Property Line Disputes and Easement Rights

| Lindsay Petrone
property line

Many property owners are unaware of where their property legally begins and ends which can lead to property line disputes.  In residential areas, owners often rely on historical use or the location of fences, especially when surveys are not conducted during property transactions.  In Wang v. Peletta (112 Cal.App.5th 478 (2025)), a survey revealed that a large portion of Peletta’s neighbor’s (Wang) retaining wall encroached onto Peletta’s property.  Further investigation revealed the wall was built without permits, violating county code, and Peletta refused to allow Wang access to make necessary repairs.  Wang claimed that they had an easement for the wall to remain on the Peletta’s property and related access rights to make the repairs, which the lower court denied and Wang appealed.

Initially, Wang argued they had acquired a prescriptive easement through continuous and open use of the property.  A prescriptive easement requires the claimant to prove (1) use for five years, (2) open and notorious use, (3) continuous and uninterrupted use, (4) use hostile to the owner, and (5) under a claim of right.  The court in Wang ruled that even if these elements were met, Wang did not acquire a prescriptive easement because the wall violated county law and constituted a public nuisance.  According to legal precedent, a prescriptive easement cannot be granted for property used in a public nuisance where the action is brought by a citizen who has suffered special injury in consequence thereof.  Wang contended that this rule applied only to continuing and not permanent public nuisances.  They argued the wall was a permanent encroachment and the three (3) year statute of limitations for nuisance claims had expired.  However, the court in Wang disagreed, ruling the nuisance could be abated by the nature of the notice of violation requiring abatement (either by bringing the wall into compliance or removing it entirely).  Therefore, it was deemed a continuing nuisance rather than a permanent one.  As such, the statute of limitations did not apply and the prescriptive easement denied.

Wang then alleged that if the easement was not obtained by prescriptive use the court should grant an equitable easement out of fairness.  A court has discretion to grant an equitable easement if the person seeking the easement evidences all three elements: (1) the trespass was innocent and not willful or negligent, (2) the easement will not cause irreparable injury to the public or the property owner and (3) the hardship to the trespasser from denying the easement is greatly disproportionate to the property owner’s from the continuance of the easement.  Courts approach the issuance of equitable easements with an abundance of caution and resolve doubtful cases against the easement.  Here, the court found that the encroachers were aware that permits were required to build the wall, so the trespass was not innocent.  With the first condition unmet, the court denied the equitable easement without considering the other factors.

The Wang v. Peletta case highlights key points about prescriptive and equitable easements.  It confirms that an easement cannot be granted for property used in violation of law (such as a public nuisance), but does not clarify whether private nuisances can ever ripen into easements.  The case also clarifies the distinction between permanent and continuing nuisances—if a structure is possibly removable, the nuisance may be considered continuous and the statute of limitations for nuisance claims never runs.  Property owners should be aware of the potential legal consequences if their structures encroach on neighboring property and consider whether their encroachments could be classified as continuing nuisances.

 

Authored by Reuben, Junius & Rose, LLP Partner, Lindsay Petrone.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

Potential Expansion of All-Electric Building Requirements

| Kaitlin Sheber
renovations

Last week, Supervisor Mandelman introduced all-electric legislation that would require many buildings undergoing “major renovations” to convert to all-electric. The legislation would expand the City’s current prohibition on new construction of mixed-fuel buildings, which has been in place since 2021.

Under the proposed ordinance, after January 1, 2026, the Building Official can only accept permit applications to conduct major renovations for all-electric buildings or buildings that will be converted to all-electric.  Should this legislation be approved, those seeking to perform major renovations that do not fall under one of the five exceptions below have until January 1, 2026 to submit and have DBI accept a building permit application, or the project will be subject to the new all-electric building requirements.

