California Landlord Law Book V15
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& Ralph Warner, J.D.
15th Edition
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15th Edition
The California
Landlord’s Law Book:
Rights &
Responsibilities
Attorneys David Brown & Janet Portman,
& Ralph Warner, J.D.
LAW for ALL
FIFTEENTH EDITION MARCH 2013
Editor MARCIA STEWART
Cover Design SUSAN PUTNEY
Book Design TERRI HEARSH
Proofreading ROBERT WELLS
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ISSN 2163-0313 (print)
ISSN 2326-0114 (online)
ISBN 978-1-4133-1853-1 (pbk)
ISBN 978-1-4133-1854-8 (epub ebook)
This book covers only United States law, unless it specifically states otherwise.
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About the Authors
David Brown practices law in the Monterey, California, area, where he has
represented both landlords and tenants in hundreds of court cases—most of which
he felt could have been avoided if both sides were more fully informed about
landlord/tenant law. Brown, a graduate of Stanford University (chemistry) and the
University of Santa Clara Law School, is the author of Fight Your Ticket & Win in
California, Beat Your Ticket: Go to Court & Win, and The California Landlord’s Law
Book: Evictions, and the coauthor of The Guardianship Book for California.
Ralph Warner is founder and publisher of Nolo, and an expert on landlord/tenant
law. Ralph has been a landlord, a tenant, and, for several years, a property manager.
Having become fed up with all these roles, he bought a single-family house.
Janet Portman, an attorney and Nolo’s Co-Executive Editor, received under graduate
and graduate degrees from Stanford and a law degree from Santa Clara University.
She is an expert on landlord/tenant law and the coauthor of Every Landlord’s Legal
Guide, Every Landlord’s Guide to Finding Great Tenants, Every Tenant’s Legal Guide,
Renters’ Rights, Leases & Rental Agreements, and Negotiate the Best Lease for Your
Business. Janet writes a nationally syndicated column on landlord-tenant issues,
“Rent It Right,” which appears in the Chicago Tribune and The Boston Globe, among
other newspapers.
Table of Contents
e California Landlord’s Legal Companion .................................................................. 1
California-Specific Legal Information ............................................................................................................ 1
California Legal Forms and Notices ............................................................................................................... 1
California Rent Control Rules ........................................................................................................................... 1
How (and Why) to Use is Book ................................................................................................................... 2
Evicting a Tenant .................................................................................................................................................... 2
Renting Out a Condo or Townhouse ............................................................................................................ 2
Who Should Not Use is Book ...................................................................................................................... 2
1
Renting Your Property: How to Choose Tenants
and Avoid Legal Pitfalls
........................................................................................................................ 5
Adopt a Rental Plan and Stick to It ................................................................................................................ 6
Advertising Rental Property .............................................................................................................................. 6
Dealing With Prospective Tenants ................................................................................................................. 7
Checking Background, References, and Credit History of Potential Tenants ...........................16
Choosing—And Rejecting—An Applicant ...............................................................................................22
Holding Deposits ..................................................................................................................................................26
2
Understanding Leases and Rental Agreements .......................................................29
Oral Agreements Are Not Recommended ...............................................................................................31
Written Agreements: Which Is Better, a Lease or a Rental Agreement? .....................................32
Foreign Language Note on California Leases and Rental Agreements ........................................35
Common Legal Provisions in Lease and Rental Agreement Forms ...............................................36
How to Modify and Sign Form Agreements............................................................................................54
Cosigners .................................................................................................................................................................. 58
Illegal Lease and Rental Agreement Provisions .......................................................................................60
3
Basic Rent Rules ..........................................................................................................................................65
How Much Can You Charge? ..........................................................................................................................66
When Rent Is Due ................................................................................................................................................66
Where and How Rent Is Due...........................................................................................................................68
Late Charges ...........................................................................................................................................................69
Returned Check Charges ..................................................................................................................................71
Partial Rent Payments ........................................................................................................................................ 71
4
Rent Control ..................................................................................................................................................75
Property Exempt From Rent Control..........................................................................................................77
Local Rent Control Administration .............................................................................................................77
Registration of Rental Properties ..................................................................................................................77
Rent Formula and Individual Adjustments ..............................................................................................78
Security Deposits .................................................................................................................................................79
Certification of Correct Rent Levels by Board .........................................................................................79
Vacancy Decontrol .............................................................................................................................................. 80
Tenant Protections: Just Cause Evictions ..................................................................................................80
Rent Control Board Hearings ..........................................................................................................................83
Legal Sanctions for Violating Rent Control ..............................................................................................86
5
Security Deposits ...................................................................................................................................... 89
Security Deposits Must Be Refundable ...................................................................................................... 90
How Landlords May Use Deposits ...............................................................................................................91
Dollar Limits on Deposits ................................................................................................................................. 91
How to Increase Deposit Amounts .............................................................................................................92
Last Month’s Rent ................................................................................................................................................92
Interest, Accounts, and Record Keeping on Deposits .........................................................................93
Insurance as a Backup to Deposits ............................................................................................................... 95
When Rental Property Is Sold ........................................................................................................................95
When You’re Purchasing Rental Property .................................................................................................96
6
Property Managers ................................................................................................................................. 99
Hiring Your Own Manager ............................................................................................................................100
Avoiding Legal Problems................................................................................................................................ 101
Management Companies ...............................................................................................................................111
An Owner’s Liability for a Manager’s Acts .............................................................................................. 112
Notifying Tenants of the Manager .............................................................................................................113
Firing a Manager .................................................................................................................................................114
Evicting a Manager ............................................................................................................................................114
7
Getting the Tenant Moved In ....................................................................................................117
Inspect and Photograph the Unit ...............................................................................................................118
Send New Tenants a Move-In Letter ........................................................................................................ 125
First Month’s Rent and Security Deposit Checks ................................................................................129
8
Lawyers, Legal Research, Eviction Services, and Mediation ......................131
Legal Research Tools ........................................................................................................................................132
Mediating Disputes With Tenants ..............................................................................................................135
Nonlawyer Eviction Services ........................................................................................................................ 136
Finding a Lawyer .................................................................................................................................................137
Paying a Lawyer .................................................................................................................................................. 138
Resolving Problems With Your Lawyer ....................................................................................................139
9
Discrimination...........................................................................................................................................141
Legal Reasons for Refusing to Rent to a Tenant ...................................................................................142
Sources of Discrimination Laws .................................................................................................................. 146
Forbidden Types of Discrimination ............................................................................................................147
Occupancy Limits ..............................................................................................................................................161
Legal Penalties for Discrimination ............................................................................................................. 163
