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Legal Q & A – By Richard Beckman, Attorney

Posted on 01. Apr, 2014 by in all

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Question 1: One of my tenants wants to add a roommate in my Oakland building that is covered by the Oakland rent ordinance. Can I increase the rent because I pay garbage and water and because of the extra wear and tear? Can I also ask for more security deposit?
Answer 1: Since your question does not address the issue of adding a roommate, we will save that issue for another question (see answer 4 below).  However, roommates, subletting and assignments continue to be among the more confusing issues facing landlords in rent controlled jurisdictions (in non-rent controlled cities, state law governs and is much clearer about the respective rights of the landlord and tenant in the subletting situation).

As to your actual question, you may not increase the rent because the tenant added a roommate. Under the Oakland rent and eviction control laws, once the tenancy terms are established as to the amount of rent and the services provided by the landlord in exchange for the rent, no other rent increases may be imposed other than as allowed by the annual rent increase, or by petition. The landlord may petition for additional rent increases based on the following grounds:

  • Banking: Saving rent increases that are not given in one year and imposing them in subsequent years.
  • Capital Improvements: Seeking a rent increase based on improvements that materially add to the value of the property and appreciably prolong its useful life or adapt it to new building codes. These improvements must primarily benefit the tenant. Increases are divided among all units benefited by the improvement and five years.
  • Uninsured Repairs: An increase for work performed to secure compliance with any state or local law to repair damage from fire, earthquake, or other casualty or natural disaster to the extent the repairs are not reimbursed by insurance. These increases are allocated and amortized like capital improvements.
  • Debt Service Costs: An increase that allows an owner to collect rents sufficient to cover the combined housing service and debt service costs for a loan secured by the property to finance a purchase of the property or improvements in the property that directly benefits the tenants.
  • Increased Housing Service Costs: An increase that compares two years of operating expenses and allows for an increase in situations where there has been an increase in those costs.
  • Constitutional Fair Rate of Return: By law, owners must be allowed an increase that allows them to earn a fair rate of return on their investment.

Of those grounds, your question would involve increased housing service costs. You might contact the Oakland Rent Board, or review their website, for additional assistance on whether your situation warrants such a petition.

As to increasing the security deposit, there does not appear to be any clear answer to that question in tenancies under a rent control law such asOakland’s. Some rent control cities, such asSanta   Monica, specifically prohibit it. Others, such asSan Francisco, seem to take no position.Oakland’s rent control law and regulations merely define ‘security deposit’ and ‘rent’ without stating specifically whether security deposits are covered by the same restrictions on increases as are applied to rent payments. However, ‘rent’ is defined as “The total consideration charged or received by an owner in exchange for the use or occupancy of a coverage unit including all housing services provided to the tenant.” That would seem to include the security deposit required at the beginning of the tenancy.

I spoke with a representative of the Oakland Rent Board to find out if it takes an official position on security deposit increases. According to the Rent Board officer, the Oakland Rent Board also takes no position on increasing security deposits. Personally, I find this odd, since questions about increasing the security deposit come up routinely. One argument is that you can serve a notice of change of terms of tenancy to increase the security deposit, but the tenant’s failure to pay it may not result in your ability to evict the tenant for not paying the increased amount. This is because of the rule that a unilateral change of terms of tenancy that is not otherwise allowed by the rent ordinance (such as the annual CPI rent increase) that alters the tenant’s rights or obligations may not be the basis for an eviction, so I think ultimately seeking the increased deposit amount would not be prohibited, but seeking to enforce it would not be successful.

However, given the definition of ‘rent’ stated above, it is more likely that you can legally require the tenant to increase the security deposit by the allowable CPI rent increase percentage each year. Also, while lease provisions that violate ordinances or statutes are often unenforceable, it might assist your security deposit increase position if your lease includes a provision to that effect. The ‘safest’ route would be to petition the Rent Board to approve an increase in security deposit to the state’s allowed maximum of the equivalent of two months’ rent for an unfurnished apartment and three months’ rent for a furnished apartment. If the rent board approves it, at least you would not have to worry about the tenant claiming you are violating the rent ordinance. If you do so, please let me know how it went.

Question 2: My family has a rental house in Burlingame that needs substantial repairs and remodeling. The tenant is 60+ years old and has been there for approximately 15 years. Are there special ordinances that I need to consider before giving a 60-notice to terminate the tenancy?
Answer 2: There is no form of rental or eviction control inBurlingame, and there is no state law I am aware of that would affect your right to terminate the tenancy you describe below. So, absent a state or local law that would otherwise restrict your ability to terminate the tenancy on a 60 day notice, the answer to your question would be ‘no.’

Question 3: Is there a form for the notice to perform covenant or quit? A tenant in my Oakland building (but not covered by the eviction control law) has a dog and the lease states no pet. What kind of form do I give her? And how do I service it?
Answer 3: AOA has various forms, and in your case, Form # 104 – 3 Day Notice to Cure Violation or Move Out would be the form to use for your situation, assuming you are  correct that the rental unit is not covered by the eviction control law in Oakland, Measure EE. If it is covered, there are additional notice requirements not found in the AOA form notice, and there is an additional requirement that the tenant receive a ‘pre-notice’ notice of the violation before the actual 3 Day Notice can be served. If you are not certain whether your unit is covered or not, you should consult with an attorney or the Oakland Rent Board to make that determination before serving any notices to the tenants.

