The Sausalito Floating Homes Association (FHA) has heard many concerns from floating home residents about fees and costs charged by or policies imposed by their marinas.
In response, the FHA, through its Legislative Action Committee (LAC) and generous donations from residents, engaged an attorney with decades of experience in California real estate and tenant law to review these fees and expenses to determine if they are permissible under the Floating Home Residency Law (FHRL).
The FHRL is the state law that regulates the relationship between floating home marina owners and their tenants.
Below are the attorney’s legal opinion on fees and the pass-through of certain operating costs. He has found that a number of the fees – present and proposed – as well as certain pass-throughs and other obligations may be impermissible under the FHRL. His primary findings are listed in the executive summary of his memorandum.
As you will see, we are also sending the legal memorandum to Sausalito floating home marina owners (Waldo Point Harbor, Kappas Marina, Yellow Ferry Harbor, and Commodore Marina).
We are seeking to meet with the marina owners to address the issues raised in the attorney’s legal memorandum. In addition, we will send a copy of the legal memo to our state and county government representatives.
Please note two things:
1) The FHA is not contemplating legal action against any marina as yet, but the FHA is asking all of them to stop charging fees that appear to be legally impermissible.
2) On your behalf, the FHA is asking marina owners to meet with homeowners’ representatives to discuss alternatives to legal action.
The FHA’s lawyer does NOT recommend the non-payment of any harbor fees or pass-throughs because non-compliance with rules could be a cause for eviction.
Many ask, “so why don’t we sue now?” We have heard from many residents that they would like to take the recent tension out of relations with the marina owners and we are seeking a meeting with them within the next month.
Please read the attached memorandum and if you have questions or comments, please contact the LAC in one of three ways:
Send an Email: fhasaus@gmail.com
Mail a Letter: Sausalito FHA, 3020 Bridgeway Boulevard, #138, Sausalito CA 94965
Join Us In-Person: The FHA will soon be announcing a series of upcoming dock-side community meetings
Memorandum
Date: May 28, 2024
To: Marinas of the Sausalito Floating Home Community (Kappas Marina, Commodore Marina, Yellow Ferry Harbor, Waldo Point Harbor)
From: The Sausalito Floating Homes Association
Subject: Memorandum: Legal Opinion on Marina Fees and Expenses
To ensure that floating home residents understand the nature of their legal relationship with the
owners of the marinas in which they reside, the Floating Homes Association (FHA) engaged the
services of an experienced real estate lawyer, Ken Coren. Residents have questioned some of the
fees and expenses recently passed through by the marinas to their residents. Mr. Coren has
studied these pass-throughs and offered his opinions on them, concluding that some of the
charges appear to be impermissible under the terms of the Floating Homes Residency Law and
common and contract law. In the interest of fostering long-term community harmony, we are
attaching for your consideration Mr. Coren’s memorandum to the FHA on these matters.
We hope and expect that, once you have had the opportunity to review Mr. Coren’s analysis, you
will refrain from passing along these fees and expenses, and a small group from the FHA would
like to meet with you to discuss rolling back those that have been imposed to date.
Please contact Joe Novitski (Chair of the FHA’s Legislative Action Committee) at
lacfha@gmail.com to set a convenient time for you to meet with us within the next 30 days.
May 24, 2024
WARNING AND DISCLAIMER: The following memorandum has been prepared at the request of and solely for the use and benefit of the Floating Homes Association. It is not in any way or manner to be considered, construed or used as legal advice to or for any individual or person.
To the Floating Homes Association:
Based upon my research into the Floating Home Residency Law (FHRL), pertinent case law and similar laws and regulations, as well as my decades of real estate transactional and litigation experience, I have reached the following views and conclusions, each of which is explained in greater detail.
– Costs and fees characterized in leases as “additional rent,” such as capital expenses or increased marina operational costs, such as property taxes or insurance costs, cannot result in a total rent being charged that is greater than the rent allowed under the FHRL, which is capped at an annual increase of the year’s increase in CPI plus 3% (but no greater than 5%).
