Legal Corner

Tenant Info, Rent Increase, Sublets

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Q: I’ve owned my buildings for several years and many of my residents are long-term tenants. I don’t seem to have any current contact information for most of my residents. The applications in the files are way out of date, and many files don’t contain any at all. Even the applications that are in the files have old and outdated telephone numbers. Do I have the right to request this information?

A: Of course. It is a good management practice to maintain current information on all of your residents. Put in the original lease that information has to be updated yearly. Prudent landlords will update the resident’s file annually with current telephone numbers, employment informa tion, vehicle license plates, email and emergency contact persons and phone num bers. Current telephone numbers should include home, work and cell numbers. Rather than asking your residents to complete a new application, the better method is to prepare a resident information form requesting this information, and ask the resident to fill in the blanks. Of course, it is also a good practice to photocopy rent checks as they are tendered to you. Most residents will not object to providing this information to you and will gladly complete your form. This simple exercise will identify the cooperative residents and those residents who are not. Although California law does not require that the resident provide the requested information, it does not prohibit your asking.

Q: I just sent out my annual rent increases to all of my residents. Because times are tough, I delayed sending them out and I kept the increases minimal. Well, I just got home, checked my messages, and got an earful from one of my more “vocal” residents. She claims that I was retaliating against her, and that the rent increase notice was not valid. She says that she won’t pay it and that I violated the law by even giving it to her. Something about her deducting $6.50 from her rent three or four months ago for a leaky faucet. I remember that she shorted the rent, but I didn’t really mind because she took care of the dripping faucet herself. What does this mean? What is “retaliation?” Did I do something illegal by serving my annual rent increase notice?

A: No. Although there are protections in place for certain tenant conduct, your resident is confused. A landlord cannot punish a tenant for exercising a “legal right.” The law offers tenants certain pro tections from retaliatory evictions and retaliatory acts. California law will infer or “presume” that a landlord has a retaliatory motive if he seeks to evict the tenant or take other retaliatory action within six months after the tenant has exercised cer tain protected rights including: using the repair and deduct remedy; complaining about the condition of the unit to a public agency after giving the landlord notice; or after filing a lawsuit based upon the condition of the unit.

The tenant must prove that she exercised one of these rights in the past six months and that her rent is current. The landlord may counter or “rebut” the tenant’s claims of retaliatory conduct by establishing that he did not have a retaliatory motive. If the landlord’s actions were based on a valid reason and not in response to the tenant’s exercise of a protected right, then a court would find that the landlord did not retaliate. If your annual rent increase was consistent with past practices, didn’t solely target this individual tenant, was based upon objective business reasons, and was not meant to “punish” this resident, then your rent increase would most likely not be deemed retaliatory. It is a good practice/policy to serve rent increases regularly taking into consideration the market. For example, under-market residents should be served first.

Q: My rental agreement states that the resident cannot sublet the apartment or assign the lease. I’m not sure I know the difference, can you explain? And why is that provision even there?

A: Often times a tenant wants to move in a roommate during the term of the lease or may wish to replace a recently departed roommate. When a resident wants to remain in the unit and allow another to reside with him, he wishes to “sublet” a portion of the unit to a third party.

When the resident gets a job transfer and wishes to move out, but wants to transfer the tenancy rights to another, he wishes to “assign” the lease to another. It is important that landlords know who their residents are and that proper screening techniques are utilized to ensure only qualified persons reside in the unit. That is why rental agreements prohibit residents from subletting or assigning the tenancy without the landlord’s prior written consent.

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, has successfully handled over 235,000 landlord tenant matters throughout California, and has collected over $140,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Please visit www.DuringerLaw.com for more information.

Commercial Leases

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Q: Most of my challenges come from my residential tenants. I have a question about handling a commercial property situation. I am about to enter into a ten-year term lease for an industrial unit in Southern California. The unit has been vacant for quite some time now and I don’t want to lose this deal. It seems like good tenants are few and far between lately. We’ve agreed on just about all of the deal points except a couple. At the last minute the tenant requested the lease be prepared with a subsidiary of his company rather than the parent company, saying it is for “tax reasons.” Additionally, he wants to make the use provision extremely broad rather than specific, allowing him to do just about anything in the premises without having to get my permission. He knows I need to lease the space, but I’m not sure I want to give in on these points. What are my options?

