Legal Update - California Outlaws Tenant Eviction Tracking

Legal Update - California Outlaws Tenant Eviction Tracking

Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes

Landlords in California beware.  The current CA law is that unlawful detainer actions are publicly searchable unless they are resolved within 60 days of the first filing.  If the tenant fights, this easily takes it past 60 days, the court fight shows up on public records, and future landlords will be aware of the fact that this guy applying for your property has an eviction history.  

Under the law that takes effect Jan 1 2017, tenant evictions (called unlawful detainer) cases will no longer be searchable in the majority of cases.  (I won;t go into the limited exceptions here)  The CA legislators felt like it was unfair to the tenant to have disputes with the current landlord impair their right to get credit and future housing, so they made essentially sealed these cases from public view.

This will have two impacts.  First, and most obviously, it will make it a lot harder to screen tenants. Right now, I take felons and bad credit history.  My only ABSOLUTE NO is prior evictions.  Now prior evictions will remain hidden.

But a second impact may prove to be just as damaging to us property owners.  As any attorney, I also litigate Unlawful Detainer actions in court.  In the vast majority of cases today, the tenant settles (whether pay-to-stay or move out)  for one reason - because as part of the settlement, the landlord agrees to seal the case.  His/her history will remain clean.    Now, there will be precious little to motivate a tenant to settle, and eviction cases will become longer, more drawn out, and of course more expensive.  And suffering no consequences, the tenant will be able to do it again and again.

9Reply
170 views

Most Popular Reply

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y

Another good reason not to invest in CA! High taxes, state income taxes, overregulation, etc make it difficult for investors in CA as well as other "progressive" states. They do not care if they have a negative impact on investors and may see them more as predators than business people. It is no secret that many businesses move out of CA due to the burdens imposed on them by socialist centered governments. Now I see they have a petition to secede. LOONS!

See this reply in the discussion

50 Replies

Jump to latestLatest
  • Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
    9y

    Yikes, sounds like the CA legislators don't think much of landlords. 

  • Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    @Nick C., @Leonard L.

    Good info and yes, Calif is difficult to deal with on any subject :sigh:

  • Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes
    9y

    @Nick C. @Jeff B.

    Still pretty damn disappointing.  If you read the legislation that our fine representatives in Sacramento voted for, it pretty much says outright that the "housing crisis" in California means they have to make it as easy as possible to get into housing, including hiding rental litigation from future landlords.

  • Investor · San Jose, CA · Member since 2015 · 61 posts · 13 votes
    9y

    @Leonard L. @Nick C. It looks like this legislation is going to make it difficult to get housing for the borderline cases. Now landlords will be stricter with their qualification requirements now. I had an eviction case earlier this year in Sacramento and I am surely going to double down on my qualification requirements. This is a lose-lose for both sides. 

  • Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    @Raman Bindlish  Agree.  Increase income required to 2.75 or 3x the rent will shed lots of applicants who typically struggle hand-to-mouth or under the table income; just be prepared for higher vacancy expenses.

  • Investor · San Jose, CA · Member since 2015 · 61 posts · 13 votes
    9y

    @Jeff B. I guess politicians do not understand that they are doing a disservice to the tenant base here. I invested in B/B- neighborhood and I try to accommodate tenants that have good credit but borderline on income etc. Now I would have to make even credit requirements stricter as threat of eviction is not going to work anymore and you need really good history on on-time payments.

    For handling vacancy expenses, I guess just plan for better rehabs and quality product so that good qualified tenants come to you faster. I learnt it hard way this reality of Sac area.

  • Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes
    9y

    @Raman Bindlish - It is not just the politicians who drove this.  The socialist wing of the Democratic party (tenants' rights, low-income advocates, non-profits, unions, etc) got this over the finish line over the objections of landlord organizations.  I would argue that, along with the politicians, these groups also do not understand the impact on tenants.  By taking away this very useful information, the landlords will be more cautious on other factors like credit and income, as you and @Jeff B. suggest.

