REAL ESTATE AND LAND USE LAW UPDATE September – November, 2016 By Miles J. Dolinger, Esq.
ADUs: California Legislature Passes Easier, Statewide Permitting Requirements and Restrictions For Granny Units/ADUs. The California Legislature recently passed new rules making it easier, faster, and presumably less expensive, for people to get permits for new “granny units” otherwise referred to as “accessory dwelling units” (“ADUs”). Senate Bill 1069, which was signed by Governor Brown on September 27, 2016 and takes effect on January 1, 2017, amends Government Code section 65852.2 to require local agencies statewide to amend their zoning ordinances to implement several uniform development requirements and restrictions on ADUs – both substantive and procedural. The new substantive rules include the following:
ADUs shall not be required to provide fire sprinklers if they are not required for the primary residence; Off-street parking requirements (not more than 1 per ADU or bedroom), may be provided as tandem parking on a driveway; No off-street parking requirements may be imposed on ADUs that meet any of the following criteria: o The ADU is located within one-half mile of public transit. o The ADU is located within an architecturally and historically significant historic district. o The ADU is part of the existing primary residence or an existing accessory structure. o When the local jurisdiction requires on-street parking permits but does not offer them to the occupant of an ADU. o When there is a car share vehicle located within one block of the ADU. In addition, a local agency may reduce or eliminate parking requirements for any ADU located within its jurisdiction; ADUs shall not be considered new residential uses for the purposes of calculating local agency connection fees or capacity charges for utilities, including water and sewer service; For certain types of ADUs, a local agency shall not require the applicant to install a new or separate utility connection directly between the ADU and the utility or impose a related connection fee or capacity charge; The floor area of an attached ADU shall not exceed 50 percent of the existing living area of the existing structure (increased from 30 percent). (Note: Unchanged are the existing restrictions that for attached ADUs the maximum increase in floor area is 1,200 square feet, and that the maximum total floorspace for a detached ADU is 1,200 square feet); A local agency may require an applicant to be an owner-occupant and may require that the property not be used for rentals for terms shorter than 30 days.
SB 1069’s most important procedural rule changes require local agencies: a) to process ADU applications as “ministerial” permits (that is, ‘over the counter’ – like a building permit, as opposed to processing these applications as “discretionary” approvals, which require a hearing and allow the decision-makers to impose conditions); and b) to do so within 120 days of receiving the application, provided the project satisfies several criteria, including these: The ADU is not intended for sale separate from the primary residence and may be rented; The lot is zoned for single-family or multifamily use; The lot contains an existing single-family dwelling; The ADU is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling; The increased floor area of an attached ADU shall not exceed 50 percent of the existing living area (increased from 30 percent max), with a maximum increase in floor area of 1,200 square feet; and The total area of floorspace for a detached ADU shall not exceed 1,200 square feet. All local land use permitting jurisdictions should be in the process of drafting amendments to their zoning codes to incorporate these new requirements for ADUs, so consult your local city or county planning department. For more information: Here is a link to the entire bill: https://leginfo.legislature.ca.gov/faces/billVersionsCompareClient.xhtml?bill_id=201520160SB1069 Here is an article from the San Jose Mercury News: http://www.mercurynews.com/2016/09/27/california-eases-restrictions-on-granny-units/ Santa Cruz County’s current ADU ordinance is found at County Code Chapter 13.10.681, http://www.codepublishing.com/CA/SantaCruzCounty/. Here is a link to the “Second Unit” section on the Santa Cruz County Department’s web page (which is expected to be updated early next year): http://www.sccoplanning.com/PlanningHome/ZoningDevelopment/SecondUnits.aspx
California Supreme Court Rules On Duties Of Real Estate Agents in Dual-Agent Transactions. In Horiike v. Coldwell Banker Residential Brokerage Co. (2016) 201 Cal.Rptr.3d 1, 383 P.3d 1094, the California Supreme Court ruled that all salespeople working under a single broker in a “dual agent” transaction owe the same fiduciary duties to both buyers and sellers that the broker does, even if different agents within the brokerage represent the buyer and seller separately. In this case, the buyer and seller agreed to Coldwell Banker’s dual agency and signed the various disclosure forms to that effect. The seller was represented by one Coldwell Banker agent (Cortazzo) and the buyer was represented by a different Coldwell Banker agent from another office (Namba). The seller’s agent represented in marketing materials that the property had 15,000 SF of living area, but he
knew from the residence’s building permit that only 11,000 SF was actually permitted. The seller’s agent never clearly informed the buyer or the buyer’s agent that the 15,000 SF representation may not be accurate or that that only 11,000 SF was permitted. Instead, he provided the buyer’s agent with a copy of the building permit, along with a form stating that the broker was not verifying square footage, that the buyer should not rely on the broker’s representations about square footage, and et cetera. When the buyer later discovered this discrepancy in square footage, he sued both Coldwell Banker and Cortazzo for breach of fiduciary duty. During the jury trial, at the close of the buyer’s case, the trial court granted the defendants’ request for a nonsuit and dismissed buyer’s breach of fiduciary duty cause of action against Cortazzo. It ruled that Cortazzo did not owe a fiduciary duty to the buyer because he, Cortazzo, represented the seller exclusively and Namba represented the buyer exclusively. The court of appeal reversed that decision, which was affirmed by the California Supreme Court. The Supreme Court explained that, “[t]he primary difference between the disclosure obligations of an exclusive representative of a seller and a dual agent representing the seller and the buyer is the dual agent's duty to learn and disclose facts material to the property's price or desirability, including those facts that might reasonably be discovered by the buyer”. It further explained that these same duties bind all of the agents/salespeople