– Charging a monthly fee for owners of floating homes to rent out their homes is likely impermissible as it is not an incidental reasonable charge for services actually rendered.
– Increasing the berth rent for a floating home because the owner is renting it also
constitutes an impermissible fee as it is not an incidental reasonable charge for
services actually rendered. If calling the fee “additional rent” rather than a fee
were to withstand challenge, the resulting total berth rent would be subject to the
rent caps discussed above.
– Forcing floating home owners who wish to rent out their homes to indemnify the harbor for any damage to or on the harbor’s property is likely an unreasonable interference with the home owners’ ability to lease their homes as well as an attempt to by the marina to avoid their responsibility to provide and maintain their property, including the common area.
– Charging a fee for contractors working on floating homes to park in the harbor appears unreasonable and restrains the rights of floating home owners to use common area for its purpose, as well as their right and obligation to maintain their floating homes.
– Charging a monthly “climate change fee” to support potential, unspecified harbor
improvements is likely impermissible as it is not an incidental reasonable charge for services actually rendered.
– Since the purpose of a berth lease is to supply a space for a residential floating home to tie up, it is the harbor’s responsibility to provide and maintain requisite pilings or mooring facilities.
Discussion:
Questions have arisen regarding the legality of certain fees, charges, and pass-through expenses proposed and/or imposed upon Floating Home owners affiliated with the Floating Home Association by their respective landlord Floating Home Marinas.
The particular fees, charges, obligations and expenses discussed have been: parking fees for contractors working on or in a Homeowner’s Floating Home; pass-through of a Marina’s operating expenses such as increases of property tax and insurance premiums; capital expenditures; fees imposed when a Homeowner subleases their floating home, including percentage of sublease rent fees plus the need to enter into a hold harmless agreement freeing the landlord from its
responsibilities; climate change surcharge; shifting of cost of mooring piling installation and maintenance to Homeowner. While the language and the terms of the leases vary, depending upon the marina as well as the time when a particular lease is offered by a marina, it is not uncommon to see these fees, charges and/or pass-through expenses characterized as “rent”.
Legal Background:
California’s Floating Home Residency Law (FHRL), beginning with section 800 of the Civil Code [CC], largely governs the rental relationship between owners of floating homes and the marinas where their floating homes are berthed. While the statutory and case law of California are applicable to the relationship, the FHRL preempts those laws in the areas covered by the FHRL.
Who are the parties?
CC § 800.4 states that a “Floating home marina” means an area where five or more
floating home berths are rented, or held out for rent, to accommodate floating
homes…
CC §800.6 states that a “Homeowner” means a person who owns or resides in a floating home which is in a floating home marina pursuant to a rental agreement with management.
Are the leases residential or commercial?
CC § 800.3 states that “Floating home” has the same meaning as defined in subdivision (d) of Section 18075.55 of the Health and Safety Code’, which in turn defines a floating home as “a floating structure…designed and built to be used, or is modified to be used, as a stationary waterborne residential dwelling…[with] no mode of power of its own…dependent for utilities upon a continuous utility linkage to a source originating on shore…[that] has a permanent continuous hookup to a shoreside sewage system.”
800.9. “Tenancy” means the right of a homeowner to the use of a berth within a floating home marina on which to locate, maintain, and occupy a floating home, and accessory structures or vessels, including the use of the services and facilities of the floating home marina.
Based upon these statutory definition of floating home, along with other provisions of the FHRL which are in line with laws governing residential rental laws, it seems clear that the rental agreements between the parties are residential rental agreements as apposed to commercial rental agreements.
Why was the FHRL enacted?