A: Negotiating commercial leases involves a bit of horse trading. Often, terms that are very important to your tenant may not be so important to you, and vice versa. Knowing the pros and cons of each deal point allows you to knowingly accept or reject certain risks when considering certain requests. Generally, parties meet somewhere in the middle of a request, allowing certain concessions, but protecting the interests of the Lessor. The tenant’s last-minute request to substitute a subsidiary in its stead is an attempt to shift the risk away from the financially stable parent company and obligate a less financially qualified entity, often times a mere shell with relatively few assets. Screen the proposed replacement tenant as you would any proposed tenant to determine if it meets your rental criteria. Is it an existing concern or a new entity recently formed solely for the purpose of signing this lease? Is it an independent business concern, generating its own revenue stream? Does it have assets of its own? Or is it merely a subsidiary of the parent with no independent means of sustainability. There are many options to offer that would allow the tenant to satisfy his “tax reason” while still protecting the Lessor’s interests.

You may allow the replacement tenant but require the parent company to guaranty the lease. The guaranty can range from an unconditional full-term guaranty to a limited guaranty based either on a certain period of time or a certain maximum exposure. An increased security deposit adds protection as well. Options such as an irrevocable declining letter of credit issued by a reputable financial institution allows parties to salvage deals that might otherwise fail.

“Use” provisions are important for a number of reasons. It is important that the tenant’s use does not overburden the facility or interfere with the neighbors. Certain unacceptable tenant uses may involve high levels of noise or the use of corrosive or carcinogenic materials or other toxic byproducts. As your facility is an industrial complex, parking is no doubt limited. It is important that the approved uses do not overburden the limited available parking. Rather than approving a very broad undefined use, it is better to identify the allowed use, but allow the tenant to request approval for a change of use in the event its operations change in the future.

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, has successfully handled over 235,000 landlord tenant matters throughout California, and has collected over $140,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Please visit www.DuringerLaw.com for more information.

Resident Managers, Gang Bangers & Drop Boxes

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Legal Corner

By Stephen C. Duringer, Esq.

Q: I’ve always treated my resident managers as independent contractors and just swapped out rent for management services. It seemed easier to just swap out rent for services, with less paperwork and less hassle. This procedure seemed to work just fine for years. I understand that there have been some changes in the law and that I’m not supposed to do it that way any longer. Is that true?

A: Yes, there have been some changes in the law the past couple of years regarding the relationship between a resident manager and the owner or management company employer. There has been a huge increase in Labor Board claims and litigation against landlords regarding this issue, in part due to the outrageous penalties, fees, costs and other damages that can be awarded due to non-compliance. Claims typically range from $50,000 to over $300,000!

A resident manager is an employee of the owner or management company, not an independent contractor. A written manager’s agreement, voluntarily signed by the employer and the resident manager is very important, but ensure that you are using the most current form provided by your local apartment association. If the manager does not agree in writing that the reduced or free rent is to be credited against the manager’s wages otherwise owed under California’s minimum wage law, then that credit is illegal and the manager must be retroactively paid for each hour worked - in some cases going back four years.

Most agreements will require that the employee prepare and submit a record, or a log, of days and hours worked. California law requires the employer to maintain time records of total hours worked per day and document when the employee started and stopped work each day. In addition, the employer should require a signed certification from the manager detailing the total hours worked during the preceding pay period. If a manager is required to live onsite as a condition of employment, then the maximum credit that the owner or management company may apply to the resident manager’s wages which would otherwise be due, was the lower of two-thirds of the market rent or $508.38 per month for a single manager and $752.02 per month for a couple, for the calendar year 2015. These monthly amounts increased to the lower of two-thirds of the market rent or $564.81 and $835.49, respectively, this past January 1, 2016.

Ensure that the hourly rate used complies with the minimum wage laws. In 2015 it was $9.00 per hour, and is now $10.00 per hour effective January 1, 2016. Also, every employer must provide all employees who work 30 days or more per year with paid sick leave. Sick days will accrue at a rate of one hour for every 30 hours worked. For example, employees who work 90 hours in one month would accrue three hours of paid sick leave for that month. An employer may limit the employee’s use of paid sick days to 24 hours (or three days) in each year of employment. Employees are entitled to use accrued paid sick days as early as the 19th day of employment. Accrued but unused paid sick days carry over to the following year of employment. Additionally, in the event employers require that their employees use their personal cell phones to perform their duties, then the employer must reimburse the employee for a reasonable percentage of the employee’s phone bill. Lots of issues to keep in mind. Contact a qualified labor law attorney for further clarification.

