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Legal Q & A – By Richard Beckman, Attorney

Posted on 01. Dec, 2016 by in all, Magazine Articles

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Question 1: A company would like to rent one of our apartments for their out-of-town employees. An employee would stay 3-4 months and then a new employee would come in. My questions: How do I verify a company’s credit and integrity? What should I be leery of, if anything?
Answer 1: The Dun and Bradstreet agency issues credit reports on businesses, for a fee (though it may offer a free trial). The Better Business Bureau (BBB) provides a limited review of certain businesses, which may be free. As to what you should be leery of, that is a broad area, and you should probably seek a specific legal opinion on the issues that may arise when renting to an employer master tenant who intends to cycle subtenants (even as employees) through the unit.

Generally, having a rental agreement, the maximum security deposit and a clear understanding of the credit worthiness of the tenant, just as in a ‘regular’ situation, would be the minimum. Since the employees will not be your tenants, I would also require the tenant to have a commercial insurance policy that adds you as a named insured. If the tenant is an ‘entity’ (e.g. corporation, llc etc)  a personal guaranty by someone would help avoid the situation where the tenant is or becomes finanancially unable to meet its obligations. There may be local restrictions on such arrangements (similar to Airbnb local laws restricting the number of short term rentals allowed), but I am not aware of any such laws.

Question 2: What is the legal amount I can charge for late fee for my Oakland single family home? Rent amount will be $4,000 per month. Also, can I raise rent if I sign a one-year lease before the lease expires?
Answer 2: There is no fixed amount for a late fee that is set by case or statute (regardless of the type of rental unit). Because of a legal concept referred to as ‘liquidated damages,’ Civil Code Section 1671 generally prohibits pre-determined late fees in rental agreements.  The exception to this rule is when it would be difficult to figure out the actual cost to the landlord caused by the late rent payment, and the parties (the landlord and the tenant) agree in advance to an amount that is a reasonable estimate of costs that the landlord will face as a result of the late payment (“a provision in a contract liquidating damages for the breach of the contract is void except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.”). Of course, being a statute, it is not easy to understand, but the general concept is that a late fee that is so high that it amounts to a ‘penalty’ is not legally valid. While most leases contain standard late fee provisions, and most tenants do not challenge them, a judge asked to enforce the payment obligation may reject the provision when the landlord can not show both the pre-lease negotiation required by Section 1671, or the reasonableness of the amount charged.

As to the rent increase, if the unit is not subject to rent control, you can increase the rent to the current fair rental value when the current lease term expires, whether you and the tenant enter into a new one year lease or not (i.e. allow the expiring lease to go ‘month to month’).

Question 3:   What is considered normal wear and tear for deductions from the security deposit? Is there a list available?
Answer 3: It is basically common sense decisions that guide these issues. There is no ‘list’ available that I know of. Certain items (e.g. appliances, carpets, toilets, heaters etc) have estimated useful lives, but whether a tenant’s use of the item caused it to fail prematurely is often just a guess. Like late fees discussed above, deductions from security deposits are governed by statute (Civil Code 1950.5), but when a judge is asked to decide what is tenant-caused damage and what is normal wear and tear, in my experience the burden is on the owner to establish relatively clearly that the tenant caused the damage or broke the item in question.

 

Question 4: I have a lease listing where a couple (unmarried man and a woman) applied to rent the house. They filled out two separate applications and I was given $80 check from the woman for the credit and background screening fee to cover the fee for both. I somehow had only one person sign a screening fee receipt, and I used a copy of that same receipt to give back to the other person as a proof that screening fee was received from both applicants. We could not complete the transaction due to lack of cooperation from the woman’s employer. I later received an email from the male tenant (who is an attorney) asking me to return the $40 screening fee to his co-applicant because she did not sign a screening fee receipt. I sent both applicants an email asking them if they are still interested in renting the unit if the owner is willing to waive the verification of employment. However, I got no response.
I need to know two things;
1. Should I return the screening fee?
2. Since the transaction was not completed, what notice should I send to the applicants? Is a denial notice required?
Answer 4: Even without the issue of the screening fee receipt, I would return the $40.00, just to avoid the possibility of these people going gonzo on you, as spurned attorney applicants have been known to do! As for sending the adverse action letter, it is probably not necessary, since you did not reject them because of their credit score.

Question 5: When you have a lease with a tenant do you or the tenant have to give proper notice to vacate prior to the lease expiration date?
Answer 5: No, neither party is required to provide notice. However, I always suggest that if you do not intend to renew the expiring lease, you give the tenant sufficient notice, as a courtesy, that when the lease expires they will be expected to have vacated the premises. It is not legally required, but is really recommended as a way to avoid an unpleasant surprise for both you and the tenants who may have simply expected the lease would ‘roll over’ to a month to month rental agreement. Conversely, if you hope the tenants will stay, I would inquire as to their intentions, so you can plan appropriately.