of a dual agent broker. The Supreme Court then explained that because a broker’s agent’s authority arises exclusively from its relationship to the broker, the agent/salesperson is bound by the same fiduciary duties that apply to the dual agent broker. Cortazzo was thus charged with carrying out Coldwell Banker’s duty to the buyer to learn and disclose to the buyer all material information affecting the value or desirability of the property. (The case was remanded back to the trial court to determine whether Cortazzo satisfied that duty by giving the buyer’s broker a copy of the building permit.) This decision clarifies that the agents involved in a dual-agent transaction essential stand in the shoes of the broker with respect to their fiduciary duties to both parties. Therefore, they must disclose all material facts about the desirability or value of the property to both buyer and seller regardless of which one they are working with. Appellate Court Holds That Coastal Act Protections Supersede State Affordable Housing and Density Bonus Rules. In Kalnel Gardens, LLC v. City of Los Angeles, (2016) 3 Cal.App.5th 927, the court of appeal held that affordable housing requirements set forth in the Density Bonus Act (Gov. Code § 65915 et seq.) and the Mello Act (Gov. Code § 65590 et seq.) were superseded by development restrictions set forth in the California Coastal Act (Pub. Resources Code § 30001 et seq.). The subject project included five new duplexes and five new single family homes in an old neighborhood in Venice comprised mostly of singlestory 1920s-era bungalows. The project also included density bonus concessions under the City’s density bonus ordinance, including higher rooflines and shorter setbacks. Plaintiffs argued that the project violated the Coastal Act because its height, density, setbacks and other visual and physical characteristics were out of character of the existing neighborhood. The applicable section of the Coastal Act provides that the design of new developments protect scenic views and be “visually compatible with the character of the surrounding areas.” (Pub. Resources Code § 30251.) The L.A. Planning Commission denied the application and the City Council affirmed the decision of the Planning Commission. The developer appealed, arguing that the state affordable housing requirements referenced above superseded Coastal Act provisions, but the court disagreed. It held that the Density Bonus Act was
expressly subordinate to Coastal Act restrictions. If further held that the Mello Act’s affordable housing requirements, while not subordinate to the Coastal Act per se, should be applied provided that those housing projects abide by the Coastal Act’s overall protective provisions. Appellate Court Holds That Affordable Housing “In-Lieu” Fees Are Not Exactions And Thus Not Subject To The Reasonable Relationship Test (Following California Building Industry Assn. v. City of San Jose (2015) 61 Cal.4th 435). In 616 Croft Ave., LLC v. City of West Hollywood, (2016) 3 Cal.App.5th 621, the court of appeal held that the City’s in-lieu affordable housing fee was not subject to the reasonable relationship test under the Nollan/Dolan line of cases. The subject project, an 11-unit condominium development on two combined lots, was approved in 2005, but because of the economic downturn the developer did not request building permits until 2011. During that time, the City’s in-lieu housing fee under its 2011 fee schedule had increased to $540,000.00. The developer paid under protest, and then sued the City for a refund in 2012, arguing that the fee was an illegal “exaction”. While that case was making its way through the courts, in 2015, the California Supreme Court held that an affordable housing provision requiring that a certain number of new housing units be set aside as “affordable” units was not an “exaction” that invoked the United States Constitution's Fifth Amendment due process takings protections, but rather, such a restriction “is an example of a municipality's permissible regulation of the use of land under its broad police power.” (California Building Industry Assn. v. City of San Jose (2015) 61 Cal.4th 435.) Thus, in the 616 Croft Avenue case, the court of appeal followed the City of San Jose case and held that the same reasoning applied even though the issue in this case was the payment of an inlieu fee as an alternative to setting aside affordable units, and thus, the fee was not required to satisfy several reasonable relationship requirements. Laguna Hills HOA Prevails Against Homeowner’s Intentional Encroachment Into Common Area. In Nellie Gail Ranch Owners Association v. McMullin, (2016) 4 Cal.App.5th 982, the court of appeal affirmed a trial court ruling quieting title to a portion of planned development’s common area in favor of a homeowners association (HOA) in Laguna Hills. In this case, a homeowner sought the HOA’s approval to construct several backyard improvements, including renovations to a pool, and new stairways, retaining walls and fences that dropped down the owner’s hillside towards HOA common area (Lot 274). The HOA approved the pool renovations, but not the owner’s proposed re-grading, retaining walls and fences. However, the owner’s constructed those improvements anyway, which had the effect of fencing in 6,000 SF of the common area, and the HOA sued. In court, the owner claimed a right to land it fenced in under the doctrines of adverse possession and equitable easement. Following trial, the trial court rejected the adverse possession claim because the owner did not pay taxes on the disputed property and failed to show that the property had no value (to support the owner’s argument that property taxes were never assessed against the land). In addition, the trial court rejected the equitable easement claim because it found the owner was not innocent; on the contrary, the trial found that the owner knew where his lower property line was, intentionally planned to build a new retaining wall across the line on the HOA’s Lot 274, and intentionally withheld this information from the HOA even though the HOA requested surveyed boundary information several times. The trial court ordered the retaining wall to be removed/demolished and Lot 274 to be restored at the owner’s expense. Finally, the trial court awarded the HOA $185,000.00 in attorneys’ fees. Applying the abuse of discretion standard, the court of appeal affirmed the trial court’s ruling on all issues, and held that the owner failed to timely appeal the trial court’s post-judgment attorneys’ fees award.
©2016 Miles J. Dolinger. This article is not intended to and does not constitute legal advice or a solicitation for the formation of an attorney-client relationship, and no attorney-client relationship is created through your receipt or use of any materials contained in this email.
