In an interesting but limited decision, the California Court of Appeals was required to review whether an apartment building that was converted to condominiums in 2009 but still left the existing tenants in the units still fell within the Los Angeles Rent Stabilization Ordinance (“LARSO”). The Court found that even if a new certificate of occupancy was issued in 2009, the unit still fell within the LARSO because the existing tenants lived in the unit prior to the conversion. Therefore, rent controls still existed.
The decision in Burien, LLC v. Wiley provides some insight into how condominium conversions can still fall within the regulations of rent control.
Here, the landlord had purchased a building that was built in 1972. Because it was built in 1972, the LARSO applied. The LARSO does not apply to units that have a certificate of occupancy issued after 1978. In 2009, the apartment building was converted to condominiums. In 2011, the Landlord served a 60 Day Notice to a tenant living in the newly converted condominiums raising the rent from $1,401 to $3,000 per month. The Los Angeles Housing Department became involved eventually referring the matter to the City Attorney.
Because the units were a “condo conversion,” the Costa-Hawkins Rental Housing Act also applied. The Costa-Hawkins Rental Housing Act exempts converted condominium units from local rent control laws if the certificate of occupancy is issued February 1, 1995. However, Civil Code Section 1954.52 provides some exceptions to this exemption from rent control laws.
The Court found that the State Legislature intended to prevent landlords from converting an apartment building to condos but never selling the units to buyers. This would allow a landlord to treat the building the same as an apartment building although new certificates of occupancy are issued.
Here, although there was a new certificate of occupancy issued in 2009, the original certificate of occupancy was issued in 1972. There was no change of use because the units were always used for residential purposes. Therefore, the Court found that the newly converted condo units were still within the realm of the LARSO.
The LARSO does not just apply to apartment units but can also apply to condominium units within the City of Los Angeles. Condos are still subject to eviction controls and rent registration. Further, tenants living in a unit prior to 1996 would still have rent controls as well. This is an important part of the LARSO if you own condo units in Los Angeles.
It is important to note that there are many exceptions within the LARSO and the Costa-Hawkins Act that may apply to new construction, so this ruling may be limited to a specific fact pattern that was found in Burien, LLC v. Wiley. Please contact Attorney Anthony Marinaccio at 818-839-5220 for more information.