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California Continues to Trample Property Owners’ Rights

Posted on 01. Jul, 2019 by in all, Magazine Articles

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The below two cases have been filed by Pacific Legal Foundation (PLF) on behalf of property owners.

Government Can’t Force Tenants for Life

Mr. Pakdel is a small business owner in Ohio. In 2009 he bought what’s known as a “tenancy in common” (TIC) apartment in San Francisco and leased it to a residential tenant. As part of the purchase, Pakdel signed an agreement with the other owners to convert the building’s six units into condominiums. But the City of San Francisco requires that property owners doing this conversion must offer lifetime leases to any tenants. Rather than allow the city to trample his property rights by dictating the use of his own property, Pakdel is fighting the unconstitutional mandate in federal court.

Mr. Pakdel is an engineer who is a partial owner of a small manufacturing company in Northeast Ohio and spent a large part of his retirement savings toward purchasing this property with a hope that he could live there. In 2009, he bought a tenancy in common (TIC) apartment in San Francisco and rented it out to a residential tenant. As part of the purchase, Pakdel signed an agreement with the other owners to follow necessary steps to convert the building’s six units into condominiums.

Pakdel and the other owners eventually pursued conversion plans in 2015—two years after the city passed a Lifetime Lease Requirement mandating that property owners who convert TIC apartments to condos offer lifetime leases to any tenants, including Pakdel’s. Pakdel wants to leave open the possibility of using the condo himself in the future and offered to buy the tenant out of the lease. The tenant did not agree to a reasonable amount and offered to buy the property several hundred thousand dollars below its market value.

PLF represents Pakdel in appealing a federal district court ruling striking down his claims that the Lifetime Lease Requirement violates the following constitutional protections:

  • The Fifth Amendment Takings Clause because it takes away Pakdel’s right to occupy his home and gives it to the tenant—for life.
  • The Fifth and Fourteenth Amendments because the requirement interferes with Pakdel’s fundamental right to privacy in his home.
  • The Fourth Amendment because it unreasonably seizes Pakdel’s property.

Moreover, this type of land use restriction makes it more difficult and more expensive to own a home in San Francisco—which is already the most expensive real estate market in the country. San Francisco needs more homeowners, not fewer. And certainly not onerous legislation which drives up real estate prices for everyone.

What’s at Stake?

  • Ownership with no say over your tenants is not ownership at all. By forcing Mr. Pakdel to agree to a lifetime lease, San Francisco has undercut an essential part of his home ownership.
  • San Francisco’s Lifetime Lease Requirement drives up real estate prices for everyone, in the most expensive real estate market in the country.

Marin County Punishes Elderly Property Owners with Unconstitutional Fees

When Dart and Esther Cherk needed to supplement their retirement income, they decided to split a three-acre vacant lot in Marin County that had been in the family for six decades in order to sell both halves. As a condition of the lot split, however, the county demanded that they pay $40,000 as an “affordable housing” fee. This condition is unconstitutional because the Cherks are not causing the lack of affordable housing; in fact, by selling buildable lots, they are mitigating it. Worse, the county singled out the Cherks; other neighbors did not have to pay the fee. The Cherks paid the fee under protest and PLF now represents them in a lawsuit to strike down the condition and get their money back.

A Marin County ordinance requires property owners who divide small lots to pay a fee to the county for the purpose of creating affordable housing. The Cherk family has owned a three-acre vacant lot in the county for 60 years. When the Cherks needed to supplement their modest retirement income, they looked to sell their primary asset (other than their Mill Valley home, where they have lived since 1959). They asked permission from the county to split the lot into two parcels, so they could sell them separately. The county conditioned the permit on the Cherks’ payment of $40,000 for “affordable housing.” The county demanded this fee without showing any kind of relationship between the Cherks’ project and the county’s lack of affordable housing, much less the “essential nexus” required by Nollan v. California Coastal Commission.

The Cherks tried to work with county officials for over a decade and ultimately paid the fee under protest. They had to mortgage their home to come up with the money. To add insult to injury, the county has waived the affordable housing fee for some permit applicants while refusing the Cherks’ requests for a waiver. Both the federal and state constitutions forbid such unequal treatment.

PLF filed a lawsuit on behalf of the Cherks in Marin County Superior Court on the grounds that the fee was an unconstitutional condition on the building permit, in violation of the Fifth Amendment’s prohibition on uncompensated takings, and that the selective granting of waivers violated the Cherks’ constitutional right of Equal Protection.

What’s at Stake?

  • The government may impose fees as a condition of land use permits only to the extent that they mitigate some adverse public impact of the proposed project. When a project does not cause any reduction in affordable housing, the property owners cannot be made to bear alone the cost of remedying the problem.
  • Local governments are increasingly abusing the permit process to make unlawful demands of property owners while they are in a vulnerable position. The permit process cannot be used as a shakedown machine.

Founded in 1973, PLF litigates cases nationwide to vindicate the rights fundamental to a free society. With nine consecutive U.S. Supreme Court victories and counting, PLF fights on the front lines, ensuring individual liberty is secure. Donor-supported Pacific Legal Foundation (www.pacificlegal.org) is the leading watchdog organization that litigates for limited government, property rights, individual rights, and free enterprise, in courts nationwide. PLF represents all clients free of charge.  For more information, visit www.pacificlegal.org, call (916) 419-7111 or write PLF at 930 G. Street, Sacramento, CA 95814.

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