The Real News
RELAW, APC
January, 2016
New Lending Rules Increasing Delays in Closings
Last month, the National Association of Realtors surveyed more than 2,600 realtors to get some information of how often their transactions closed on time in the previous three months.  The survey found that 32 percent of the transactions were delayed.

When asked why a delay occurred, the realtors cited three primary causes: (1) buyer financing issues; (2) home inspection issues; and (3) appraisal issues.  Indeed, of the delays noted, 46 percent were blamed on financing issues, up from 40 percent as noted in a similar survey in the first half of 2015.  Ellie Mae also released a survey this month which indicates that the average residential loan was taking 49 days to close in December of 2015.  This was up from 42 days in a similar survey in December of 2014.
These reports of delays are a continuation of those reported late last year.  Last December the National Association of Realtors reported that existing home sales were down 10.5% in November of 2015.  The chief economist for the National Association of Realtors blamed the decline on the new lending regulations for residential lending.
It is no surprise that these new rules, which mandate waiting periods and impose greater underwriting burdens on lenders would cause the financing process to take a little longer.  In fact, these delays are exactly what the government wanted.  Their stated purpose in the regulations was to give consumer more time to think about their financing decisions.
Symbol of law and justice law and justice concept.
Case of the Month
Chen v. Craft
The case involves a tenant who was running an Airbnb business out of her rental unit.  Airbnb is a website for people to list, find, and rent lodging.  These rentals tend to be short term (less than 30 days) and are often for rooms in other people's homes.  Both were the case here, as the tenant was allowing short term occupancy of a loft in the rental unit.
That unit was a rent-controlled premise located in Venice, California pursuant to a July 19, 1997 written agreement.  The landlord in this case was the successor in interest to the original landlord who had signed the lease back in 1997. The original lease described the unit as a one bedroom with loft.  The loft, however, was not actually permitted living space.  In 2009, the prior landlord had signed a modification of the lease permitting the tenant to operate an Airbnb business at the location.
In this case the new landlord was suing to evict the tenant for so operating the Airbnb business on the grounds that short term subletting of the rental unit was illegal based upon the zoning of the property and because use of the loft as a sleeping area was illegal as it was not permitted living space.
The tenant opposed on the grounds that the lease permitted her to operate the business, that she had obtained a City of Los Angeles Permit to collect the Transient Occupancy Tax, and that she had not been cited for by the city for any illegal use.
The landlord filed a motion for summary judgment and the court granted the motion.  The tenant appealed.
The appellate court affirmed the trial court's ruling, finding that the landlord established each of the elements of unlawful detainer based on her theory of illegal purpose, and defendant failed to raise a triable issue as to any element or affirmative defense with regard to this theory. Code of Civil Procedure section 1161 sets forth numerous grounds giving rise to a landlord's right to evict in unlawful detainer, including that based upon illegal purpose.  In addition, Los Angeles's rent control ordinance provides that a landlord may bring an action to recover possession of the premises if the tenant is "using, or permitting" the premises "to be used for any illegal purpose." (LAMC ยง 151.09(A)(4).)  The lease addendum authorizing use of the unit as an Airbnb business did not help the tenant because the addendum constituted an illegal contract in violation of existing regulations, and was therefore void and unenforceable.
HOAs & Landlords Required to Permit Clotheslines

The environmental movement has won another battle in California; they've brought clotheslines back in an attempt to save energy.  As such, California is now a "right to dry" state.
The new law, which went into effect January 1st of this year, voids provisions in HOA governing documents that effectively prohibit or unreasonably restrict an owner's ability to use a clothesline or drying rack in the owner's backyard.  The HOA can establish reasonable rules and restrictions governing clotheslines or drying racks.  The law applies only to backyards that are designated for exclusive use of the owner.  In the law, "clotheslines" and "drying racks" are specifically defined to exclude balcony, railing, awning, or other parts of a structure or building.
Similar restrictions are also put on landlords under the law who must also permit a tenant to utilize a clothesline or drying rack approved by the landlord in the tenant's private area (in or outdoor). The clothesline or drying rack cannot interfere with the maintenance of the rental property nor can they create a health or safety hazard, cannot block doorways, or interfere with walkways or utility service equipment.  Further, the clotheslines cannot be affixed to the building without the landlord's consent and the landlord can impose reasonable time and location restrictions.  Like with HOAs, a balcony, railing, awning, or other part of a structure or building does not qualify as either a clothesline or a drying rack.

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Jennifer Felten, Esq., Principal & Editor
(805) 265-1031
[email protected] 
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