The legislation provides for the following exceptions to the all-electric requirement:

  1. Where it is physically or technically infeasible to convert to all-electric design;
  2. Projects that retain gas to serve a restaurant;
  3. Change of use projects from nonresidential to residential units. This exception expires after January 1, 2031;
  4. Where the building replaced or upgraded a major system fueled by natural gas within the last 5 years; or
  5. 100% affordable housing projects until January 1, 2027. Between January 1, 2027 and January 1, 2028, 100% affordable projects where the cost of converting to all-electric conflicts with the project’s ability to meet its housing goals will be exempt. This exception expires after January 1, 2028.

As we previously reported, the Ninth Circuit earlier this year struck down similar legislation in the City of Berkeley that prohibited the use of natural gas in newly constructed buildings, finding that the law was preempted by the Energy Policy and Conservation Act (“EPCA”). This proposed legislation would provide a carveout consistent with the Ninth Circuit’s decision, amending the definition of all-electric buildings to include buildings with natural gas infrastructure solely dedicated to serve appliances covered by the EPCA and that comply with the Department of Building Inspection’s design guidelines for electric-ready buildings. This new language appears to address the preemption issue for all-electric legislation.

The legislation is under consideration by several legislative bodies and is subject to change. We will continue to monitor as the City considers this proposed legislation.

 

Authored by Reuben, Junius & Rose, LLP Attorney, Kaitlin Sheber.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

San Francisco Legalizes Condo Sales of ADUs

| Jay Drake
condominium

San Francisco has adopted a significant ordinance implementing Assembly Bill 1033 (Ting, 2023) that opens the door to a new form of homeownership: allowing certain accessory dwelling units (ADUs) and their associated primary residences to be sold separately as condominiums.

Unanimously approved by the Board of Supervisors on July 8, 2025, the ordinance (File No. 241069) amends the Planning and Subdivision Codes to allow subdivision and separate conveyance of eligible ADUs—primarily new or detached units on small lots—marking a major shift in local land use policy. The ordinance is now pending the Mayor’s signature.

Expanding Housing Access Through ADU Ownership

ADUs have been promoted as a way to introduce low-impact housing into established neighborhoods, but restrictions on resale and rental use have limited their appeal. To address this, the State Legislature enacted AB 1033, effective January 1, 2024, allowing cities to authorize the sale of ADUs and primary dwellings as separate condominiums. San Francisco is among the first cities in the state to implement this authority.

Summary of the Ordinance

The ordinance:

  • Adds Planning Code Section 207.4, establishing the process by which certain ADUs may be sold separately from their primary residences as condominiums;
  • Amends Planning Code Sections 207.1 and 207.2 to clarify the circumstances under which ADUs may be subdivided and established as condominiums;
  • Adds Subdivision Code Sections 1316 and 1396.8, aligning subdivision procedures and providing an exemption from the condo conversion lottery.

Planning Code Section 207.4 – Authorizing Separate Sale for Certain ADUs

New Planning Code Section 207.4 permits the separate sale or conveyance of certain ADUs and their associated primary residences, under certain conditions. The ADU must have been approved under the state ministerial program in Planning Code Section 207.2 or former Section 207(c)(6). Although Section 207.4 does not detail subdivision procedures, it requires compliance with the Subdivision Code. In practice, this means separate sales must meet the criteria in Subdivision Code Section 1316.

Eligibility Under Planning Code Section 207.1 (SF Local Program)

ADUs developed under the City’s local, discretionary program in Section 207.1 are generally not eligible for separate sale under Section 207.4. A narrow exception is for an ADU located in a building consisting entirely of condominiums as of July 11, 2013, which has had no qualifying evictions under the SF Rent Ordinance since July 11, 1996.

Eligibility Under Planning Code Section 207.2 (State-Mandated Program)

ADUs approved under the City’s state-mandated, ministerial program (Planning Code Section 207.2 or former Section 207(c)(6)) may qualify for separate sale under Planning Code Section 207.4, provided that the subdivision complies with Subdivision Code Section 1316. Those requirements are summarized below.

