S.F. Daily Journal - Dec 17, 2002

San Francisco's TIC Law Struck
A judge finalizes his ruling in the 1-year-old case that the city's tenancy law is unconstitutional.

By Tyler Cunningham
Daily Journal Staff Writer

SAN FRANCISCO - Andrew Zacks has clearly won his battle with the city over a local housing ordinance that would have limited tenancies in common in San Francisco.

But he's the one now pushing for an appeal.

The real estate attorney is worried that, absent clear authority from a higher court, the city will continue to push for anti-TIC legislation in the future.

"I have no problem with an appeal," Zacks said. "It's an unusual position to take, but it might be the best thing for the owners. I'm very concerned if there's not an appellate case clearly saying the city can't do this, maybe they'll do it again."

San Francisco Superior Court Judge A. James Robertson II made it easier to jointly buy and occupy San Francisco real estate Friday, ruling that the city's TIC law violates constitutional guarantees of privacy and equal protection.

TICs are a home ownership structure popular with first-time buyers that allows people to jointly buy a building and occupy different units.

The city passed an ordinance last year aiming to stem the rising tide of evictions by limiting the number of TICs created each year. City officials believe the creation of TICs depletes the city's stock of rental housing for those who cannot afford to buy. Nicknamed McTIC after its sponsor, Supervisor Jake McGoldrick, the ordinance essentially placed TICs under the same cap the city imposes on condominium conversions.

A legal challenge soon followed. Zacks filed Tom v. CCSF, 323591, on behalf of 11 plaintiffs, including the Small Property Owners of San Francisco, the San Francisco Apartment Association, the Greater Association of San Francisco Realtors and several individuals.

Robertson said Friday that the law violates the right to privacy guaranteed by the state constitution. He apparently agreed with the plaintiffs, who argued that the law prevents co-owners from agreeing among themselves to occupy only specific areas of the building. In theory, the law leaves each owner with full access to the living space of the co-owners, plaintiffs said.

Deputy City Attorney Andrew Schwartz disagreed with the ruling. There are many ways to own property in San Francisco, he argued, and people are free to acquire property in a way that doesn't impinge on their privacy.

"Judge Robertson decided, in effect, that owners have a constitutional right to own property as a tenant in common," he said.

The city has made no decision whether to appeal, Schwartz said. The final decision rests with City Attorney Dennis Herrera, who will consult with supervisors before deciding. Stephen Collier, an attorney with the Tenderloin Housing Clinic, who represents intervenor San Francisco Tenants Union, said he plans to appeal.

Zacks said he welcomes the challenge. He said that the city has a history of passing laws that limit owners' rights to occupy their buildings, only to lose court battles, forgo appeals and pass substantially similar legislation years later.

"We need some appellate guidance on these issues," he said. "What San Francisco is doing politically is so out there that the courts don't usually see these things. The idea that people can't live in property they own doesn't happen that many places."

Robertson also ruled that the ordinance violates owners' rights to equal protection because it distinguishes between family members and non-family members when granting or denying exclusive rights of occupancy.

The judge's ruling, which came from the bench Friday, had another ironic effect. Lawyers from both sides disagreed as to its effect. City lawyers maintained that the judge has invalidated the McTIC law completely, even portions that changed the rules for condo conversions. Zacks argued that the new condo conversion rules, which are favorable for owners, should remain valid. Both sides expect the issue to become clearer once Robertson issues a written ruling.

The lawsuit was filed a year and a half ago. Robertson convened about a dozen hearings and ordered almost as many briefs before deciding the case. In the interim, lawyers and real estate brokerage houses advised clients to wait for legal clarity before converting to a TIC.

The prolonged hearings may have left a pent-up demand for TICs, said D. Andrew Sirkin, a real estate lawyer with San Francisco's Goldstein Gellman Melbostad Gibson who specializes in TICs. "Now, with some certainty in the law, the largest brokerages will be less nervous," Sirkin said.