Question 6: I have an apartment complex in Richmond, CA and one in El Cerrito. I’m wondering how much notice I need to give for a rent increase in each city?
Answer 6: The state law requirement for rent increase notices are 30 days if the increase is no more than 10%, or 60 days if the increase is over 10%. Nothing in El Cerrito or Richmond affects that requirement.

Question 7: I have a couple currently on a lease in my Sunnyvale unit. They are being a nuisance to the community by arguing every night. The people above them are constantly complaining about them. I am trying to concentrate on bigger things like getting a new roof, tree trimming, solar powered common areas and fiber optic internet, and can no longer stand being told I’m a poor manager because I haven’t kicked them out. If they weren’t on a lease, I’d give them a 60 day notice to move. Since they are on a lease, what is the best path to take to have them leave?
Answer 7: I would send a letter to the nuisance tenants with a reference to the lease provision (or the general law against nuisance if you have no written rental agreement) that prohibits disturbing neighbors or otherwise being a nuisance and warn them that continued violation of that provision will result in eviction proceedings. Specify the nature of the complaints, so the bad tenants know what exactly they need to fix, though not necessarily the source of the complaints, in order to avoid even worse tenant-to-tenant relations. Then, if they fail to reform, you can probably terminate the tenancy despite the remaining lease term, on the basis of breach of the lease (or the statute that governs nuisance conduct generally, Civil Code Section 3479). However, evictions based on ‘nuisance’ are fact-specific, so a consultation with an experienced attorney would be helpful before you serve a termination notice.

Question 8: My tenant recently complained to me that her neighbor’s cat is coming into her back yard and damaging and digging up her plants. Do I, as a landlord, have any legal responsibility to my tenant to keep the neighbor’s cat from coming into her back yard or to educate the tenant on her options under animal control laws?

In this situation, both the cat owner and the tenant who does not want the cat in her back yard are our tenants. The properties are neighboring parcels (an apartment and a single family home).
Answer 8: Generally, the landlord does not have a general duty to her tenants to control a neighbor’s cat. However if the offending cat belongs to another of your tenants, even if in a separate building, you may have a duty to notify the cat owner to take steps to control the cat. Since you have a measure of control over the cat owner, by virtue of your relationship as her landlord, you have the ability to notify the tenant that her cat is affecting a neighboring tenant, and that the cat owner needs to take some steps to prevent the cat from crossing the boundary, or the cat owner may be liable for the cat’s conduct in destroying the neighbor’s landscaping. But in reality, the gardener tenant can take steps, I believe, to help, by, for example, getting some anti-cat spray to spray her plants with and protect them from the cat. And, as you suggest, she can always contact animal control. But this would appear to call for a ’let’s work this out’ kind of thing, rather than a litigation-based solution.

Question 9:  I have two questions:

1) Can I send the tenant a text as my 24 hour notice to enter for repairs (the tenant replied that the planned entry for repairs was ok with her)?

2) I evicted a tenant from one rental unit in my building. I learned later that the tenant moved into another unit in the building with someone they know. Is that considered trespassing, or am I allowed to issue a warning letter to remove the evicted tenant because I didn’t agree to it?
Answer 9: Civil Code Section 1954 governs the details of the owner’s right of entry. The text method of notice is not proper notice, and if the tenant did not respond, or objected, I would not enter on such notice. But if the tenant approves the notice of entry, then there is no problem.  Section 1954 also provides that the tenant and the landlord may agree orally to an entry to make agreed repairs or supply agreed services. The oral agreement shall include the date and approximate time of the entry, which shall be within one week of the agreement. In this case, the landlord is not required to provide the tenant a written notice. Also, a written notice of entry is not required under 1954 to respond to an emergency, or if the tenant is present and consents to the entry at the time of entry.

As to the second question, an evicted tenant is not trespassing by visiting or even moving in with, another tenant in another unit (as long as the other tenant consents of course). It may be a violation of the other tenant’s lease agreement, and there is a remedy for that (as you note, most such provisions require the landlord’s prior written consent), but it is not trespassing

ALERTS AND UPDATES:

On Nov. 8, voters in Alameda, Richmond, Mountain View, Burlingame and San Mateo will decide whether to enact new rent control proposals. In Oakland, where there is already rent and eviction control, Measure JJ seeks to impose new regulations limiting landlords’ ability to increase rents and expand just-cause eviction protections. However, all measures were to be voted on after the publication date of this edition of the AOA Magazine, and so members should expect to receive an update on the results of the vote on each measure after election day.

 

Richard Beckman, of Beckman Blair, LLP has been practicing landlord-tenant law for over 24 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.