Owner-Occupied Premises and Occasional Rentals ......................................................................... 164
Managers and Discrimination ..................................................................................................................... 165
Insurance Coverage for Discrimination Claims ................................................................................... 165
10
Cotenants, Subtenants, and Guests ................................................................................... 169
Renting to More an One Tenant ............................................................................................................170
Subtenants and Sublets ...................................................................................................................................171
When a Tenant Brings in a Roommate .................................................................................................... 173
If a Tenant Leaves and Assigns the Lease to Someone ......................................................................174
11
e Landlord’s Duty to Repair and Maintain the Property ...................... 177
State and Local Housing Standards .......................................................................................................... 179
Enforcement of Housing Standards ..........................................................................................................180
Maintenance of Appliances and Other Amenities ............................................................................ 183
e Tenant’s Responsibilities ....................................................................................................................... 184
e Tenant’s Right to Repair and Deduct .............................................................................................. 185
e Tenant’s Right to Withhold Rent When the Premises Aren’t Habitable ......................... 186
e Landlord’s Options If a Tenant Repairs and Deducts or Withholds Rent ....................... 188
e Tenant’s Right to Move Out .................................................................................................................191
e Tenant’s Right to Sue for Defective Conditions ......................................................................... 193
Avoid Rent Withholding and Other Tenant Remedies by Adopting a High-Quality Repair
and Maintenance System
.......................................................................................................................... 196
Tenant Updates and Landlord’s Regular Safety and Maintenance Inspections .................... 202
Tenants’ Alterations and Improvements ................................................................................................ 205
Cable TV ................................................................................................................................................................209
Satellite Dishes and Other Antennas ....................................................................................................... 209
12
e Landlord’s Liability for Dangerous Conditions,
Criminal Acts, and Environmental Health Hazards
...........................................215
Legal Standards for Liability ..........................................................................................................................217
Landlord’s Responsibility to Protect Tenants From Crime ............................................................. 224
How to Protect Your Tenants From Criminal Acts While Also Reducing Your Potential
Liability
............................................................................................................................................................... 229
Protecting Tenants From Each Other (and From the Manager) .................................................. 235
Landlord Liability for Drug-Dealing Tenants ......................................................................................... 237
Liability for Environmental Hazards ......................................................................................................... 240
Liability, Property, and Other Types of Insurance .............................................................................. 263
13
e Landlord’s Right of Entry and Tenant’s Privacy .......................................... 269
e Landlord’s Right of Entry ...................................................................................................................... 270
Entry by Others .................................................................................................................................................. 277
Other Types of Invasions of Privacy .......................................................................................................... 278
What to Do When Tenants Are Unreasonable .................................................................................... 279
Tenants’ Remedies If a Landlord Acts Illegally .....................................................................................280
14
Raising Rents and Changing Other Terms of Tenancy ................................... 283
Basic Rules to Change or End a Tenancy ................................................................................................284
Rent Increase Rules ...........................................................................................................................................284
Preparing a Notice to Raise Rent ................................................................................................................290
How to Serve the Notice on the Tenant ................................................................................................. 293
When the Rent Increase Takes Effect .......................................................................................................294
Changing Terms Other an Rent ............................................................................................................295
15
Retaliatory Rent Increases and Evictions .....................................................................299
Types of Prohibited Retaliation ...................................................................................................................300
Proving Retaliation ........................................................................................................................................... 301
Avoiding Charges of Retaliation ................................................................................................................. 302
Liability for Illegal Retaliation ......................................................................................................................305
16
e ree-Day Notice to Pay Rent or Quit .................................................................309
When to Use a ree-Day Notice to Pay Rent or Quit .....................................................................310
How to Determine the Amount of Rent Due .......................................................................................310
Directions for Completing the ree-Day Notice to Pay Rent or Quit .....................................313
Serving the ree-Day Notice on the Tenant ........................................................................................314
When the Tenant Offers to Pay Rent ........................................................................................................318
e Tenant Moves Out ....................................................................................................................................318
If the Tenant Won’t Pay Rent (or Leave)...................................................................................................319
17
Self-Help Evictions, Utility Terminations, and
Taking Tenants’ Property
...............................................................................................................321
Forcible Evictions ..............................................................................................................................................322
Blocking or Driving the Tenant Out Without Force..........................................................................323
Seizing the Tenant’s Property and Other Harassment ......................................................................324
Effect of Landlord’s Forcible Eviction on a Tenant’s Liability for Rent ........................................324
18
Terminating Tenancies .................................................................................................................... 327
e 30-, 60-, or 90-Day Notice .................................................................................................................... 329
e ree-Day Notice in Cities at Don’t Require Just Cause for Eviction .......................... 337
Termination When Just Cause for Eviction Is Required ...................................................................344
Termination Without Notice ...................................................................................................................... 353
e Initial Move-Out Inspection Notice ................................................................................................ 353
19
When a Tenant Leaves: Month-to-Month Tenancies,
Fixed-Term Leases, Abandonment, and Death of a Tenant
...................... 357
Terminating Month-to-Month Tenancies.............................................................................................. 358
Terminating Fixed-Term Leases ...................................................................................................................360
Termination by Tenant Abandoning Premises ....................................................................................364
What to Do When Some Tenants Leave and Others Stay ..............................................................367
Death of a Tenant .............................................................................................................................................368
20
Returning Security Deposits ...................................................................................................... 373
Basic Rules for Returning Deposits ............................................................................................................ 375
Initial Move-Out Inspection and Tenant’s Right to Receipts ........................................................ 376
Final Inspection .................................................................................................................................................. 385
Deductions for Cleaning and Damages ...................................................................................................386
Deductions for Unpaid Rent ........................................................................................................................387
Preparing an Itemized Statement of Deductions ............................................................................... 389
Small Claims Lawsuits by the Tenant ....................................................................................................... 394
If the Deposit Doesn’t Cover Damage and Unpaid Rent .................................................................399
21
Property Abandoned by a Tenant ....................................................................................... 403
Handling, Storing, and Disposing of Personal Property ...................................................................404
Motor Vehicles Left Behind ..........................................................................................................................408
Appendixes
A
Rent Control Chart ...............................................................................................................................411
Reading Your Rent Control Ordinance ...................................................................................................412
Finding Municipal Codes and Rent Control Ordinances Online .................................................. 413
Rent Control Rules by California City .......................................................................................................415
B
How to Use the Interactive Forms on the Nolo Website ............................. 445
Editing RTFs .........................................................................................................................................................446
List of Forms Available on the Nolo Website .......................................................................................446
Index ...........................................................................................................................................................................449
e California Landlord’s Legal Companion
H
ere is a concise legal guide for people who
own or manage residential rental property in
California. It has two main goals: to explain
California landlord/tenant law in as straightforward
a manner as possible, and to help you use this legal
knowledge to anticipate and, where possible, avoid
legal problems.