Q: I just received a very strange letter. Seems my local police department has identified one of my residents as an undesirable. They say he's suspected of being a gang banger and is dealing drugs and tagging the neighborhood. They say that if I don't evict him, the police will prosecute me for allowing a criminal to operate on my property. I may even lose my property! The family has been there for several years and other than a couple of bounced checks, they have been model tenants. This is the first I’ve heard of this. No one has ever complained before - no complaints, no drugs and no graffiti or tagging around my building. Help! I can’t afford a vacancy right now, and I think that the police might be wrong, what do I do?

A: In this upside down and crazy world we live in today, this actually is a growing trend in law enforcement. With a revolving door judicial system acting more like a “catch and release” fishing excursion than one that metes out consequences for truly bad behavior, law enforcement is focusing on the easier prey – landlords - in controlling crime in their jurisdictions. Rather than prosecute the criminal, many law enforcement agencies are taking the lazy way out and threatening the law abiding landlord, forcing them to evict the resident. Rather than locking up the bad guys, seems like the current trend is to simply shuffle them off to another community. If the police are certain he is dealing drugs and tagging, seems like the right thing to do would be to arrest him, prosecute him fully and send him off to the "gray bar hotel.”

If the letter you received is inconsistent with your experience with your resident, follow up with the police department by asking for documentation supporting their claim. Ask them to provide specific incidents, dates and times of wrongdoing. Have there been arrests on the property? Have illegal drugs been found there? Ask the office to identify any witnesses that would be willing to testify in court, if necessary. Ask other residents in the building and gather independent information. If the information you gather supports your resident's involvement in criminal activity, take action immediately. Consult your attorney to determine if you have enough facts to support a three-day nuisance notice or if a 30-day or a 60-day notice is appropriate. Remember, a letter from the police department is not sufficient evidence in court to base a nuisance notice on - testimony from percipient witnesses will be required in the event the resident contests the unlawful detainer action.

Q: I’ve been thinking of installing a drop box somewhere on my property so that the residents can put their rent checks in it. I’m thinking I’ll save them a stamp and get the rents sooner. Any problem with doing this?

A: Many landlords do exactly that, most with absolutely no problems whatsoever. If you are considering the practice, it is very important to install a secure box that cannot be removed or broken into, and provide your residents with written procedures regarding use of the drop box. Specifically, inform the residents that use of the box is optional, that they may use it for their convenience, but that there always is a risk of loss or theft. Rent will not be considered paid until you actually receive their check. And, of course, never have them deposit cash.

Also provide the residents with a physical address where they can personally deliver the rent (not a P.O. Box), if they prefer not to deposit the rent into the drop box. By not requiring the use of the drop box, the resident will bear the risk of loss, until you actually receive the rent. If you mandate the use of a drop box and fail to provide a physical address for payment or require payment to be made to a P.O. Box, courts will find that the risk of loss transfers to you upon their placement in the drop box or in the mail.

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, has successfully handled over 235,000 landlord tenant matters throughout California, and has collected over $140,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Please visit www.DuringerLaw.com for more information.

 

 

 

Inspections, Deductions, & Trees

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Q:  I am a very conscientious landlord.  I want to ensure that my rentals are well maintained and that any maintenance issues are addressed immediately.  Every year, I send a notice to my residents informing them that I will inspect each unit.  I have been doing this for years without any problems.  This month I received a letter from one of my tenants telling me that I had no right to enter his apartment to look around and that he would not let me in.  What do I do?  Can I force my way in to do the inspection?

A:  Your policy of doing annual inspections is admirable, and is practiced by responsible landlords throughout California.  Most tenants welcome a responsible landlord’s actions in ensuring that all is well, and voluntarily cooperate in providing access upon the landlord’s reasonable request.  It is clearly in the best interest of all to ensure that any maintenance issues are promptly addressed and that a spirit of communication and cooperation exists between a landlord and the residents.  The trouble is your resident is right.  There is no specific provision in California law requiring a resident to allow the landlord access to merely “inspect” the premises.

