Connect

LEGALLY SPEAKING: WHAT NOT TO DO IN 2023

Every January, we all sit down to reflect on the year behind us and look forward with resolutions for what we all will do in the future. While this is a helpful and time-trusted exercise, it is just as important for property owners to think about what they should not do in the coming year. Here are a few resolutions for owners and property managers to consider, as they move into 2023, to maximize their returns and minimize their liability:

First and foremost: don’t get cute about it. In most aspects of our lives, we are rewarded for our creativity and ingenuity. For property owners, that behavior often has the opposite effect. Rules setting limits for rents, on available causes for eviction, and on provision of housing services exist for a reason. While we may question those reasons, and those rules, we do not improve the situation by attempting to circumvent them. It is not a good idea, for example, to attempt to avoid a moratorium on rent-based evictions by inducing a renter to leave by reducing or altering housing services. Nor is it wise to do so as a means of avoiding limits on what rent can be charged.

Second, in a similar regard, don’t cut corners. Renters are entitled to basic housing services, as defined by law. This entitlement does not change if a renter has become a nuisance or is late in paying rent. Owners have remedies for each of those things independently and should pursue them. The answer is not to help ourselves to a seemingly more expedient resolution by reducing services or taking steps to induce a renter to leave “on his or her own.”

Third, don’t assume the worst in people. Crime dramas often remind

BY SCOTT FREEDMAN

us that our justice system is founded on the principle that we are all innocent until proven guilty. This principle should be similarly adopted in our dealings with renters. Unfortunately, some renters have seen fit to take advantage of COVID-era protections that were designed to help protect those in need. Property owners should not, however, treat their renters as though they have or are doing so, unless and until it is established with hard evidence. Even then, how a property owner uses such evidence can be a sticky proposition. But before that evidence is obtained, property owners should assume that those seeking out the protection of these rules have a legitimate need for it and act and respond accordingly.

Fourth, don’t assume that yesterday’s rules still apply. Property owners and managers may feel as though there has been a near-daily evolution in what they are allowed to do and not allowed to do for the past few years. And they’d be right about that! What this means for 2023 and beyond is that using last year’s lease or rent-increase notice or three- or 10-day notice, is not wise. Using an out-of-date form or document can have disastrous effects during a legal proceeding and can cause considerable delay before or after one begins.

Fifth, don’t wait until a claim comes in to confirm you have proper insurance coverage. Just as owners should not assume that yesterday’s notice is a good notice, they should not assume that yesterday’s insurance policy is any better. Changes in ownership structure, use of a property, or who interacts with the building’s occupants can all have impact on whether a policy’s coverage will be triggered in the event of a claim. Having proper insurance cover- age ahead of time and putting it in place for the proper people and/or entities, is key to minimizing personal liability for renter claims. The old adage, “you get what you pay for,” is equally applicable here – and property owners are wise to compare their options and spend a bit more for better or more coverage.

Lastly, while not specifically a “thing to do to avoid getting sued in 2023,” owners should not ignore the good and positive relationships they have with their existing renters. We have all heard horror stories these past few years, largely about those who have manipulated and abused rules designed for a very different purpose. But for every one of those stories, there are stories of good, honest and hard-working renters (some of whom have recently needed some assistance too) who continue to pay their rent on time and honor their obligation. There are rules and regulations that limit what property owners can’t do, and often little can be done about them. However, there is no prohibition on being thankful for the good ones out there, and property own- ers would be wise in 2023 to do what they can to preserve their relationships with them. That’s something we’re all allowed to do, and it may just lead to a better year ahead.

Scott Freedman is the managing shareholder of Zacks, Freedman & Patterson, PC, a full-service real estate law firm representing property owners throughout California, with offices in San Francisco, Oakland and Soquel (www.zfplaw.com).