California-Specific
Legal Information
This book concentrates on the dozens of state legal
rules associated with most aspects of renting and
managing residential real property. For example, we
include information on leases, rental agreements,
managers, credit checks, security deposits, discrimi-
nation, invasion of privacy, the landlord’s duty to
maintain the premises (and tenant rights if you don’t),
liability for tenant exposure to mold, how to deal with
bedbugs, how to increase the rent or terminate for
nonpayment of rent, what you can legally do with a
tenant’s abandoned property, and much more. This
book also covers key federal laws that affect landlords,
such as lead-paint disclosure rules, and highlights
important local rules, particularly rent control (see
below) and health and safety standards.
California Legal Forms
and Notices
We provide over 40 practical, easy-to-use, and legal
forms, notices, letters, and checklists throughout this
book, including rental applications, leases, repair
notices, warning letters, notice of entry forms, security
deposit itemizations, move-in and move-out letters,
disclosure forms, three-day nonpayment of rent
and other termination notices, and more. We clearly
explain what form you need for different situations,
with clear instructions on how to prepare the form
(including how to provide proper legal notice when
required). We also provide filled-in samples in the text.
All forms are available for download on the Nolo
website on a special companion page for this book as
described below.
TIP
Put it in writing. Using the forms, checklists,
and notices included in this book will help you avoid legal
problems in the first place, and minimize those that can’t be
avoided. e key is to establish a good paper trail for each
tenancy, beginning with the rental agreement and lease
through a termination notice and security deposit itemization.
Such documentation is often legally required and will be
extremely valuable if attempts at resolving disputes with your
tenant fail.
California Rent Control Rules
Many of you will own rental properties in areas
covered by rent control ordinances. These laws not
only establish how much you can charge for most
residential living spaces, they also override state
law in a number of other ways. For example, many
rent control ordinances restrict a landlord’s ability
to terminate month-to-month tenancies by requiring
“just cause for eviction.” We handle rent control
in three ways: First, as we explain your rights and
responsibilities under state law in the bulk of this
book, we indicate those areas in which rent control
laws are likely to modify or change these rules.
Second, we provide a detailed discussion of rent
control in Chapter 4. Third, we provide summaries
(see Appendix A) of key rent control rules, particularly
how they affect evictions, in 16 California cities with
rent control. If you own rental property in a rent
control city, it’s crucial that you have a current copy of
2
|
THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
the local ordinance. You can get a copy from your city
rent control board or online.
How (and Why) to Use is Book
This book provides a roughly chronological treatment
of subjects important to landlords—beginning with
taking rental applications and ending with returning
security deposits when a tenant moves out. But you
shouldn’t wait until a problem happens to educate
yourself about the law.
With sensible planning, you can either minimize—
or avoid—the majority of serious legal problems
encountered by landlords. For example, in Chapter 11
we show you how to plan ahead to deal with those
few tenants who will inevitably try to invent bogus
reasons why they were legally entitled to withhold
rent. Similarly, in Chapter 9 we discuss ways to be sure
that you, your managers, and other employees know
and follow antidiscrimination laws and, at least as
important, make it clear that you are doing so. We take
you through most of the important tasks of being a
landlord. Most of these tasks you can do yourself, but
we are quick to point out situations when an attorney’s
help will be useful or necessary.
We believe that in the long run a landlord is best
served by establishing a positive relationship with
tenants. Why? First, because it’s our personal view
that adherence to the law and principles of fairness
is a good way to live. Second, your tenants are
your most important economic asset and should be
treated as such. Think of it this way: From a long-
term perspective, the business of renting residential
properties is often less profitable than is cashing in
on the appreciation of that property. Your tenants are
crucial to this process, since it is their rent payments
that allow you to carry the cost of the real property
while you wait for it to go up in value. And just as
other businesses place great importance on conserving
natural resources, it makes sense for you to adopt
legal and practical strategies designed to establish and
maintain a good relationship with your tenants.
Evicting a Tenant
This book, The California Landlord’s Law Book: Rights
& Responsibilities, is the first of a two-volume set. It
explains how to terminate a tenancy, but if you need
to evict a tenant, you’ll want to consult the second
volume, The California Landlord’s Law Book: Evictions.
The Evictions volume provides a step-by-step guide
and all the necessary forms and instructions for ending
a tenancy and doing your own evictions.
Renting Out a Condo
or Townhouse
If you are renting out your condominium or town-
house, use this book in conjunction with your
homeowners’ association’s CC&Rs (covenants,
conditions, and restrictions). These rules may affect how
you structure the terms and conditions of the rental
and how your tenants may use the unit. For example,
many homeowners’ associations control the number
of vehicles that can be parked on the street. If your
association has a rule like this, your renters will need to
comply with it, and you cannot rent to tenants with too
many vehicles without running afoul of the rules.
You need to be aware that an association rule
may be contrary to federal, state, or local law. For
instance, an association rule that banned all persons
of a certain race or religion from the property would
not be upheld in court. And owners of condominium
units in rent-controlled areas must comply with the
ordinance, regardless of association rules to the
contrary. Unfortunately, it’s not always easy to know
whether an association rule will pass legal muster. To
know whether a particular rule is legally permissible is
an inquiry that, in some cases, is beyond the scope of
this book.
Who Should Not Use is Book
Do not use this book or forms in the following
situations
•Renting commercial property for your business. Legal
rules and practices vary widely for commercial
rentals—from how rent is set to the length and
terms of leases.
•Renting out a space or unit in a mobile home park or
marina. Different rules often apply. For details,
check out the California Department of Housing
and Community Development publication, 2012
THE CALIFORNIA LANDLORD’S LEGAL COMPANION|3
Mobilehome Residency Law, available at www.hcd.
ca.gov/codes/mp/2012MRL.pdf.