California law states that a landlord can enter a rental unit only for certain reasons.  Those reasons are in an emergency; when the tenant has moved out or abandoned the premises; to make necessary or agreed repairs, decorations, alterations or other improvements; to show the unit to prospective purchasers, tenants or lenders; to provide entry to contractors or workers who are to perform work on the unit; or to conduct a pre-move out inspection at the end of the tenancy pursuant to court order; or to inspect the smoke detector; or inspect the installation of a waterbed.  Conspicuously absent from this body of law is the unfettered right of a landlord to just inspect for the pure sake of just making sure everything is all right.  You cannot force your tenant to allow access for the purpose of inspection.

 

Q: When my most recent resident moved in several months ago, he deducted $100 from his second month’s rent because he said he had to fix a few things in the unit. I didn’t say anything at the time, I needed the unit rented, and I didn’t want to upset my new tenant. Since then, he has been able to find something wrong each and every month, deducting a little bit each time. I told him I didn’t think that was right, but he did it again this month. He told me that California law says he can “repair and deduct” for anything wrong in his apartment. Is this true?

A: No. California law (specifically California Civil Code Section 1941.2) provides that a residential tenant my make repairs and deduct the cost from the rent only under certain very limited circumstances. These limited circumstances require the tenant to give the landlord notice of the dilapidation before using the repair and deduct remedy. After giving notice, the landlord has a “reasonable time” to make the repairs, before entitling the resident to repair and deduct. Only defects that are serious and render the premises uninhabitable will qualify for this remedy.

Tenants may only invoke this remedy twice in any 12-month period and each time the remedy is utilized, the deduction cannot exceed one month’s rent. In your situation, it appears that the tenant is abusing a privilege that is reserved for tenants with serious dilapidations in their apartments. Without providing notice to you of the defect, and an opportunity for you to correct any serious defect, the tenant is not entitled to deduct anything from his rent. Provided you haven’t condoned his conduct or waived your rights to accept the full amount of rent, you may demand that the tenant pay all amounts previously deducted and become current.

 

Q: Woke up last night to the sound of my neighbor’s tree crashing through the roof of my garage. Not the whole tree, but sure seemed like it at three in the morning! A giant branch broke off his oak tree, came crashing down and took out the fence and half of my garage. I think there is more to come because this oak tree is very old and has lots of branches that seem to all grow my way. Many are 30 feet or more in the air and extend 20 to 30 feet into my property. What are my rights? Can I make him cut down the tree?

A: Over-hanging tree branches are considered a nuisance and can be abated. Your neighbor, if the tree is his, will be responsible for the damage caused by the falling tree branch. Additionally, you have certain limited rights to use “self-help” to prevent further damage or injury. The courts recognize your right to cut the tree branches that extend beyond the property line, provided that such self-help does not adversely affect the health of the tree, i.e., you can trim, but you can’t kill it!

Alternatively, you could file a civil action for recovery of your damages and to abate the nuisance by requesting the court to order the neighbor to “abate the nuisance” by trimming the tree. You cannot require your neighbor to “cut down the tree” nor can you require him to trim beyond the property line. One issue to check before you get too upset with your neighbor is to see where the trunk of the tree sits. If the entire trunk originates entirely on your neighbor’s property, then it is his tree, and he bears the responsibility for any damage it may cause. If the tree “straddles” the property line, then you and your neighbor own the tree as tenants in common. In that case, it doesn’t matter how much is on his or your side, you own it equally and are equally responsible. In that case, neither property owner may remove the tree without the adjoining neighbor’s permission. You may trim the branches that extend in your direction, but may not destroy the tree.

This article is presented in a general nature to address typical landlord tenant legal issues.  Specific inquiries regarding a particular situation should be addressed to your attorney.  The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, has successfully handled over 235,000 landlord tenant matters throughout California, and has collected over $140,000,000 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643.  Please visit www.DuringerLaw.com for more information.

The right to ‘smoke’ marijuana...

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Q: My apartment building has always been a nice and quiet community - no bother, no worries. Everyone keeps to themselves; never have complaints about behavior. Well, that all changed when my manager let down her guard and didn’t fully screen my newest residents! Ever since these two characters moved in, flashing me their “doctor’s note” saying they could smoke pot, they’ve been puffing away ever since. Apparently they claim to be “disabled” and that because they are “disabled” they get to do whatever they want. Huge clouds of smoke literally billow out of their apartment! I’m concerned about lots of things, but mostly the little girl who lives next door. I believe that she’s asthmatic. How much more of this must I, and the neighbors, take?

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