Hello everybody. Recent changes to our laws pertaining to discrimination, easements and resident managers will impact all owners of apartment buildings and management companies. My column this month addresses those changes in a cursory fashion, but will alert readers to the problem areas so that they may seek specific legal advice should they feel the need to.
Unlawful Discrimination Update
On June 25, 2015, the United States Supreme Court issued a definitive ruling on “disparate impact” discrimination. That is one type of the two principal types of unlawful discrimination. The other type is intentional discrimination.
Intentional discrimination is obvious. Where a landlord intentionally discriminates against individuals on the basis of their race, color, religion, sex, handicap, familial status or national origin, that action violates the federal Fair Housing Act (“FHA”) enacted by the United States Congress. California adds additional categories of unlawful discrimination including age, ancestry, marital status and sexual orientation, among others.
Examples of intentional discrimination would be an owner’s refusal to rent to a tenant applicant because of his skin color or refusal to rent to two applicants, who will share a one bedroom unit, on the basis that they are unmarried.
Discrimination based on adverse disparate impact is more subtle and harder to ascertain, but equally as unlawful. Disparate impact means that the landlord’s practices, even though not designed to discriminate, nevertheless have a disproportionate affect on a protected class of people.
For example, in California, it is illegal to refuse to rent to applicants because they have children. That is intentional discrimination. But it would also be unlawful to impose a rule which would primarily affect children unless there is a compelling business necessity for the rule and that implementing the rule would be the least restrictive means of achieving that necessity.
One example I gave of that was in my February 2015 column of AOA Magazine in which I explained that a lease which provides that no person is allowed to play with Barbie dolls in the outdoor common areas of the apartment building would be unlawfully discriminatory because of the disparate treatment of children (probably of girls more than boys), because adults rarely play outside with Barbies.
While the categories of unlawful discrimination are different under the federal FHA than under the California discrimination statutes (such as the California Unruh Civil Rights Act), both the federal and state jurisdictions recognize that disparate-impact discrimination may be just as invidious as intentional discrimination. As of June 25, 2015, the United States Supreme Court now officially recognizes disparate impact discrimination as unlawful.
For a discussion of how to protect against discrimination claims, particularly against children, please see my column in the February 2015 issue of this magazine.
Update On Easements
In my column in the May 2015 issue of this magazine, I observed that easements are “once again front and center in the news,” having in mind a case decided in March 2015 by the California Court of Appeal. After that issue went to press, on May 22, 2015 the appellate court issued an enlightening decision about “equitable” easements.
Significantly, in Shoen v. Zacarias the Court of Appeal held that California Courts have the power to issue an equitable easement authorizing a trespasser to continue trespassing in exchange for paying damages to the owner, but only if, among other things, “the hardship on the trespasser in ceasing the trespass is greatly disproportionate to the hardship on the land’s owner in losing use of the trespassed-upon portion of the land.”
That means that even if the trespasser does not hostilely use the owner’s land for the requisite five years to obtain a prescriptive easement, the court can still award an easement which is equitable in nature to ensure the trespasser’s further use.
The Schoen case is important because it clarifies the law of equitable easements. But it was brought upon rather preposterous facts in which the cessation of the trespasser’s use of the owner’s land would never be a significant hardship.
Specifically, when the trespasser (Zacarias) purchased her property, she thought that an adjoining small patch of land was actually part of her parcel. In fact, the patch was owned by her adjacent neighbor. But believing that it was her own land, Zacarias populated it with outdoor furniture, including a chaise chair, tables, stools and a cabana.
Later, the owner of the land (Schoen) demanded that Zacarias remove her furniture, which Zacarias refused to do. Schoen then sued for trespass and the compelled removal of the furniture.
Zacarias defended on the basis that she had an equitable easement because of the hardship she would suffer if she were required to remove her items of personal property.
The Court held that the hardship Zacarias would suffer in spending less than $300 to remove her patio furniture from Schoen’s property was not greatly disproportionate to the hardship that Schoen would suffer in losing the use of the land that she owned. The court observed that the hardship to Zacarias was nothing like hardships in other cases to trespassers “who would be forced to move buildings or forced to be airlifted to their landlocked property.”
The Court of Appeal then concluded that the trespasser’s claim for an equitable easement fell short of showing a substantial hardship if the claim were rejected.