•Renting out a live/work unit (such as a loft). While
you will be subject to state laws governing
residential units, you may have additional
requirements (imposed by building codes) that
pertain to commercial property as well. Check
with your local building inspector’s office for the
rules governing live/work units.
Get Updates, Forms, and More at This
Book’s Companion Page on Nolo.com
You can download the lease, rental agreement, and all
of the other forms and agreements in this book at:
www.nolo.com/back-of-book/LBRT.html
When there are important changes to the information
in this book, we’ll post updates on this same dedicated
page (what we call the book’s companion page). You‘ll
find other useful information on this page, too, such as
author blogs, podcasts, and videos. See the end of the
table of contents for a complete list of forms available
on nolo.com.
Abbreviations Used in This Book
We make frequent references to the California Civil
Code (CC) and the California Code of Civil Procedure
(CCP), important statutes that set out landlords’ rights
and responsibilities. We use the following standard
abbreviations throughout this book for these and other
important statutes and court cases covering landlord
rights and responsibilities. ere are many times when you
will surely want to refer to the complete statute or case.
See Chapter 8 for advice on how to find a specific statute
or case and do legal research.
California Codes
CC Civil Code
CCP Code of Civil Procedure
UHC Uniform Housing Code
B&P Business and Professions Code
H&S Health and Safety Code
CCR California Code of Regulations
Ed. Code Education Code
Federal Laws
U.S.C. United States Code
Cases
Cal. App. California Court of Appeal
Cal. Rptr. California Court of Appeal and
California Supreme Court
Cal. California Supreme Court
F. Supp. United States District Court
F.2d, F.3d United States Court of Appeal
U.S. United States Supreme Court
Opinions
Ops. Cal. Atty. Gen. California Attorney General Opinions
l
CHAPTER
1
Renting Your Property: How to Choose
Tenants and Avoid Legal Pitfalls
Adopt a Rental Plan and Stick to It ................................................................................................................... 6
Advertising Rental Property ..................................................................................................................................6
Dealing With Prospective Tenants ....................................................................................................................7
e Rental Application ........................................................................................................................................7
Credit Check and Screening Fees .................................................................................................................12
Terms of the Rental ..............................................................................................................................................12
Landlord Disclosures ...........................................................................................................................................13
Checking Background, References, and Credit History of Potential Tenants ...................... 16
Check With Previous Landlords and Other References .................................................................. 16
Verify a Potential Tenant’s Income and Employment .......................................................................17
Obtain a Credit Report From a Credit Reporting Agency ..............................................................17
See If Any “Tenant-Reporting Services” Operate in Your Area .................................................... 21
Check With the Tenant’s Bank to Verify Account Information .................................................. 21
Review Court Records ........................................................................................................................................ 21
Checking the Megan’s Law Database ........................................................................................................ 22
Do Not Request Proof of, or Ask About, Immigration Status .....................................................22
Choosing—And Rejecting—An Applicant ................................................................................................ 22
Record Keeping......................................................................................................................................................23
Information You Must Provide Rejected Applicants .........................................................................24
Holding Deposits ....................................................................................................................................................... 26
FORMS IN THIS CHAPTER
Chapter 1 includes instructions for and samples of the following forms:
• Rental Application
• Consent to Background and Reference Check
• Application Screening Fee Receipt
• Disclosures by Property Owner(s)
• Tenant References
• Notice of Denial Based on Credit Report or Other Information, and
• Receipt and Holding Deposit Agreement.
e Nolo website includes downloadable copies of these forms. See Appendix B for the link
to the forms in this book.
6
|
THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
A
ll landlords typically follow the same process
when renting property. We recognize that a
landlord with 40 (or 400) units has different
business challenges than a person with an in-law
cottage in the backyard or a duplex around the corner.
Still, the basic process of filling rentals remains the
same:
•Decide the terms of your rental, including rent,
deposits, and the length of the tenancy.
•Advertise your property.
•Accept applications.
•Screen potential tenants.
•Choose someone to rent your property.
In this chapter, we examine the practical and legal
aspects of each of these steps, with an eye to avoiding
several common legal problems. Because the topic
of discrimination is so important we devote a whole
chapter to it later in the book (Chapter 9), including
advice on how to avoid discrimination in your tenant
selection process.
RESOURCE
For comprehensive information and over
40 forms on advertising, showing your rental, screening
applicants, and accepting and rejecting prospects, see Every
Landlord’s Guide to Finding Great Tenants, by Janet Portman
(Nolo).
Adopt a Rental Plan
and Stick to It
Before you advertise your property for rent, you’ll
want to make some basic decisions, which will form
the backbone of your lease or rental agreement—how
much rent to charge, when it is payable, whether to
offer a fixed-term lease or a month-to-month tenancy,
and how much of a security deposit to require. You’ll
also need to decide the responsibilities of a manager (if
any) in renting out your property.
RELATED TOPIC
If you haven’t made these important decisions,
the details you need are in Chapters 2, 3, 5, and 6.
In renting residential property, be consistent when
dealing with prospective tenants. The reason for this
is simple: If you don’t treat all tenants more or less
equally—for example, if you arbitrarily set tougher
standards for renting to a racial minority—you are
violating federal laws and opening yourself up to
lawsuits.
Of course, there will be times when you will want
to bargain a little with a prospective tenant—for
example, you may let a tenant have a cat in exchange
for paying a higher security deposit (as long as it
doesn’t exceed the legal limits set by law). As a general
rule, however, you’re better off figuring out your rental
plan in advance and sticking to it.
Advertising Rental Property
In some areas, landlords are lucky enough to fill all
vacancies by word of mouth. If you fit this category,
skip to the next section.
There is one crucial point you should remember
about advertising: Where you advertise is more
important than how you advertise. For example, if you
rent primarily to college students, your best bet is the
campus newspaper or housing office. Whether you
simply put a sign in front of your apartment building,
post a notice on Craigslist, or work with a rental
service or property management company, be sure
the way you advertise reaches a sufficient number of
the sort of people who are likely to meet your rental
criteria.