The FHRL codifies a public policy rationale similar to that found in the Mobilehome Residency Law. Specifically, the Legislature determined that such preemption is necessary to protect floating home tenants in light of the unique characteristics of floating home marina residency. As expressly codified in CC §800.70(a)
The Legislature finds and declares that, because of the high cost of moving floating homes, the potential for damage resulting therefrom, the requirements relating to the installation of floating homes, and current government policy limiting the availability of floating home berths, it is necessary that the owners of floating homes within floating home marinas be provided with the unique protection from actual or constructive eviction afforded by the provisions of this
chapter.
As with the Mobilehome Residency Law [MRL}, the focus of the Legislature was the prevention of a proliferation of service charges above and beyond rent or utilities. Insightful judges have noted in the mobilehome park context that “The unscrupulous park owner could lure mobilehome owners with a competitive rent, then ‘nickle-and-dime’ this relatively captive market with an array of unanticipated charges which when aggregated could render the tenant unable to afford to
continue the tenancy. The Legislature first ensured that the charges must be for
services actually rendered…”
The FHRL, in CC § 800.41, states that “A homeowner shall not be charged a fee for other than rent, utilities, and incidental reasonable charges for services actually rendered.
“A homeowner shall not be charged a fee for obtaining a rental agreement on a floating home berth for (1) a term of 12 months, or (2) a lesser period as mutually agreed upon by both the homeowner and the management. A fee may be charged for a rental agreement of more than one year if the fee is mutually agreed upon by both the homeowner and management.” [emphasis added]
Fees disguised as rent increases:
While there is a dearth of appellate court opinions interpreting the statutory language of the FHRL or the similar and foundational MRL, the California Court of Appeal issued an illuminating opinion in Vance v. Villa Park Mobilehome Estates, (1995) 36 Cal. App. 4th 698. The mobile home residents sued the mobilehome park claiming that certain provisions of their leases providing for “pass through” or landlord cost-shifting rental increases were, in reality, prohibited fees under the
MRL disguised as rent increases to avoid the statutory prohibition of fees that were not reasonable charges for “services actually rendered”.
Unfortunately for the mobilehome park tenants the Court held that, in the absence of rent control, there was nothing in the MRL that would prohibit the parties from agreeing that certain operational costs and increases from being characterized as additional rent.
Fortunately for Floating Home owners in Marin County, as well as Alameda and Contra Costa Counties, the FHRL does provide a form of rent control by limiting rent increases over any 12 month period to the lesser of 5% or 3% + CPI. [CC 800.40.5]
This distinction is significant for the residents of the Sausalito marinas, because the leases available for review characterize virtually all of the incidental additional charges under consideration as rent increases. As a practical matter, what otherwise could be challenged as prohibited fees, work to exhaust the marinas’ limited margin for rental increases, which we could assume they would take
advantage of in any event.
In addition, a number of rent control jurisdictions, including San Francisco, do not allow capital expenditures and other operational expenses to be automatically passed through as rent increases, some requiring proof of actual expenditure, permits, and authorization. Given the current trend in favor of expansion of rent control, good cause ordinances and creation of affordable housing, these pass-through rent increases are increasingly disfavored by legislative bodies.
Pertinent Issues Facing Association Members:
Fees imposed as other than rent and expanded obligations:
Sublet Fee, Penalty and Indemnity
I am informed that some of the subject marinas have amended their rules and regulations and/or leases in order to impose monetary and other obligations upon a Homeowner when their Floating Home is rented to a non-owner, either long or short-term, taking various forms:
Monetary:
1. Charging Sublease Fee: “For each monthly billing cycle in which a Floating Home is being sublet, Homeowner will pay a $250 sublease fee as a reasonable estimate of the additional expense and time that the sublease will cause Management to incur, except that for any single sublease consisting of a consecutive thirty or thirty-one day’s duration, only a single $250 sublease fee will be charged.”
2. Additional Rent: “Lessee agrees to pay an additional rental of $100.00 per month for each month said floating home is leased to a third party.”
