Berkeley lawsuit sets a troubling precedent for investors who want to rebuild and exempt rental units from Costa-Hawkins
Although efforts to repeal or amend the law have failed, it has been increasingly subject to interpretation in the courts.
All eyes have been on the First District Court of Appeal after weighing the arguments made in NCR Properties, Inc. v. the City of Berkeley. The justices have spoken, and their ruling doesn’t bode well for owners looking to invest in unlivable buildings and then exempt units from rent control.
After purchasing two derelict single-family homes that were red-tagged, the landlords rehabilitated them, converted them into triplexes, and rented them out. A dispute arose as to whether the tenants were protected by the Rent Ordinance. The landlords contended that the units were exempt from the city’s rent control under Costa-Hawkins and the Rent Board took exception with four of the six units.