Art Colony Property v. Tidwell CA2/8

FACTS

1. Background Facts In 2018, Art Colony Property LLC (plaintiff) purchased property known as the Santa Fe Art Colony, a complex of “live/work artist spaces.” Sylvia Tidwell (defendant) was a tenant and head of the Santa Fe Art Colony Tenants Association (tenant association or association). For 30 years, the property had been subject to rent restrictions. These legal covenants expired in 2016, allowing the owner to set rents at market rates if the owner gave various statutory notice requirements specified by the Government Code. The owner had to notify tenants the rent restrictions were expiring, rents would be raised to market rates, and “qualified entities” would have the opportunity to submit a “bona fide” offer to buy the property at the “fair market value of the property’s highest and best use” and maintain below-market rents. (See

3 Gov. Code, §§ 65863.10, subds. (b), (c), 65863.11, subd. (k).) The prior owner gave notice in 2016, and in October 2017 reset the rents to market rates, after which plaintiff bought the property in June 2018. In July 2018, counsel for the tenant association alleged the notice by the prior owner did not conform to state law. Rather than…