3. “If a houseboat unit is not owner occupied: There is an additional rent of 15% of the base rent…”
Additional Obligations:
1. Notification of Listing, which states that “Promptly upon listing a Floating Home for sublease and in all events prior to accepting a reservation, Homeowner shall provide to Management a copy of the advertisement, listing or posting along with a signed and dated Representation and Indemnity Agreement…”
2. With the following warning: “FAILURE TO REPORT TO MANAGEMENT ANY SUBLEASE OR SHORT TERM RENTAL LISTING AS REQUIRED BY THIS RULE WILL RESULT IN A FINE OF $100 FOR EACH OCCURRENCE, REGARDLESS OF WHETHER A SUBLEASE IS ACCEPTED BY HOMEOWNER…”
3. Upon any such listing, the Homeowner must agree, among other things, to hold the landlord marina harmless, and agree to defend and indemnify the landlord marina from any and all claims or damage that may arise by reason of the sublease.
As discussed above, CC § 800.41 states that “A homeowner shall not be charged a fee for other than rent, utilities, and incidental reasonable charges for services actually rendered.
A homeowner shall not be charged a fee for obtaining a rental agreement on a floating home berth for (1) a term of 12 months, or (2) a lesser period as mutually agreed upon by both the homeowner and the management. A fee may be charged for a rental agreement of more than one year if the fee is mutually agreed upon by both the homeowner and management.” [emphasis added]
Assuming that the sublease charges and the rent increases triggered by a sublease were all to be viewed simply as fees, they would be prohibited by the FHRL for the following reasons:
By its own terms the sublease fee “…is reasonable estimate of the additional expense and time that the sublease will cause Management to incur…”
This projection of an undefined estimated management burden does not seem to fit within the statutory category of “services actually rendered.”
In evaluating whether a fee is reasonable, assuming it were not prohibited under the FHRL, a court is likely to give weight to the statutory concern floating home owners, like mobilehome owners, should not be required to pay for services that confer no appreciable benefit on them, even if the amounts charged for the services are not unreasonable. This is derived from the “an intent on the part of the Legislature to strictly limit the ability of park management to collect fees from any
source except, of course, for services performed.”
The requirement that services be “actually rendered” or “performed” implies a request for the services, or at least willing acceptance of them. Under the law of California, “… it is an established principle that “Where one performs for another, with the other’s knowledge, a useful service of a character usually charged for, and the latter expresses no dissent, or avails himself of the service, a promise to pay the reasonable value of the services is implied.”
With regard to the sublease fee, the monthly fee being imposed is not only not for services actually rendered, but is also for hypothetical, undefined services that were neither requested, necessary, nor of use to the floating homeowner.
Furthermore, the flat monthly reoccurring fee fails to provide any basis for meeting the “reasonable charge” requirement.
This and the other incidental fees are contrary to another strong trend in the law as we are seeing Federal and State legislation restricting “junk fees” and “drip pricing” which, as noted in the rationale for the FHRL and the MHL, are a form of bait and switch to lure tenants in with a reasonable rent which is then incrementally raised to unreasonable levels through fees.
A brief look into California’s drip pricing law [SB 478] (which goes into effect on July 1, 2024) is instructive with regard to objectively evaluating whether a fee is unreasonable.
CC § 1770 (a) (24) (B) (iii) “Unreasonable fee” means a fee that is exorbitant and disproportionate to the services performed. Factors to be considered, if appropriate, in determining the reasonableness of a fee, are based on the circumstances existing at the time of the service and shall include, but not be limited to, all of the following:
(I) The time and effort required.
(II) The novelty and difficulty of the services.
(III) The skill required to perform the services.
(IV) The nature and length of the…relationship.
(V) The experience, reputation, and ability of the person providing the services.
It could also be argued that the sublease fees are “fee[s] for obtaining a rental agreement” for a rental agreement for a year or less, also prohibited by CC § 800.4, but that would involve a more complex inquiry regarding the rental of a berth as apposed to the rental of a floating home occupying a berth.