The method of service of such a notice is set forth in Code of Civil Procedure Section 1162, copied in part below. The three methods are known as personal service, substitute service and ‘nail and mail’ service, respectively:

(1) By delivering a copy to the tenant personally.

(2) If he or she is absent from his or her place of residence, and from his or her usual place of business, by leaving a copy with some person of suitable age and discretion at either place, and sending a copy through the mail addressed to the tenant at his or her place of residence.

(3) If such place of residence and business cannot be ascertained, or a person of suitable age or discretion there can not be found, then by affixing a copy in a conspicuous place on the property, and also delivering a copy to a person there residing, if such person can be found; and also sending a copy through the mail addressed to the tenant at the place where the property is situated. Service upon a subtenant may be made in the same manner.

Question 4: I have three original tenants in a two-bedroom apartment. Two of them want to leave and the remaining one wants to bring on two new roommates. The lease (CAR form LR) has a paragraph 21 prohibiting sublet, assign or transfer without landlord’s approval. What issues are there and should I handle it as a 6.14 issue under SF rent board regulations?
Answer 4: As mentioned above in response to the first question, roommates, subletting and assignments continue to be among the more confusing issues facing landlords in rent controlled jurisdictions. The San Francisco rent ordinance supplements the lease’s sublease restriction if the tenant is replacing departing tenants and complies with the rent ordinance regulation 6.15 regarding submitting a request for new occupants with application information for the landlord’s review. The landlord has 14 days to approve or reject the applicant. I recommend you review the rent board’s website on subletting, and if you have any questions afterward, you may want to consult with your favorite legal professional for further guidance.

I was recently a speaker in a landlord-tenant seminar, which was attended by several staff attorneys from the Berkeley Rent Board, along with three attorneys as guest speakers. Two of the attorneys on the panel, both long-time practitioners in this field and very familiar with the issues raised by the sublet/assignment issue and the impact of the state law known as ‘Costa Hawkins’ (which allows landlords to impose market rate rent increases on any remaining occupants when the ‘last original tenant’ has moved out), disagreed as to the landlord’s best procedure when a remaining ‘original tenant’ seeks to replace departing roommates. One attorney, who teaches a class on subletting to another landlord association organization, believes the landlord should have absolutely no contact with the proposed subtenant, or even acknowledge the existence of the new occupants, for fear of somehow later on being denied the right to impose the market rate increase when the last original tenant moves out. My reading of the state law and local ordinance is not so restrictive, which view was shared by the Berkeleyrent board staff attorneys. I believe the most important thing is you want to make it very clear in writing to the new roommates that they are not your tenants, that they are subtenants of the remaining tenant, and that they are NOT original tenants under the rental agreement or otherwise, and so will be subject to the market rate rent increase if they remain in possession after x, the last remaining original tenant, vacates. As for serving the “6.14” notice as well, there is a split in opinion on that item as well, with some attorneys advising their clients to not use it, as it complicates the (relatively) clear provisions of the superior state law (Costa Hawkins). Others find it to be a worthwhile supplement to the state law rights imposed on the local rent ordinance. Perhaps one day an appellate court will issue a ruling on these issues and clarify the solution for everyone. The San Francisco Rent Board website section on subletting starts at http://www.sfrb.org/index.aspx?page=1040.

Question 5: We are preparing to rent some commercial space in an older building. Who would hold liability for ADA compliance, the owner or the tenant?
Answer 5: Responsibility forADA compliance is on the building owner and the building tenant, although the parties can agree by the lease which party will bear the burden of compliance. If there is no provision, then the lawsuit by the disabled person will name both the owner and the tenant, and the ultimate liability will be on the party who has exclusive control over the area that is not in compliance. So, a lease provision making it clear who is responsible for what can at least avoid the expensive finger-pointing that ensues when the landlord and the tenant get sued and then look to each other for indemnity (i.e. ‘you owe me for having gotten us both sued’).

Question 6: Is it legal to charge for carpet cleaning if stated in the rental or Lease contract?
Answer 6: At least as far as being able to deduct the cost of the cleaning from the security deposit, pursuant to Civil Code Section 1950.5 (the security deposit law) the tenant is only responsible for the cost of “The cleaning of the premises upon termination of the tenancy necessary to return the unit to the same level of cleanliness it was in at the inception of the tenancy.” You might be able to have a lease provision that simply stipulates that the carpet is to be returned as clean as it was provided to the tenant, and the tenant has the option of either having that cost taken from the security deposit or having the carpet cleaned to the same condition as it was provided. Realistically, if you use part of the deposit to have the carpet cleaned after the tenants leave, and there’s any evidence the carpet was not professionally cleaned before they vacated, you would probably withstand a small claims action by the tenant seeking the return of the deposit, especially if your lease had that provision (which would probably be most effective in simply discouraging the tenant from even making the claim).

Richard Beckman, of Beckman Blair, LLP has been practicing landlord-tenant law for over 19 years, primarily in rent-controlled jurisdictions such as San Francisco, Oakland and Berkeley. He represents clients in a broad range of real estate-related disputes, including partition of co-ownership interests, purchase contract disputes, insurance coverage analysis and land use. Mr. Beckman also specializes in all aspects of landlord-tenant issues, representing landlords and tenants in residential and commercial matters. He can be reached at 415-871-0070; email rich@beckmanblairllp.com or by visiting the website www.beckmanblairllp.com.