Legally, you should have no trouble if you follow
these simple rules:
Make sure the price in your ad is an honest one. If a
tenant shows up promptly and agrees to all the terms
set out in your ad, you may run afoul of the law if you
arbitrarily raise the price. This doesn’t mean you are
always legally required to rent at your advertised price,
however. If a tenant asks for more services or different
lease terms, which you feel require more rent, it’s fine
to bargain and raise your price. And if competing
tenants begin a bidding war, there’s nothing illegal
about accepting more rent—as long as it is truly freely
offered. However, be sure to abide by any applicable
rent limits in local rent control areas.
Don’t advertise something you don’t have. Some large
landlords, management companies, and rental services
have advertised units that weren’t really available
in order to produce a large number of prospective
ChApter 1 |RENTING YOUR PROPERTY
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7
tenants who could then be “switched” to higher-priced
or inferior units. This type of advertising is illegal, and
many property owners have been prosecuted for bait-
and-switch practices.
Be sure your ad can’t be construed as discriminatory. Ads
should not mention age, sex, race, religion, disability,
or adults-only—unless yours is senior citizens’
housing. (Senior citizens’ housing must comply with
CC § 51.3. Namely, it must be reserved for persons
over age 62, or be a complex of 150 or more units (35
in nonmetropolitan areas) for persons over age 55.)
Neither should ads imply through words, photographs,
illustrations, or language that you prefer or discriminate
against renters because of their age, sex, race, and so
on. For example, if your property is in a mixed Chinese
and Hispanic neighborhood and if you advertise
only in Spanish, you may be courting a fair housing
complaint. In addition, any discrimination against any
group that is unrelated to a legitimate landlord concern
is illegal. For example, it’s discriminatory to refuse to
rent to unmarried couples, because the legal status of
their relationship has nothing to do with whether they
will be good, stable tenants.
exAmple: An ad for an apartment that says
“Young, female student preferred” is illegal,
since sex and age discrimination are forbidden
by both state and federal law. Under California
law, discrimination based on the prospective
tenant’s occupation also is illegal, since there is no
legitimate business reason to prefer tenants with
certain occupations over others.
If you have any legal and nondiscriminatory rules on
important issues, such as no pets, it’s a good idea to put
them in your ad. This will weed out those applicants
who don’t like your terms. But even if you don’t
include a “no pets” clause, you won’t be obligated to
rent to applicants with pets. You can still announce the
policy at the time you interview a prospective tenant—
and you can use your discretion when deciding
whether their pets are acceptable.
Dealing With Prospective Tenants
It’s good business, as well as a sound legal protection
strategy, to develop a system for screening prospective
tenants. Whether you handle reference checking and
other tasks yourself or hire a manager or property
management company, your goal is the same—to
select tenants who will pay their rent on time, keep
their rental in good condition, and not cause you any
legal or practical hassles later.
TIP
Never, never let anyone stay in your property
on a temporary basis. Even if you haven’t signed a rental
agreement or accepted rent, giving a person a key or allowing
him or her to move in as much as a toothbrush can give that
person the legally protected status of a tenant. en, if the
person won’t leave voluntarily, you will have to file a lawsuit to
evict him or her.
e Rental Application
Each prospective tenant—everyone age 18 or older
who wants to live in your rental property—should fill
out a written application. This is true whether you’re
renting to a married couple sharing an apartment or to
a number of unrelated roommates.
See the sample Rental Application below.
FORM
You’ll find a downloadable copy (both PDF and
RTF versions) of the Rental Application on the Nolo website.
See Appendix B for the link to the forms in this book. You can
use the PDF version (print as is and give it to your applicants)
or the RTF version. You can edit the RTF version and add or
delete questions, but be aware that extensive changes might
affect the form’s layout (the margins and available space for
answers).
Complete the box at the top of the Rental Application,
listing the property address, details on the rental term
and amounts due before the tenants may move in.
Ask all applicants to fill out a Rental Application
form, and accept applications from everyone who’s
interested in your rental property. Refusing to take
an application may unnecessarily anger a prospective
tenant, and will make him or her more likely to look
into the possibility of filing a discrimination complaint.
Make decisions about who will rent the property later.
The Rental Application form includes a section for
you to note the amount and purpose of any credit
Rental Application
Separate application required from each applicant age 18 or older.
THIS SECTION TO BE COMPLETED BY LANDLORD
Address of Property to Be Rented:
Rental Term: ■ month to month ■ lease from to
Amounts Due Prior to Occupancy
First month’s rent ............................................................................................................................................. $
Security deposit ................................................................................................................................................ $
Credit-check fee ................................................................................................................................................ $
Other (specify): $
TOTAL .......................................................................................................................................................... $
Applicant
Full Name—include all names you use(d):
Home Phone: Work Phone: Cell Phone:
Fax (By providing this number, I agree to receive Fax transmissions from the landlord or landlord’s agent):
Email: Social Security Number:
Driver’s License Number/State:
Other Identifying Information:
Vehicle Make:
Model: Color: Year:
License Plate Number/State:
Additional Occupants
List everyone, including children, who will live with you:
Full Name Relationship to Applicant
Rental History
Current Address:
Dates Lived at Address: Reason for Leaving:
Landlord/Manager: Landlord/Manager’s Phone:
178 West 8th Street, Apt. 6, Oakland, CA
3
March 1, 20xx February 28, 20xx
1,200
1,800
30
3,030
Hannah Silver
510-555-3789 510-555-4567
hannah@coldmail.com 123-000-4567
CA V123456
Toyota Camry White 2008
CA 123456
Dennis Olson Husband
39 Maple Street, Oakland, CA
May 2000 – date Wanted bigger place
Jane Tucker 510-555-7523
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Previous Address:
Dates Lived at Address: Reason for Leaving:
Landlord/Manager: Landlord/Manager’s Phone:
Previous Address:
Dates Lived at Address: Reason for Leaving:
Landlord/Manager: Landlord/Manager’s Phone:
Employment Histor
y
Name and Address of Current Employer:
Phone:
Name of Supervisor: Supervisor’s Phone:
Dates Employed at is Job: Position or Title:
