While that civil code section clarifies a number of issues, some questions have remained. What, for example, are "normal business hours"? Also, might exhibiting the dwelling to prospective or actual purchasers include holding open houses?
A recent California Appellate Court decision (Dromy v. Lukovsky,Second Appellate District, August 30, 2013) provides some answers. To some they may be surprising.
Landlord Dromy leased a Santa Monica condominium to Lukovsky (Tenant) in 1994. In approximately 2010, Dromy entered into a listing agreement to sell the property. The Tenant allowed the agent to conduct individual showings, but she refused to permit open houses on the weekends.
Dromy filed a motion in Superior Court based on Civil Code 1954 and sought declaratory relief against the tenant. In a declaration supporting the motion, his real estate agent stated: "In my professional opinion, Ms. Lukovsky's refusal to permit weekend open house showings at the subject property has made it much more difficult to find a prospective purchaser. The custom and practice in the residential real estate community is to conduct weekend open houses in order to market properties more effectively and expose listed properties to the general public." The statement was not contested.
The Superior Court ruled in favor of the landlord; but it did not grant an unrestricted right to hold open houses. Indicating a desire to fashion an order that was fair and reasonable to both sides, it came up with the following:
- The agent could hold two open houses per month.
- They could be on weekend days between 1:00 p.m. and 4:30 p.m.
- The agent must be present, and the tenant may be present, during any open house.
- The agent must give 10 days advance email notice to the tenant of proposed open house dates, and the tenant has 48 hours to acknowledge or to propose an alternative weekend date.
The Appellate Court noted that the phrase normal business hours, though not defined in the statute, was meant to strike a balance between two competing policies: (1) the tenant's right of quiet enjoyment of the property, and (2) the landlord's right and ability to sell his property. The Court noted that, at the time the legislation was enacted, the current edition of Black's Law Dictionary defined "business hours" as meaning: "In general those hours during which persons in the community generally keep their places open for the transaction of business." The Court then went on to say, "For our purposes, the relevant community consists of licensed professionals working in the residential real estate business." Moreover, "It is undisputed that the custom and practice of [that community] is to hold open houses during weekends…"
Thus, the Appellate Court held that the judgment of the Superior Court was "reasonable under the facts and circumstances and that it complies with the requirements of section 1954, subdivision (b)."
California real estate agents will no doubt wonder how this decision applies to their business. The legal department of the California Association of Realtors® (CAR) had this to say in its realegal publication. "…landlords and their listing agents who want to arrange weekend open houses should obtain the tenant's consent or comply with the reasonableness standard required by the Dromy court." To help insure that what they schedule is reasonable, landlords and agents "are strongly encouraged to, depending on the circumstances, pattern your weekend open house arrangements in a similar fashion to what the trial court ordered in Dromy…" (See the 4-point requirement that was stated above.)