Readers should note that equitable easements, such as in the Schoen v. Zacarias, are difficult to obtain. On the other hand, obtaining easements by prescription (i.e., visibly and hostilely using a neighbor’s property for more than 5 years without the owner’s consent), are not subject to equitable balancing to determine which party would suffer more hardship in connection with the existence or removal of the use of the owner’s land.
For a discussion of how an AOA member can protect his/her property from an easement claimed by a neighbor, please see my column in the May 2015 issue of the AOA Magazine.
Update of New Resident Manager Laws
Significant new laws affect owners and management companies that employ resident managers in apartment buildings.
Effective July 1, 2015, all managers who work more than 30 hours per year are entitled to receive paid sick leave in the event that they take time off from work because they or a close family member is ill. The sick leave compensation must be for either three days or 24 hours of pay, depending upon how the employment agreement is drafted. But if the manager does not take off any time during the year then no payment is required.
AOA members should review their resident manager agreements to ensure that the contracts cover sick leave under the new legislation.
With respect to cell phone usage, if the employer requires the manager to have or use a cell phone in connection with the performance of his duties, then the employer must pay a reasonable percentage of the manager’s monthly bill based on the amount of time that the manager uses his phone for business purposes as compared with personal use.
If a cell phone is not required, then the employer need not make any contribution toward the monthly service cost. Employers should be certain that their agreements with their managers address the cell phone issue.
With respect to the California’s minimum wage that the employer must pay to the manager, it is presently $9.00 per hour. Beginning January 1, 2016, it rises to $10.00 per hour. If the apartment building is located anywhere within the City of Los Angeles, the minimum wage amounts increase to $10.50 per hour on July 1, 2016, and then to $12.00, $13.25, $14.25, and $15.00 per hour on July 1, 2017, 2018, 2019 and 2020, respectively.
However, owners and management companies with 25 or fewer employees will have an additional year to comply with each of the Los Angeles wage increases.
The requirement of paying the manager the proper minimum wage (and executing a properly drafted resident manager agreement between the employer and the manager), is significant. If the apartment manager did not voluntarily sign a written employment agreement with the owner or the employing management company, or if the agreement is defective in its legalese (as so many agreements are, including some generic preprinted forms), the owner or management company could be liable to the resident manager for substantial sums of money.
In fact, litigation now initiated by lawyers on behalf of their manager clients often seek unpaid wages, damages, penalties, fees, costs and other amounts ranging from $150,000.00 to $250,000.00. While grievances filed with the Labor Commissioner typically demand lesser sums, such as $50,000.00 or $75,000.00, those amounts are significant nonetheless.
Bear in mind that resident managers are employees, not independent contractors, of the owner or management company that hires them. That means that the managers are entitled to the benefits and protections of the minimum wage laws in the State of California and the employer needs to have a written agreement with the manager in conformity therewith.
Moreover, nearly all resident manager agreements which were entered into prior to January 1, 2015, or which do not take into consideration the new anti-discrimination laws, new sick leave laws, new cell phone laws and new minimum wage laws, should be updated, or better still, replaced with a newly drafted agreements in their entirety.
We have entirely too many laws in this great country. Whether they be enacted legislatively or created by judicial decisions of the Court, it would be wonderful if they were dramatically reduced in number or at least improved in clarity.
Unfortunately, AOA readers who are in the apartment business either as owners or management companies are often not viewed with favor by the Courts, the legislature or the media. For that reason, members of our industry need to fastidiously adhere to the multitude of laws which affect us. We cannot expect sympathy from the public or others if we violate them.
Dale Alberstone is a prominent litigation and transactional real estate attorney who has specialized in real property law for the past 38 years. He has been appointed to periodically serve as a judge pro tem of the Los Angeles Superior Court and is a former arbitrator for the American Arbitration Association. He also testifies as an expert witness for and against other attorneys who have been accused of legal malpractice.
Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell. An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity. You may Google “Dale S. Alberstone” for further background.
The foregoing article was authored on July 1, 2015. It is intended as a general overview of the law and may not apply to the reader’s particular case. Readers are cautioned to consult an advisor of their own selection with respect to any particular situation.
Questions of a general nature are warmly invited. Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 1900 Avenue of the Stars, Suite 650, Los Angeles, California 90067. Phone: (310) 277-7300.