Name and Address of Previous Employer:
Phone:
Name of Supervisor: Supervisor’s Phone:
Dates Employed at is Job: Position or Title:
Income
1. Your gross monthly employment income (before deductions): $
2. Average monthly amounts of other income (specify sources):
$
$
$
TOTAL: $
Cr
edit and Financial Information
Bank/Financial Accounts Account Number Bank/Institution Branch
Savings Account:
Checking Account:
Money Market or Similar Account:
Type of Account Account Name of Amount M
onthly
Credit Accounts & Loans (Auto loan, Visa, etc.) Number Creditor Owed Paymen
t
Major Credit Card:
Major Credit Card:
Loan (mortgage, car, student loan, etc.):
Other Major Obligation:
1215 Middlebrook Road, Palo Alto, CA
June 1997 – May 2000 New job in East Bay
Ed Palermo 650-555-3711
152 Highland Drive, Santa Cruz, CA
Jan. 1996 – June 1997 Wanted to live closer to work
Millie & Joe Lewis 831-555-9999
Argon Works, 54 Nassau Road, Berkeley, CA
510-555-2333
Tom Schmidt 510-555-2333
2000 – date Marketing Director
Palo Alto Tribune
13 Junction Road, Palo Alto 650-555-2366
Do r y K r o ss b e r 65 0 -555 -1111
1996 –2000 Marketing Associate
5,000
husband’s salary 4,000
9,000
1222345 Cal West Berkeley, CA
789101 Cal West Berkeley, CA
234789 City Bank San Francisco, CA
Visa 123456 City Bank $1,000 $500
Dept. Store 45789 Macy’s $500 $500
ChApter 1 |RENTING YOUR PROPERTY
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9
Miscellaneous
Describe the number and type of pets you want to have in the rental property:
Describe water-fi lled furniture you want to have in the rental property:
Do you smoke? ■ yes ■ no
Have you ever: Filed for bankruptcy? ■ yes ■ no Been sued? ■ yes ■ no
Been evicted? ■ yes ■ no Been convicted of a crime? ■ yes ■ no
Explain any “yes” listed above:
References and Emergency Contact
Personal Reference: Relationship:
Address:
Phone:
Personal Reference: Relationship:
Address:
Phone:
Contact in Emergency: Relationship:
Address:
Phone:
I certify that all the information given above is true and correct and understand that my lease or rental agreement may be
terminated if I have made any material false or incomplete statements in this application. I authorize verifi cation of the information
provided in this application from my credit sources, credit bureaus, current and previous landlords and employers, and personal
references. I understand that if I have initiated a “security freeze” on my credit information with any of the credit reporting
agencies, I will promptly lift the freeze for a reasonable time so that my credit report may be accessed by the Landlord/Manager;
and I understand that if I fail to do so, the Landlord/Manager may consider this an incomplete application. (CC § 1785.11.2.) is
permission will survive the expiration of my tenancy.
Date
Applicant
Notes (Landlord/Manager):
No pets
None
X
X X
X X
Joan Stanley friend, co-worker
785 Spruce Street, Berkeley
510-555-4578
Marnie Swatt friend
785 Pierce Avenue, San Francisco
415-555-7878
Connie and Martin Silver Parents
123 Gorham Street, Princeton, N.J.
609-555-8765
Feb. 15, 20xx Hn Svr
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
ChApter 1 |RENTING YOUR PROPERTY
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11
check fee. (Credit check fees are discussed below.)
If you do not charge credit check fees, simply fill in
“none” or “N/A.”
Be sure all potential tenants sign the Rental
Application, authorizing you to verify the information
and references. (Some employers and others require
written authorization before they will talk to you.) You
may also want to prepare a separate authorization,
so that you don’t need to copy the entire application
and send it off every time a bank or employer wants
proof that the tenant authorized you to verify the
information. See the sample Consent to Background
and Reference Check, below.
FORM
You’ll fi nd a downloadable copy of the Consent
to Background and Reference Check on the Nolo website.
See Appendix B for the link to the forms in this book.
CAUTION
Don’t take incomplete rental applications.
Landlords are often faced with anxious, sometimes
desperate people who need a place to live immediately.
Some people tell terrifi c hard-luck stories as to why normal
credit- and reference-checking rules should be ignored in
their case and why they should be allowed to move right in.
Don’t believe any of it. People who have planned so poorly
that they will literally have to sleep in the street if they
don’t rent your place that day are likely to come up with
similar emergencies when it comes time to pay the rent.
Always make sure that prospective tenants complete the
entire Rental Application, including Social Security number
(or an alternative; see below), driver’s license number or
other identifying information (such as a passport number),
current employment, and emergency contacts. You may
need this information later to track down a tenant who
skips town leaving unpaid rent or abandoned property. (See
Chapters 19 and 21.)
Consent to Background and Reference Check
I authorize
to obtain information about me from my credit sources, current and previous landlords and employers, and personal references,
to enable
to evaluate my rental application. I authorize my credit sources, credit bureaus, current and previous landlords and employers,
and personal references to disclose to
information about me that is relevant to ’s
decisions regarding my application and tenancy. is permission will survive the expiration of my tenancy.
Name
Address
Phone Number
Date Applicant
Jan Gold
Jan Gold
Jan Gold
Jan Gold
Sandy Meyer
4 Elm Road, Sacramento, CA
916-555-9876
May 2, 20xx Sndy Mer
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
An Alternative to Requiring
Social Security Numbers
You may encounter an applicant who does not have an
SSN (only citizens or immigrants authorized to work
in the United States can obtain one). For example,
someone with a student visa will not normally have an
SSN. If you categorically refuse to rent to applicants
without SSNs, and these applicants happen to be foreign
students, you’re courting a fair housing complaint.
Fortunately, nonimmigrant aliens (such as people
lawfully in the United States who don’t intend to stay
here permanently, and even those who are here illegally)
can obtain an alternate piece of identification that will
suit your needs as well as an SSN. It’s called an Individual
Taxpayer Identification Number (ITIN), and is issued by
the IRS to people who expect to pay taxes. Most people
who are here long enough to apply for an apartment will
also be earning income while in the United States. and
will therefore have an ITIN. Consumer reporting agencies
and tenant screening companies can use an ITIN to
find the information they need to effectively screen an
applicant. On the Rental Application, use the line “Other
Identifying Information” for an applicant’s ITIN.
Credit Check and Screening Fees
State law limits credit check or application fees you
can charge prospective tenants, and specifies what
you must do when accepting these types of screening
fees. (CC § 1950.6.) You can charge only “actual out-
of-pocket costs” of obtaining a credit or similar tenant
“screening” report, plus “the reasonable value of time
spent” by you or your manager in obtaining a credit
report or checking personal references and background
information on a prospective tenant. We cover credit
reports and other screening efforts below.