There is no objective difference between the fixed recurring monthly sublet fee and the fixed monthly increase in rent triggered by a sublease, or occupancy by a non-owner. They differ in name only, not in effect or substance. If a judge, in 2024, were a court were to apply the logic followed in the 1995 Vance v. Villa Park Mobilehome Estates, cited above, then at the very least the marina will be limited in its ability to increase rent beyond the lesser of 5% or 3% + CPI as expressly
provided in CC 800.40.5, thus exhausting part or all of the marina’s ability to raise annual rent, or actually causing rent to be increased beyond the lawful limit.
The indemnity and “hold harmless” agreement sought to be imposed is unwarranted and overbroad. Under the FHRL, a person living in a Floating Home is a Resident, whether they own the Floating Home or not. Accordingly, entering into an agreement to permit a non-owner to reside in one’s Floating Home does not in any way decrease, increase or otherwise affect the landlord marina’s obligations to provide safe and habitable premises and common areas to Residents. It is also discriminatory in that these newly imposed obligations are triggered by subleasing only, as opposed to, say, having a guest visit one’s Floating Home. Finally, the effect of such a hold harmless agreement would be to make the Floating Home owner responsible for the safety conditions of the common areas which, under the law, are the responsibility of the landlord marina. For these reasons alone, the imposition of these new obligations ought to be viewed as unreasonable restrictions on the homeowner’s right to sublet their floating home in violation of CC §800.71(c)— “management may not impose unreasonable restrictions on the right of the homeowner to sublet his or her floating home”.
Due to the fact that the sublease fees are neither reasonable nor for services actually rendered, the marina owner would have an additional burden in trying to enforce the imposition of the fee, because floating home owners cannot be evicted for violating an “unreasonable” rule or regulation, such as an “unreasonable” restriction on homeowners’ right to sublet their floating home berth. [CC §800.71(c)—”management may not impose unreasonable restrictions on the right of the homeowner to sublet his or her floating home”]
Caution is advised. While having a strong defense to an unfounded eviction action might be one path to follow, it may not always the only avenue for dealing with unlawful actions of a landlord. Other options should be considered by both the landlord and the tenant, such a pre-litigation mediation or other forms alternate dispute resolution.
Finally, the penalty for not complying with the subletting rule is prohibited by CC § 800.46 which states that “A homeowner shall not be charged a fee for the enforcement of any of the rules and regulations of the floating home marina.”
Contractor Parking Fee:
I understand that there is concern over a proposed fee for contractors parking in a marina’s lot.
As part of each homeowner’s berth lease, there is a right to reasonable use of common area facilities, which areas must be maintained by the marina owner.
CC § 800.30 states that “Each common area facility shall be open or available to residents at all reasonable hours, and the hours of the common area facility shall be posted at the facility.
To the extent that the leases and marina rules and regulations require homeowners to perform reasonable landscaping and maintenance on the premises where their respective homes are located, homeowners who fail to comply may be charged for the actual costs incurred by management in performing those services. [CC § 800.47]
Necessary use of the common area parking lot by a homeowner’s contractor engaged in providing service to the homeowner’s floating home in its berth should safely come in under these statutory provision. Imposition of a fee for the temporary use of the common area parking lot by a homeowner’s contractor seems to fall outside of these provisions, in addition to being unreasonable; as unreasonable as would a fee for the contractor’s use of the common area dock to
access the floating home.
Climate Change Surcharge:
All parties involved are aware of, or ought to be aware of, climate change and sea level rise. It falls upon both the landlords and the tenants to do what they feel appropriate to protect their respective investments from the changes occurring and to come. This, however, does not justify violations of the FHRL such as a marina’s creation of a sinking fund for future improvements to the harbors resulting from climate change, to be financed by monthly surcharges imposed upon the homeowner tenants. This is so, even if the funds collected are to be invested by the landlord in
a separate fund with the proceeds to be used solely to mitigate harbor-wide impacts resulting from sea level rise and climate change.
