibling may get its corresponding value without asset co-ownership. As per California Probate Code section 16246, trustees can choose the manner in which they distribute assets.

Dealing With Divided Interest in Property

The property can transfer to more than a single beneficiary with equal interests in the property. This may seem fair to the transferring party but can give rise to several litigation issues. Problems can quickly arise when the beneficiaries fail to see eye to eye on the disposal of the property. The true owner of the property is not apparent in these cases since everyone owns an equal share.

For instance, if three siblings inherit the family house with only one sibling wanting to sell, they may file a partition action. This is usually when the other two siblings either don’t want to sell their shares or don’t have the money to purchase the third sibling’s share. The third sibling can move the court for forcing the sale of the property to cash out their interest.

Title Transfer Not Made to the Trust

In some cases, a parent will not transfer the title to the trust. Instead, they may transfer the title to a property to one of the children as joint tenants with survivorship rights to avoid probate. In this case, a big problem may arise if there is a trust stating that the property needs to be transferred to all children equally.

The child that has their name on the title as a joint tenant may not want to share the property and may argue that the property was a gift outside the trust. The matter will be tried to be resolved informally through negotiations or mediation among the parties. If no resolution is reached, the trustee or executor asserting the right to property in the name of the trust will need to file an 850 petition in probate court.

This is to have the property transferred back to the trust and redistributed as per the terms of the trust documents among all children. Such matters can become full-blown lawsuits requiring discovery and a trial to determine rightful owners. The action is usually taken by a trustee for protecting the estate assets and bringing them back into the estate.

Estate litigation can become costly, and the trustee usually has the benefit of using estate assets for pursuing a lawsuit. In case the matter remains unresolved and leads to a lengthy lawsuit, the use of assets by the trustee will leave less money in the estate to be distributed. If the problem is not resolved early on, it can become a lose-lose situation for all involved parties.

Real Estate Inheritance Attorneys Can Resolve Legal Issues

Real estate distribution is not always seamless among family members. Inheritance disputes usually revolve around the allocation of property and money. These are a few common issues that an inheritance attorney may work to resolve:

  • Perceived inequity of allocation: Significant changes right before an individual’s death can be a concern. The same holds true for massively different inheritances among the beneficiaries.
  • Wrongful acts: Beneficiaries can always raise doubts about undue influence surrounding the trust.
  • Intention: An experienced real estate inheritance dispute attorney can assess the intentions of the deceased and present it to the court to ensure your loved one’s wishes are honored.

Talk to a Skilled and Knowledgeable Real Estate Attorney Today

At Peterson, Martin & Reynolds LLP, our attorneys have decades of combined experience in working with family members within the court systems to obtain the inheritance they deserve. We are dedicated to helping you receive fair treatment.

Call us at (415) 399-2900 or reach us online for a comprehensive case evaluation.