Subdivision Code Section 1316 – Procedural and Eligibility Requirements

Subdivision Code Section 1316 establishes the substantive and procedural requirements for subdividing an ADU and its associated primary residence for separate sale as condominiums. To qualify, the project must satisfy the following:

  • An application to construct the ADU must have been submitted on or after May 1, 2025;
  • The lot proposed for subdivision must contain four or fewer existing dwelling units;
  • The ADU must either be (A) a newly constructed, detached unit on a lot with an existing single-family home or existing condominiums, and (i) approved under the City’s state-mandated, ministerial approval programs in Planning Code Section  2 or former subsection 207(c)(6), and (ii) not created by converting space within any existing structure; or (B) an attached or detached unit that is part of a new single-family home or new condominium project, and is a new construction approved under the City’s state-mandated, ministerial approval programs in Planning Code Section  207.2 or former subsection 207(c)(6).
  • Junior ADUs (JADUs) are not eligible;
  • All structures must comply with applicable Planning and Building Code standards;
  • Additional Requirements: The project must also comply with:
    • The Davis-Stirling Common Interest Development Act;
    • The California Subdivision Map Act;
    • San Francisco’s general subdivision and condo mapping procedures and standards;
    • A safety inspection of the ADU must be conducted as evidenced through a certificate of occupancy or HUD-compliant inspection and report;
    • Lienholder (i.e., lender) consent (signed and recordable);
    • HOA approval (if applicable); and
    • Notices to utility providers and disclosures regarding financing implications.

Subdivision Code Section 1396.8 – Exemption from Condo Conversion Lottery

Subdivision Code Section 1396.8 exempts qualifying ADU/primary unit projects from San Francisco’s long-standing condominium conversion lottery. This exemption applies only if the project meets all the criteria of Section 1316 and is not subject to disqualifying evictions under Subdivision Code Section 1396.2.

Conclusion

Planning Code Section 207.4 and Subdivision Code Section 1316 together create a new legal framework for subdividing and selling certain ADUs as condominiums. While the ordinance opens real opportunities for new forms of homeownership, its eligibility limits are strict and require careful legal and title review.

We are available to assist with:

  • Project structuring and subdivision applications;
  • CC&R and condominium plan drafting;
  • Davis-Stirling and Subdivision Map Act compliance;
  • Title and lienholder consent issues.

Please contact us to discuss how this ordinance may apply to your property or development.

 

Authored by Reuben, Junius & Rose, LLP Partner, Jay Drake.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

AB 130 – A Seismic Shift For CEQA?

| Andrew J. Junius and Melinda Sarjapur
AB 130

The big news this week is the signing of the California budget, which includes an important reform of CEQA as it applies to infill housing projects.  In recent years, the California legislature has been slowly chipping away at CEQA by creating a variety of streamlining programs that make certain types of housing approvals ministerial and therefore exempt from environmental review (ex: SB 423 / SB 2243 / AB 2162 / SB 684).  While these new laws were a great starting point in removing the CEQA barriers that have stymied housing production for decades (and provide useful project streamlining and other benefits), they are complex and limited to specific project types or locations, leaving out many urban infill sites.

AB 130, signed into law by the Governor on Monday, reaches directly into CEQA and creates a broad new statutory exemption that applies to urban infill housing development projects.  However, it is important to understand that AB 130 is not a project streamlining program.

The new law adds section 21080.66 to the Public Resources Code.  To qualify for this exemption, the project site must:

  • Not be more than 20 acres in size (for Builder’s Remedy or certain emergency shelter projects, 5 acres);
  • Be located within the boundaries of an incorporated municipality, or an urban area as defined by the US Census Bureau;
  • Has been previously developed with an urban use; have at least 75% of the perimeter of the site adjoining with urban uses; or have 75% of the area within a quarter-mile radius of the site be developed with urban uses;

Once the site qualifies, the project will qualify for this exemption if it meets the following criteria:

  • The project is consistent with the applicable general plan and zoning ordinance, including applicable local coastal programs.  Use of the state density bonus cannot be asserted as grounds for inconsistency.  Importantly, this consistency determination is not left to technical details and the city planners.  “If there is substantial evidence that would allow a reasonable person to conclude that the housing development project is consistent” with local zoning and planning laws, it will be considered consistent;
  • It must be dense enough; at least 1/2 of the applicable density set for in Government Code 65583.2(c)(3)(B) must be provided – this is typically 30 du/acre for metropolitan jurisdictions;
  • The site meets environmental screening criteria provided under SB 35/423, including generally that it not be located on a site that is in certain environmentally-sensitive areas of the Coastal Zone; prime farmland; wetlands; a high fire hazard severity zone; a hazardous waste site (unless cleaned); a delineated earthquake fault zone; a special flood hazard area; a regulatory floodway; subject to a community conservation plan or conservation easement; or contain a habitat for protected species;
  • Cannot require demolition of an historic resource listed on a national, state, or local historical register before the date that an SB 330 preliminary application was submitted;
  • If located within 500 feet of a freeway, certain design and air filtration requirements apply; and
  • No portion of the project can be designated for use as a hotel, motel, bed-and-breakfast Inn, or other transient lodging.

AB 130 does require tribal consultation.  This has been an issue in the implementation of SB 423 (formally SB 35).  The weakness of SB 423 was that the tribal consultation process was not structured enough to provide a clear ending to that process or guideposts for required mitigating conditions.  AB 130 attempts to solve that problem by including clear, statutory deadlines that are either met within a specific reasonable time frame or default mitigation measures would be imposed allowing the development to qualify for exemption.

Certain labor standards apply.  100% affordable projects must pay construction workers prevailing wages.  Projects greater than 85 feet in height must pay prevailing wages and utilize a skilled and trained (union) workforce.  And in San Francisco specifically, projects with 50 units or more are generally required to pay construction workers prevailing wages, even if they are less than 85 feet in height.

The new legislation allows for CEQA exemption only.  On its own, it would not provide for a streamlined design review process, increase in allowable density or reduction of applicable development standards as is the case with some other recent state-law housing programs.  However, it can be combined with state density bonus and the Housing Accountability Act to increase density and reduce local discretion.

For decades, CEQA has been a major, and in many cases fatal, barrier to the construction of needed housing.  AB 130 may finally break through and free infill projects from this burden.

AB 130 was signed into law on June 30, 2025 as part of the state budget legislation and is currently in effect.  Also signed into law on Monday were other helpful CEQA changes that we will be reporting on in the coming weeks.

 

Authored by Reuben, Junius & Rose, LLP Partners, Andrew J. Junius and Melinda Sarjapur.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

AG Instructs Localities to Permit EV Stations

| Tara Sullivan
charging

If you own an electric vehicle, one main concern is finding a public charging station.  While California has lead the nation with the number of electric vehicles sold (25.1% of all vehicle sales as of January 2025), and also leads with the number of chargers in the state (178,549 public & shared chargers as of March 2025), getting an electric vehicle (“EV”) charging station approved has proven to be a challenge.  The biggest roadblock EV charging station companies face are local jurisdictions and their Planning-Zoning codes.

As a refresher, the state legislature passed laws that mandated local jurisdictions create a streamlined approval process for EV charging (AB 1236 (Chiu, 2015) and AB 970 (McCarty and Chiu, 2021) adding Sections 65850.7 and 65850.71 to the California Government Code (together referred to as “charging streamlining laws”)).

Many jurisdictions have implemented a streamlined permit review system through their building & permitting departments.  Others, such as San Francisco, have updated their Planning codes to allow certain sites, such as former gas stations, to be converted to EV charging sites.

However, the majority of jurisdictions throughout the state either do not have EV charging stations in their Planning-Zoning codes, require a Conditional Use permit or other discretionary review, or are not permitted altogether, despite the state laws requiring the opposite.

To assist, the Attorney General issued a Legal Alert in March 2025.  Titled “Electric Vehicle Charging Station Permit Streamlining Requirements” (OAG 2025-001), it is a “reminder” to local California jurisdictions of the state laws to streamline and expedite the permitting of EV charging stations.