Clearly, this surcharge is a fee prohibited by CC § 800.41 as it is not for services actually rendered, not dissimilar to the issues discussed with regard to the sublease fees. In addition, this type of “surcharge” might be characterized as involving an involuntary investment in a sinking fund with none of the fiduciary guardrails against mismanagement, dedication to purpose, exposure to the marina’s creditors, or other protections concerning what may well be classified as a security.
Shifting the cost of mooring piling installation and maintenance to Homeowner.;
CC § 800.47 addresses the period when a floating home first enters a marina under a tenancy. “Unless the homeowner specifically requests the service in writing from the management, a homeowner shall not be charged a fee for the entry, installation, hookup, or landscaping as a condition of tenancy except for an actual fee or cost imposed by a local governmental ordinance or requirement directly related to the occupancy of the specific berth where the floating home is
located and not incurred as a portion of the development of the floating home marina as a whole…”
In practical terms, this issue comes down to the heart of what the marina is actually leasing to the homeowner. While some of the leases expressly provide for “tie-up facilities for lessee’s floating home” others only refer to the berth “space” between the docks and other structures shown on an exhibit to the lease.
Given that:
1. A Floating Home Marina is defined as an area where floating home berths are rented “…to accommodate floating homes…” per CC § 800.4; and,
2. The floating homes to be “accommodated” are defined as “stationary waterborne residential dwellings…[with] no mode of power of its own…dependent for utilities upon a continuous utility linkage to a source originating on shore…[that] has a permanent continuous hookup to a shoreside sewage system.” [CC § 800.3 incorporating Health and Safety Code § 18075.55];
It is axiomatic that:
3. A stationary and permanent mooring must be an integral part of each and every berth being rented by Floating Home Marina.
Without stationary and permanent mooring, the berth being leased to the Homeowner is not a space contemplated by the FHRL and Health and Safety Code that can accommodate a stationary waterborne residential dwelling.
To hold otherwise renders the lease of berth space that does not provide for fixed and permanent mooring illusory.
More drip pricing.
Courses of action to be considered:
1. Maintenance and/or enhancement of the rent control features of the FHRL through legislative involvement are essential given the state of the controlling case law. Alignment with rent control ordinances throughout California, particularly in the Bay Area, which limit or control the ability of a landlord to pass operational and capital expenses to a tenant seems to be a worthwhile direction.
2. The unlawful fees can be challenged, ultimately through litigation.
3. In the event a marina reduces services or fails to maintain common areas in retaliation to the exercise of tenants’ rights, a Homeowner can give 30 days written notice with specific remedies requested, such as appropriate repairs, rent abatement, reinstatement of services, and monetary damages. [CC § 800.91]
4. The FHRL provides for a special action to remedy a marina’s substantial failure to to provide and maintain physical improvements in the common facilities in “good working order and condition.” [CC § 800.201(a)] This type of misfeasance under the FHRL is expressly deemed to constitute a “public nuisance”.
The special action, as opposed to the general legal proceedings for public nuisances, does not provide for criminal sanctions under the FHRL. It does, however, authorize remedies of abatement or a civil lawsuit.
In that civil action, CC § 3493 ought to apply, whereby: “A private person may maintain an action for a public nuisance, if it is specially injurious to himself, but not otherwise.”
Pursuant to CC § 800.200, the prevailing party would be entitled to an award of their reasonable attorney fees and costs. In addition, the court is empowered to award a penalty of up to $500.00 for each willful violation of homeowners’ rights.
5. While sometimes warranted, it not always wise to rush into litigation.
The foregoing memorandum is provided for the purpose of assisting in deciding upon a strategy to roll-back unlawful fees and to protect the rights afforded under the FHRL.
6. The information provided may well form the substance of a demand letter to the various marinas, or inform participants in a meeting with marina management prior to pre-litigation mediation or other form of alternative dispute resolution.
Respectfully submitted,
/s/
KENNETH A. COREN