Erlach v. Sierra Asset Servicing, LLC, 226 Cal. App. 4th 1281 (2014)

10
       As to Sierra's argument that no landlord-tenant relationship was ever created
between appellant and Sierra because such an agreement would have constituted a
contract for an illegal purpose (since Sierra could not provide appellant with the right to
occupy the property) we conclude that this does not preclude appellant's right to recover
damages.
       Rental agreements involving units that lack a certificate of occupancy are
ordinarily regarded as unlawful and void. (Carter v. Cohen (2010) 188 Cal.App.4th
1038, 1047.) "This is because '[t]he object of a contract must be lawful [citation]; i.e., it
must not be in conflict either with express statutes or public policy. . . . [Accordingly, i]f
the contract has a single object, and that object is unlawful (whether in whole or in part),
the entire contract is void.' [Citation.]" (Ibid.)
       "Generally, 'the courts . . . will not enforce an illegal bargain or lend their
assistance to a party who seeks compensation for an illegal act.' [Citation.] Our Supreme
Court has explained: 'The reason for this refusal is not that the courts are unaware of
possible injustice between the parties, and that the defendant may be left in possession of
some benefit he should in good conscience turn over to the plaintiff, but that this
consideration is outweighed by the importance of deterring illegal conduct. Knowing
that they will receive no help from the courts and must trust completely to each other's
good faith, the parties are less likely to enter an illegal arrangement in the first place.
[Citations.]' [Citation.]" (Carter v. Cohen, supra, 188 Cal.App.4th at pp. 1047-1048.)
       "Nonetheless, the rule barring the enforcement of unlawful contracts is not
absolute. Because the rationale for the rule is founded on deterrence, the Supreme Court
has made clear that courts ' "should not . . . blindly extend the rule to every case where
illegality appears somewhere in the transaction. The fundamental purpose of the rule
must always be kept in mind, and the realities of the situation must be considered.
Where, by applying the rule, the public cannot be protected because the transaction has
been completed, where no serious moral turpitude is involved, where the defendant is the