The Legal Alert clearly outlines what the state legislature intended with AB 1236 and AB 970.  It also provides examples of how jurisdictions have been out of compliance.  Importantly, the alert specifies:

  1. EV streamlining laws supersede all local zoning designations and ordinances
    • EV charging stations can go in any zoning district, whether or not they are currently zoned for them or are expressly prohibited.
    • Meaning, they are permitted throughout a locality’s boundaries.
  2. EV charging laws apply to both primary and secondary uses of EV chargers
    • The EV streamlining laws apply to all charging station installations, regardless of whether the EV stations are for personal, public, or fleet use; or whether they are for light-medium, or heavy-duty vehicles.
    • EV charging facilities are permitted as-of-right.
  3. No discretionary review-applications of EV charging stations
    • No Conditional Use permits, no design review, variances, or other use permits are allowed.
    • Localities cannot consider aesthetics / design.
  4. Accelerated timeline for EV charging station review-permit issuance
    • Applications shall be deemed complete within 5 or 10 days from submittal (depending on # of chargers proposed).
    • After deemed complete, locality has 20 or 40 business days to approve the permit (depending on # of chargers proposed).
    • This includes any Planning-Zoning review.
  5. Only specific health and safety impacts can be reviewed and conditioned by local jurisdictions
    • A locality must specify in writing that, based on substantial evidence, the charging station “would have a specific, adverse impact upon the public health or safety.”
    • Specific, adverse impact = “a significant, quantifiable, direct and unavoidable impact, based on objective, identified, and written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete.”

The Legal Alert states that components of a proposed installation that are integral for the functioning of the charging station (equipment, paving, etc.) are included in the streamlining process.  Design guidelines that implicate health and safety, such as safety-related lighting and clearance, are permissible for a locality to impose under Section 65850.7.  In addition, items such as bathrooms, accessory structures, etc., that are not necessary to the EV charging are subject to a locality’s zoning processes.

The Legal Alert clearly states how local jurisdictions should (and should not) be reviewing and approving EV charging installations.  It is meant to push local jurisdictions to update their processes and stop imposing illegal conditions and timelines for review of EV charging installations.  The Legal Alert’s written guidance will help EV charging companies and individuals obtain permits in a timely and efficient manner.  Hopefully this will open up approvals throughout the state so that the number of charging stations rise, furthering the use of electric vehicles.

 

Authored by Reuben, Junius & Rose, LLP Partner, Tara Sullivan.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

New Law Requires HOAs to Repair Utilities

| Jay Drake
HOAs

California Senate Bill 900 (SB 900), effective January 1, 2025, introduces significant changes to the responsibilities of homeowners associations (HOAs) in common interest developments, particularly condominiums.  The legislation mandates that HOAs take immediate action to repair utility service interruptions originating in the project’s common area, such as gas, heat, water or electrical service, even if the issue extends into individual units.  Repairs must commence within 14 days of the disruption.

Key Provisions Impacting Condo Owners and HOAs

  1. Expanded Repair Responsibilities.  SB 900 amends Civil Code Section 4775, part of the Davis-Stirling Common Interest Development Act, to require HOAs to repair or replace utility services that begin in the common area of the project, even if the issue extends into individual units – unless otherwise provided in the project’s declaration, or unless the utility service that failed is required to be maintained, repaired, or replaced by a public, private, or other utility service provider.  This includes utilities like gas, heat, water or electrical service.  The HOA must commence repairs within 14 days of the service interruption.
  1. Emergency Assessments and Loans.  If an HOA lacks sufficient funds in its reserve account to cover these repairs, SB 900 allows the HOA board of directors to levy emergency assessments without a vote of the HOA members.  Additionally, HOAs can secure loans for necessary repairs without member approval.
  1. Reserve Study Requirements.  SB 900 also amends Civil Code Section 5550 to require that utility lines be explicitly listed as line-item components in future HOA reserve studies.  This requirement ensures proper financial planning for maintenance and replacement of utility infrastructure.