To determine the maximum screening fee you can
charge each applicant, go to the Consumer Price Index
website at www.bls.gov/cpi and search for the article,
“How to Use the Consumer Price Index for Escalation,”
which refers you to a calculator. (As of 2013, you can
charge a screening fee up to $42.)
Upon an applicant’s request, you must provide a
copy of any consumer credit report you obtained on
the individual. You must also give or mail the applicant
a receipt itemizing your credit check and screening
fees. If you end up spending less (for the credit report
and your time) than the fee you charged the applicant,
you must refund the difference. (This may be the
entire screening fee if you never get a credit report or
check references on an applicant.)
Finally, you cannot charge any screening or credit
check fee if you don’t have a vacancy and are simply
putting someone on a waiting list (unless the applicant
agrees to this in writing).
In light of state limits on credit check fees, we
recommend that you:
•charge a credit check fee only if you intend to
actually obtain a credit report
•charge only your actual cost of obtaining the
report, plus $10, at most, for your time and trouble
•charge no more than $42 per applicant in any
case (unless you include an adjustment based on
the CPI)
•provide an itemized receipt at the same time you
take an individual’s rental application (a sample
receipt is shown below), and
•mail each applicant a copy of his or her credit
report as a matter of practice.
FORM
You’ll find a downloadable copy of the
Application Screening Fee Receipt on the Nolo website. See
Appendix B for the link to the forms in this book.
CAUTION
Nonrefundable move-in fees are illegal. Any
“payment, fee, deposit, or charge” that is intended to be
used to cover unpaid rent or damage or that is intended to
compensate a landlord for costs associated with move-in, is
legally considered a security deposit and is covered by state
deposit laws. Security deposits are always refundable. (Chapter
5 covers security deposits.)
Terms of the Rental
Be sure your prospective tenant knows all your general
requirements and any special rules and regulations
before you get too far in the process. This will help
avoid situations where your tenant backs out at the last
ChApter 1 |RENTING YOUR PROPERTY
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13
minute (he thought he could bring his three dogs and
your lease prohibits pets) and help minimize future
misunderstandings.
To put together a rental agreement or lease, see
Chapter 2. Once you’ve signed up a tenant and want
to clearly communicate your rules and regulations, see
Chapter 7.
Landlord Disclosures
California landlords are legally obligated to make
several disclosures to prospective tenants. You can add
the military, utility, and environmental disclosures to
the rental application or put them on a separate sheet
of paper attached to the rental application. A sample
form you can use to make written disclosures is shown
below.
FORM
You’ll fi nd a downloadable copy of the
Disclosures by Property Owner(s) form on the Nolo website.
See Appendix B for the link to the forms in this book.
You can also decide to make disclosures part of
your lease or rental agreement. (See Clause 27 in
Chapter 2.) The Megan’s Law disclosure must be on
the lease or rental agreement. (See Clause 26, State
Database Disclosure, in Chapter 2.)
Megan’s Law Database
Every written lease or rental agreement must inform
the tenant of the existence of a statewide database of
the names of registered sexual offenders. Members of
the public may view the state’s Department of Justice
website to see whether a certain individual is on
Application Screening Fee Receipt
is will acknowledge receipt of the sum of $ by
[Property Owner/Manager] from
[Applicant]
as part of his/her application for the rental property at
[Rental Property Address].
As provided under California Civil Code Section 1950.6, here is an itemization of how this $ screening fee will
be used:
Actual costs of obtaining Applicant’s credit/screening report $
Administrative costs of obtaining credit/screening report and checking Applicant’s references and background information
$
Total screening fee charged $
Date Applicant
Date Owner/Manager
42.00 Moe Manager
Terri D. Tenant
123 Polk Place #4,
Palo Alto, CA 94303
42.00
credit check and handling fee
25.00
17. 00
42.00
April 1, 20xx
Terri D. Tenant
April 1, 20xx Moe Manager
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
the list. You must use the following legally required
language for this disclosure:
Notice: Pursuant to Section 290.46 of the Penal Code,
information about specified registered sex offenders
is made available to the public via an Internet Web
site maintained by the Department of Justice at www.
meganslaw.ca.gov. Depending on an offender’s criminal
history, this information will include either the address at
which the offender resides or the community of residence
and ZIP Code in which he or she resides.
Chapter 12 explains your duties under this law
in more detail. The rental agreement and lease in
Appendix C include this mandatory disclosure (see
Clause 16).
Location Near Former Military Base
If your property is within a mile of a “former ordnance
location”—an abandoned or closed military base in
which ammunition or military explosives were used—
you must notify all prospective tenants in writing.
(CC § 1940.7.) You can use the sample Disclosures by
Property Owner(s) form shown below to do this.
It is not necessary to warn prospective tenants of
the existence of current ordnance locations, such as
presently existing army or navy bases.
Although there are no penalties stated in the law
for failure to warn, and although the law applies only
to former ordnance locations actually known by the
owner, it’s only a matter of time before someone sues
their landlord for negligently failing to warn of a former
military base the landlord “should have known about.”
Therefore, if you have the slightest idea your property is
within a mile of a former military base or training area,
check it out. You might start by asking the reference
librarian at a nearby public library or by writing a letter
to your local Congressional representative. If you have a
particular location in mind, you can also check with the
County Recorder, who will show you how to trace the
ownership all the way back to the turn of the twentieth
century for any indication the property was at one time
owned or leased by the government.
Periodic and Other Pest Control
Registered structural pest control companies have long
been required to deliver warning notices to owners and
tenants of properties that were about to be treated as
part of an ongoing service contract—but the warning
notice had to be issued only once, at the time of the
initial treatment. This meant that subsequent tenants
would not receive the warning. Now, the landlord must
give a copy of this notice to every new tenant who
occupies a rental unit that is serviced periodically. The
notice must contain information about the frequency of
treatment. (B&P § 8538; CC § 1940.8.)
Landlords who apply pesticides on, in, or near a
rental building or unit (including a children’s play area)
whose occupant is a licensed day care provider must
provide advance written notice prior to doing so. See
“Family Day Care Homes” in Chapter 2.
Shared Utility Arrangements
State law requires property owners to disclose to
all prospective tenants, before they move in, any
arrangements where a tenant might wind up paying
for someone else’s gas or electricity use. (CC § 1940.9.)