    But I predict we will see more well-intentioned social and legal efforts in this field in the near future.  The book "Evicted" is one of the most talked-about non-fiction books of the year.  And more and more people of the Sanders/progressive wing of the Left think the landlords have too much power over their own property.  Housing is seen as a social good that happens to be privately owned.  One idea that has gained tractor, now the rule in Oakland for example, is that if the tenant is paying his rent, the landlord has no "just cause" and cannot evict him/her even at the end of the lease term.

  • Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    @Raman Bindlish  Instead of intermediary credit agencies that only report summary information, get direct access to one of the principle credit reporting agencies from which all others derive their summaries.  I was paying $34/inquiring but getting really great info, including all open revolving accounts and their 30,60,day histories, collection activity and all public records (and it looks like the UD actions will soon be expunged).

    With that level of detail, you can see the income and expense (deriving the discretionary funds) and the accounts the  applicants prioritize and those the skip on.  I used this as my primary criteria for screening.  Life gets messy and it's all recorded in the Credit Reports.

    I used Rental Housing Online { rhol.com } (no, I'm not associated in anyway) and you will have to qualify to get access.

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    Another good reason not to invest in CA! High taxes, state income taxes, overregulation, etc make it difficult for investors in CA as well as other "progressive" states. They do not care if they have a negative impact on investors and may see them more as predators than business people. It is no secret that many businesses move out of CA due to the burdens imposed on them by socialist centered governments. Now I see they have a petition to secede. LOONS!

  • Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y
    Originally posted by @John Thedford:

    Another good reason not to invest in CA! High taxes, state income taxes, overregulation, etc make it difficult for investors in CA as well as other "progressive" states. ... Now I see they have a petition to secede. LOONS!

     :grin: btw, population migration is heavier OUT of the state than IN - - I wonder why?

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Jeff B.

    Talk to a relative yesterday. They said they want to move out of the state. I am wondering if Florida should build a wall to keep people out:)

  • Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y
    Originally posted by @John Thedford:

    @Jeff B.

    Talk to a relative yesterday. They said they want to move out of the state. I am wondering if Florida should build a wall to keep people out:)

     I've heard that "The Donald" has some ideas on that ...

  • Toronto ON, Canada · Member since 2016 · 96 posts · 26 votes
    9y

    This news is for sure sounds demotivating to new investors, looking into starting out in CA.

  • Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes
    9y

    @Vamshi Ananth and other looking to invest in CA.  This was meant as an update to those already active in CA.  For those newbies out there, don't let this one issue deter you from buying something in CA you otherwise like.  You have to put this recent and admittedly negative change into perspective.  Despite its reputation to the contrary, CA law is actually relatively favorable with regard to evictions compared to other states.  You file a 3 day notice, wait 3 days, pay about $250-300 to file an Unlawful Detainer (closer to $1,000 if you use an attorney service), and in vast majority of cases, tenant will be gone in 40-60 days.  In some other states, this process is much longer.  So, yes, this makes screening for deadbeats harder, but CA law retains the same time-frames that generally allow pretty quick eviction of non-paying tenants compared to some other states.

    I do worry that it will encourage tenants to fight and drag out the process longer, but we will have to see how that actually plays out. 

  • Investor · Newport Beach, CA · Member since 2012 · 129 posts · 102 votes
    9y

    @Account Closed  I think landlords are universally disliked.  I remember a BP podcast episode where one of the guests, maybe it was even Josh, said he always claims he is the property manager to develop a rapport with the tenant, never admitting he is actually the owner.  It is human nature to resent having to pay rent to the landlord every month.  

    At the end of the day, there are thousands and thousands of small landlords like myself who simply won't rent to someone who has an unlawful detainer on their record.  That is actually a very large number of potential tenants.  Something like 3% of all rental units each year in the Inland Empire where I work have an eviction filed against them.  So over about 3 years, that is 10% of the units.  That is a helluva lot of people who have a hard time getting housing. 

    So I don't think it is failure to give receipts.  I think it is left-leaning legislators who want to give a break to who they see as "the little guy" i.e., the tenant.  