Controversial Aspects of SB 900

One concern with the new law is the potential financial burden on homeowners.  The ability of HOA boards to levy emergency assessments without a membership vote means that individual homeowners could face significant costs for repairs.  The legislation grants HOA boards the authority to declare an emergency and initiate repairs without a membership vote, raising concerns about the concentration of decision-making power and the potential for misuse.

Steps HOAs Can Take in Response to SB 900

HOAs should examine their governing documents to determine the extent of their responsibility for utility repairs.  If the documents are silent on this matter, SB 900’s provisions will apply.  HOAs must ensure that utility lines are included as line-item components in their reserve studies.  This will facilitate proper financial planning for maintenance and replacement of utility infrastructure.  HOAs should develop clear protocols for responding to utility service interruptions, including timelines for initiating repairs and procedures for levying emergency assessments or securing loans if needed.

SB 900 represents a shift in the responsibilities of homeowners associations in California, particularly concerning the maintenance and repair of utility services.  While the intent is to ensure timely repairs and minimize disruptions for residents, the law has introduced concerns regarding financial burdens on homeowners and the authority of HOA boards.  Condominium owners and HOAs should closely examine the implications of SB 900 to understand how it affects their rights and obligations.

 

Authored by Reuben, Junius & Rose, LLP Partner, Jay Drake.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

Major Builder’s Remedy/Housing Litigation Win

| Thomas P. Tunny
housing element

In a litigation result that will have a number of positive consequences for developers and housing advocates, the City of La Canada Flintridge (“City”) last week moved to dismiss its appeal of a closely-watched “Builder’s Remedy” case. After the appeals court ordered the City to post a $14 million bond on appeal, the City chose not to do so and will now comply with the trial court decision and process a housing application to build an 80-unit apartment project (“Project”).

Readers may recall us reporting on this litigation previously. (California Housing Defense Fund v. City of La Cañada Flintridge (L.A. Sup.Ct. No. 23STCP02614 and 2DCA No. B338985).) In May 2023, the City Council determined the Project did not qualify for the Builder’s Remedy, in part because the SB 330 Preliminary Application was filed after the date that the City Council (retroactively) self-certified its Housing Element update. Later that month, the City informed the Project developer that its SB 330 Preliminary Application was complete, but maintained its position that the Builder’s Remedy did not apply to the Project.

The developer petitioned the Los Angeles Superior Court for a writ of mandate, alleging that the City violated the HAA, State Housing Element Law, and other state laws. The Superior Court granted the writ, making four key rulings:

  1. the City cannot “self-certify” its housing element;
  2. the Builder’s Remedy is “vested” on the date a complete SB 330 preliminary application is submitted;
  3. the Builder’s Remedy is available until any required rezoning is completed; and
  4. the City unlawfully “disapproved” the Builder’s Remedy Project.

The Court’s ruling in effect means a City can’t back-date its Housing Element compliance to avoid approving a Builder’s Remedy project.

The Court of Appeal’s decision to require such a substantial bond (the City’s entire budget is $42 million) not only reinforces the pro-housing intentions of the Builder’s Remedy, Housing Element, and HAA rules, but also puts cities and counties on notice with respect to processing housing projects. In this case, not only did the City lose the litigation, but it likely will have to pay the petitioners’ attorney’s fees, and the developer may recover millions in losses incurred due to the appeal. Local jurisdictions seeking to continue old strategies of baselessly denying housing projects will have to think twice going forward about the potential costs.

 

Authored by Reuben, Junius & Rose, LLP Partner, Thomas P. Tunny.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

Impacts of Commercial Tenant Protection Act

| Lindsay Petrone
QCT

The Commercial Tenant Protection Act, which was passed by the California legislature in 2024 and took effect as of January 1, 2025, expanded certain protections which already may benefit residential tenants to include certain classes of commercial tenants. Specifically, tenants who are (i) microenterprises (those businesses with 5 employees or less and have limited access to capital or loans), (ii) restaurants with less than 10 employees, and (iii) nonprofit entities with less than 20 employees, all collectively known as “Qualified Commercial Tenants” (“QCT”). In order to qualify as a QCT, a tenant must annually represent to its landlord that it is one and attest to its number of employees as within the threshold.

