S.F. Daily Journal - Feb 14, 2002
Judge Rules With Owners, Tossing City's Law on TICs
But the city attorney's office says the ruling applies only to Ellis Act evictions aimed at creating tenancies-in-common.

By Tyler Cunningham
Daily Journal Staff Writer

SAN FRANCISCO - A judge on Wednesday made it easier for San Franciscans to jointly buy and occupy property, invalidating an ordinance meant to limit the number of tenancies in common in the city.

Lawyers in the case disputed the effect of the judge's order. One side claimed the city's new tenancy in common (TIC) law is negated entirely. The other side claims the judge only invalidated the law as applied to property owners who evict tenants under a particular state law, the Ellis Act.

Superior Court Judge A. James Robertson II ruled that San Francisco's law conflicts with the Ellis Act, which holds that no property owner can be forced to rent against his will.

Robertson agreed with plaintiffs who said the law's definition of "tenant," which explicitly excludes property owners, puts the city's law at odds with the Ellis Act because it means owners who take an apartment off the market with a vacant, useless building.

"The court finds the definition of tenant in the ordinance ... to be preempted and unenforceable under the Ellis Act," Robertson said.

Andrew Zacks, a lawyer representing the landowner plaintiffs in the case, claimed a complete victory, saying the judge had invalidated the entire TIC ordinance.

"I'm obviously very gratified the court followed the law," he said. "Owners should have the same right to live in their buildings as tenants have."

But Deputy City Attorney Andrew Schwartz questioned the extent of the ruling. He said Robertson invalidated the city's law only in situations when a landowner invokes the Ellis Act. Thus, the new law should apply whenever someone tries to create a TIC in a building made vacant in any way other than the Ellis Act - say, through an owner move-in eviction.

"There are many ways tenants in common can get possession of a property," he said. "The law is only unenforceable insofar as a landlord invokes the Ellis Act. If Ellis is not involved, the right to enforce the ordinance is intact."

Robertson seemed initially amenable to that argument. He asked both lawyers to submit proposed orders by Feb. 20. He would then have 90 days to sign either order.

Even if Robertson invalidates the entire ordinance, Schwartz said, the problem could be cured if the board of supervisors changes its definition of tenant.

TICs are a real-estate ownership structure, popular among first-time homebuyers, in which apartment buildings are owned collectively by tenants.

In November 2000, voters narrowly defeated Proposition N, which would have restricted people's ability to form TICs. The San Francisco Board of Supervisors passed a similar piece of legislation last year, however, overriding Mayor Willie Brown's veto.

The new law, nicknamed McTIC after its sponsor, Supervisor Jake McGoldrick, essentially limits the number of tenancies in common that can be formed in the city, placing them under the same cap imposed on condominium conversions.

Zacks filed suit, Tom v. CCSF, 323591, seeking to invalidate the ordinance. Among the 11 plaintiffs in the suit are the Small Property Owners of San Francisco, the San Francisco Apartment Association, the Greater Association of San Francisco Realtors and several individuals.

The groups marshaled several arguments against the McTIC ordinance. Aside from the Ellis Act argument, plaintiffs claim it violates the right to privacy guaranteed under the California Constitution. The ordinance prevents co-owners from agreeing among themselves that they will occupy specific areas of the building, the plaintiffs argue, and so each owner in theory has full access to the living space of the co-owners.