    And there are plenty of stories, trotted out when lawmakers are considering issues like this, about "innocent" tenants who had legitimate disputes with unscrupulous landlords, but ended up tarred with the irreversible stain of an Unlawful Detainer lawsuit on their record.  I have sat through hundreds of these cases in court and I think they are rare, but they do happen.  So that also plays into the thinking behind laws like this.

    A little known fact -- most landlords are also the "little guy" in that they have only a single rental.  Much of their life savings is often wrapped up in that one asset.  But no one thinks of landlords as people who need (or even deserve) protection.

  • Investor · Long Beach, CA · Member since 2012 · 313 posts · 190 votes
    9y

    This is terrible news.

  • Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes
    9y

    The 'Socialist Republic of California' is a very difficult place to do business.  The fact it is tenant friendly makes it almost a nogo for smaller and inexperienced noobies.  :-(

    As a 'refugee' from Cali, I have found AZ to be much kinder. Plus the buy in costs are less, LLC rules are much different.

    AG

  • Levi T.Pro Member
    Rental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    It's just a matter of time and Cali will turn into Detroit, vast wasteland. Yes America, liberal America hates small business and is out to crush and stomp it out in the dark blue state of Cali.

    Come to Virginia y'all, you can evict in 30 days flat, some counties you can time it just right and be in court before the end of the current month. We believe in fair business and honoring your agreements around here, and all that comes with it when you don't. 

    Maryland is on the same footing at Cali. I see non-performing, system abusing renters crossover to VA from time-to-time, they quickly retreat after trying to stiff a landlord and a judge tosses them out quick.

    Last month I'd seen a chick in a UD case in court for refusing to pay rent because she claimed the owner was slumming. She filed a not guilty plea, so the judge gave her a trial for the money, but evicted her on the spot by giving the landlord an immediate possession - Meaning in 72 hours she was removed but still has to go to court to over the money, which was the core of the case. 

  • Developer · Austin, TX · Member since 2016 · 108 posts · 23 votes
    9y

    .

  • Member since 2016 · 13k+ posts · 12k+ votes
    9y

    We have the same regulations in our jurisdiction. We have no access to eviction records. As a result professional tenants have flourished here to the point that non payment of rent fills the court every hearing date, tenants can live rent free for usually 6 months or more and professional tenants can take years to evict. Once they are evicted they simply move on to the next unsuspecting mom and pop to repeat the process. We have many occurrences of landlords going into bankruptcy due to these situations.

    The primary mandate of our court is to prevent evictions. Most non payment cases are welfare tenants therefor the government is forcing private landlords, through denying evictions, to house them so the government does not have to provide subsidized housing for them.

    If landlords had eviction records and understood the system we face the over whelming majority of welfare recipients would never get private housing in Ontario.

  • Sacramento, CA · Member since 2014 · 50 posts · 30 votes
    9y

    @Leonard L. Thank you for this valuable information! I think I learned Property Management from one of the best in the business (here in Sacramento) and there are so many rights that tenants have that at times it's hard to keep up on the changes. It's scary enough not being able to turn away felons, but same here, ABSOLUTELY NO evictions should be the last thing landlords can hole on to. So now, when a Felon with a service dog who was evicted two months ago comes along we will welcome them with open arms :)  Sorry I had to find humor in this. BTY I love all dogs!          

  • Boston, MA · Member since 2013 · 99 posts · 28 votes
    9y

    My understanding is that eviction cases in which a landlord prevails will still be searchable.  Is that a correct understanding?

  • Real Estate Agent · Lincoln, CA · Member since 2014 · 225 posts · 43 votes
    9y

    good info, will be passing this onto a client who actually just served notice...

  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 642 votes
    9y

    Requiring excellent credit will still weed out most of the tenants would have had an eviction.  Credit history really does tell you a lot.  This new law is still very unfortunate.  I wonder if the landlord obtains a judgment against the tenant will there still be a public record about that?

    Stephanie Medellin, Loan Factory58 Reviews
  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 642 votes
    9y

    @Leonard L.  I just tried googling for more info about this legislation but nothing came up.  Do you have a link with more info?

    Stephanie Medellin, Loan Factory58 Reviews
Join the conversationCreate a free account to reply, vote on answers and follow this thread.