Zigas

This case is before us on a petition for writ of mandate. Because the issues involved appeared to be of considerable public importance and of first impression, we issued an alternative writ. We now hold that the relief sought should be granted.

Petitioners are tenants of an apartment building at 2000 Broadway in San Francisco, which was financed with a federally insured mortgage in excess of $5 million, pursuant to the National Housing Act ( 12 U.S.C. § 1701 et seq.) (the Act) and the regulations promulgated thereunder ( 24 C.F.R. § 207 et seq.). They seek in a class action, inter alia, damages for the landlords’ (real parties in interest) violation of a provision of the financing agreement which requires that the landlords charge no more than the Department of Housing and Urban Development (HUD) approved schedule of rents. The trial court has sustained demurrers without leave to amend to 5 causes of action of 15 alleged, apparently on the ground that there is no right in the tenants to enforce the provisions of an agreement between their landlords and the federal government.

Petitioners allege that their landlords were required under their contract with HUD to file a…