If a tenant is deemed a “Qualified Commercial Tenant,” then it can be afforded several statutory rights which other commercial tenants do not enjoy. First, a landlord cannot raise the rent of a QCT without first providing a statutorily required written notice to the QCT and waiting a certain period after delivery of that notice. If the rent is being raised less than 10% above the lowest rental amount in the last twelve months, then the notice period is 30 days. However, if the rent is being increased by 10% or more from the lowest rental amount in the last 12 months, then the QCT must be given at least 90 days before the rental increase can take effect. We advise commercial landlords timely serve their QCTs with rental increase notices in advance of any stated changes in the lease, otherwise the rental increase might not be enforceable until the notice and time period has expired.

Additionally, month to month leases with a QCT shall automatically renew for an additional month term, unless the landlord delivers a specific written notice to such tenant – 60 days in advance of the termination date if the tenant has been there at least one year, and at least 30 days if the tenant has been there less than one year. Alternatively, a QCT is only required to give that same landlord 30 days advance written notice of termination in either instance.

The California legislature also wanted to make the operating expense reimbursement process more transparent for QCT leases. As such, a new statute requires landlords to disclose the operating expense process to their QCTs and ensure that the method of cost allocation to them is fair. Further, certain costs cannot be recovered like those reimbursed to landlord by a third party and those which were not incurred in the prior 12 months or reasonably to be incurred in the ensuing 18 months.

Finally, the Legislature clarified that any QCT negotiating their lease in Chinese, Spanish, Tagalog, Vietnamese or Korean shall have their lease translated and signed in that negotiated language. If it is not translated, then that lease could be rescinded by the affected tenant. Please note that the above is a general overview and there are additional conditions and requirements for compliance with the above laws which cannot be stated here due to breadth. As such, we recommend these new laws be reviewed prior to sending any documentation to a QCT.

As a result of the Commercial Tenant Protection Act, commercial landlords should be aware of these rights afforded to QCTs and ensure they comply with any notice, disclosure and timeline obligations. There are penalties for failing to comply with these laws, including the prospect of punitive damages in certain cases if found to be a willful violation. Landlords would be best served by doing their due diligence in understanding if a tenant is a QCT and these restrictions apply. On the other side of the coin, tenants should be aware of these laws and ensure they timely notify landlords of their status to take advantage of these additional protections.

 

Authored by Reuben, Junius & Rose, LLP Partner, Lindsay Petrone.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

Supervisors Consider Suspension of Empty Homes Tax

| Kaitlin Sheber
tax

Legislation has been introduced in San Francisco that would suspend the imposition of the “Empty Homes Tax” until a final decision is reached in litigation against the tax, promising certainty for taxpayers as the courts decide the legality of the tax. Aimed at bringing residential housing stock back into the local rental market, the Empty Homes Tax was adopted by San Francisco voters with the passage of Measure M in November 2022 and imposes a tax on vacant residential units beginning in the 2024 tax year, with payments generally due beginning in April 2025.

As we previously reported on November 7, 2024, a handful of property owners in the City affected by the Empty Homes Tax, in addition to various interested real estate organizations, filed a complaint in San Francisco Superior Court challenging the Empty Homes Tax. On November 26, 2024, the Court issued an order prohibiting the City from enforcing or administering the Empty Homes Tax as it granted judgment in favor of Plaintiffs based on the tax’s violation of both the California and the US Constitution. Following the Court’s decision, an appeal was filed by the City on December 6, 2024.

To provide certainty for both taxpayers and the City and avoid placing an undue burden on property owners, the City’s proposed legislation would suspend the imposition of the Empty Homes Tax, retroactive to the 2024 calendar year. The Empty Homes Tax would be set to be reinstated to first apply in the tax year immediately following the calendar year of a final decision in the ongoing litigation.

The proposed ordinance requires a supermajority vote of two-thirds of the Board of Supervisors for approval. If the tax is not suspended, it would place an undue burden on property owners that may have residential vacancies from several years prior, may be administratively difficult and financially burdensome for the City to collect, and would add significant uncertainty for both the City and property owners throughout the appeal. If passed and once effective, the proposed ordinance would be retroactive to January 1, 2024. We certainly hope the City will pass this commonsense ordinance quickly.

 

Authored by Reuben, Junius & Rose, LLP Attorney, Kaitlin Sheber.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

Objective Standards for Housing Projects – The Next Battleground?

| Andrew J. Junius
housing

In November of last year, to little fanfare, the San Francisco Planning Department presented to the Planning Commission its new Citywide Objective Design Standards. San Francisco, like cities across the state, are grappling with the brave new world of objective standards as required by recent housing legislation out of Sacramento. As the dust settles around the new and improved Housing Element process, the next battleground will be over individual projects, and each jurisdiction’s take on how to implement “objective standards.”

The need for objective standards is straightforward: as the state took dramatic action to jumpstart housing production by removing local zoning barriers, the focus was on eliminating local discretion for qualifying housing projects. In other words, planning commissions and city councils could no longer determine that a proposed housing project, while compliant with all local zoning, density and height controls, simply did not fit into the neighborhood character, was too big, blocked views, and generally displeased existing residents. That discretion – used by cities across the state – is why California doesn’t have enough housing. For decades, local residents have been leaning on their city officials to stop these projects. And in many cities they have succeeded.

No longer able to defer to local discretion, planning departments were charged with making sure that housing projects would only be evaluated with respect to objective standards. What is an objective standard? The California Housing Accountability Act (amended in 2017) defines objective standards as those that “involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criteria available and knowable by both the developer, applicant or proponent and the public official before submittal.”

This created an immediate challenge to planning departments across the state. While all city planning and zoning codes do have objective standards (i.e., numbers like height limits, floor area ratios, and the like), they also included a significant number of discretionary standards and processes. One would think that removing these discretionary provisions from planning codes and simply leaving the objective numbers would be a straightforward process. In other words, if a housing project in a certain zoning district required a conditional use authorization previously (a conditional use approval requires a Planning Commission to make very subjective findings regarding whether the project will be necessary and desirable and otherwise good for the neighborhood…) it should be a simple matter to remove that requirement and get on with it.

In many instances, that has simply not been the case. Discretionary and objective standards and procedures for many cities have been woven tightly together and cannot be easily untangled. At times there is even a debate over what is objective and what is subjective. And of course, such changes in local planning codes require legislative action by city councils.

Some California jurisdictions have attempted to comply with relatively minor changes to their code, claiming that these are in fact, “objective”. However, careful review of these minor changes reveals that there are still portions of their code purporting to protect views, “harmonize” the development with surrounding character, etc., etc. The subjective criteria that remain are not objective and would not pass muster if challenged.

Other jurisdictions, including San Francisco and Marin County, have taken a very different approach. In these cases, the Planners have gone to extraordinary lengths to provide an objective standard for virtually every aspect of a development, from site design, height limits, building modulation, etc., down to the more nuanced details for lobby and building entrance design and location, window location and design, façade treatment, building articulation, blind walls, and more. Marin County’s form-based code clocks in at a formidable 323 pages of objective standards.

It’s hard to predict how this will all work out in the months and years ahead. Now that the Housing Element battles are for the most part over (or at least not at full boil), the project-by-project housing battles have begun. We commend the state legislature’s efforts to prioritize housing production the only way it can: by removing the ability of cities to say no to qualifying housing projects. We hope that cities across the state will see the need for housing as critical and will work to implement these state laws as quickly and efficiently as possible.

 

Authored by Reuben, Junius & Rose, LLP Partner, Andrew J. Junius.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.