This would occur, for example, where a single gas or
electric meter serves more than one unit, or where
a tenant’s gas or electric meter also measures gas
or electricity that serves a common area—such as a
washing machine in a laundry room or even a hallway
light not under the tenant’s control. We address this
issue in detail in Chapter 2. While you may use the
Disclosures by Property Owner(s) form shown below,
your lease or rental agreement is the more appropriate
place to disclose shared utility arrangements. (See
Clause 9 of our sample lease and rental agreement.)
Intentions to Demolish the Rental
If you plan on demolishing your rental property, you
or your agent must give written notice to applicants,
new tenants, and current tenants. (CC § 1940.6.) The
steps you must follow depend on whether you’re
notifying applicants, new tenants, or current tenants.
•Applicants and new tenants. If you have applied
for a permit to demolish their unit, you must
disclose this before entering into a rental agree-
ment or even before accepting a credit check
fee or negotiating “any writings that would
initiate a tenancy,” such as a holding deposit.
(CC § 1940.6(a)(1)(D).)
•Existing tenants (including tenants who have signed a
lease or rental agreement but haven’t yet moved in).
ChApter 1 |RENTING YOUR PROPERTY
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15
Disclosures by Property Owner(s)
e owner(s) of property located at
make(s) the following disclosure(s) to prospective tenant(s) and/or employee(s):
Date Owner’s Signature
I have read and received a copy of the above Disclosures by Property Owner(s).
Date Signature
Date Signature
1234 State Avenue, Apartment 5, Los Angeles, California
Location near former military base. State law requires property owners to disclose to all prospective tenants,
before they sign any rental agreement or lease, if the property they are seeking to rent is within one mile of a
former ordnance area (military base) as defined by California Civil Code Section 1940.7.
Details regarding the former military base near the property listed above are as follows:
Between 1942–1945, the U.S. Army used the nearby area bounded by 6th and 7th Streets and 1st and 3rd
Avenues in the City of Los Angeles as a reserve training area. Unexploded rifle ammunition has been found
there.
9/19/20xx Dry Wt
9/19/20xx Susan Johnson
9/19/20xx Thomas Johnson
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
certain common areas. In Chapter 2, we explain how
to use Clause 25 to describe your policy.
Before you get to the point of negotiating a lease or
rental application with applicants, however, you may
want to tell them about your policy. You don’t want
complaints later from a nonsmoker who didn’t realize
that you permitted smoking in the common areas. Nor
do you want the complaint of a smoker who assumed
that smoking in an individual unit would be okay.
Local Disclosures
Check your local ordinance, particularly if your rental
unit is covered by rent control, for any city or county
disclosure requirements. To find yours, check your
local government website, or contact the office of your
mayor, city manager, or county administrator.
Checking Background,
References, and Credit History
of Potential Tenants
If an application looks good, the next step is to follow
up thoroughly. The time and money you spend are the
most cost-effective expenditures you’ll ever make.
CAUTION
Be consistent in your screening. You risk a charge
of illegal discrimination if you screen certain categories of
applicants more stringently than others. Make it your policy,
for example, to always require credit reports; don’t just get a
credit report for a single-parent applicant.
Here are six steps of a very thorough screening
process. You should always go through at least the first
three to check out the applicant’s previous landlords,
income, and employment, and run a credit check.
Check With Previous Landlords
and Other References
Always call previous landlords or managers for refer-
ences—even if you have a written letter of reference
from a previous landlord. Also, call previous employers
and personal references listed on the rental application.
To organize the information you gather from these
calls, use the Tenant References form, which lists key
These tenants are entitled to notice before you
apply for a demolition permit (but the law
doesn’t specify how much advance warning you
must give the tenant). The notice must include
the earliest approximate date that you expect
the demolition to occur, and the earliest possible
date that you expect the tenancy will terminate
(you cannot demolish prior to the estimated
termination date).
This disclosure requirement packs a punch—if you
fail to give written notification as explained above, a
tenant or prospective tenant can sue you for damages
(and attorney’s fees, which makes such a suit attractive
to a lawyer). You can be ordered to pay the tenant’s
actual damages (such as the cost of living in a motel
while looking for a new residence) and moving
expenses, as well as a civil penalty (payable to the
tenant) of up to $2,500.
Environmental Hazards
Federal law requires landlords to warn tenants about
the presence of asbestos and lead paint hazards in the
rental property. The subject of landlord liability for
environmental hazards is discussed in detail in Chapter
12, and a sample copy of the required lead-based paint
disclosure form is included there.
FORM
You’ll find a downloadable copy of the required
lead-based paint disclosure form on the Nolo website. See
Appendix B for the link to the forms in this book.
California landlords must also disclose the presence
of dangerous mold. If you know that a rental unit has
toxic mold levels exceeding California Department of
Public Health (CDPH) guidelines, you must disclose
that fact to current and prospective tenants. (H&S
§ 26147.) As of this writing, however, the CDPH has not
yet adopted these guidelines. When they do, they will
post them on their website at www.dhs.ca.gov. Chapter
12 discusses mold in detail.
Smoking
Landlords are free to specify that some parts (or all
of) their property will be smoke free. (CC § 1947.5.)
For example, you may want to prohibit smoking in
individual units, but permit it in common areas or
ChApter 1 |RENTING YOUR PROPERTY
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17
questions to ask previous landlords, managers, and
other references.
See the sample Tenant References form, below.
FORM
You’ll find a downloadable copy of the Tenant
References form on the Nolo website. See Appendix B for the
link to the forms in this book.
Be sure to take notes of all your conversations
and keep them on file. This information will come in
handy should a rejected tenant ever ask why he wasn’t
chosen or file a discrimination charge against you.
(These issues are covered in the discussion of record
keeping, below.)
Bad tenants often provide phony references. Make
sure you speak to a legitimate landlord or manager, not
a friend of the prospective tenant posing as one. One
suggestion is to call the number given for the previous
landlord or manager and simply ask for the landlord
or manager by name, rather than begin by saying that
you are checking references. If the prospective tenant
has really given you a friend’s name, the friend will
probably say something that gives away the scam.
If you still have questions, consider driving to the
former address and checking things out in person.
Finally, if you have any doubts, ask the previous
landlord or manager to pull out the tenant’s rental
application so you can verify certain facts, such as
the tenant’s Social Security number. If the so-called
landlord can’t do this, you are perhaps being conned.
Verify a Potential Tenant’s
Income and Employment
You want to make sure that all tenants have the income
to pay the rent each month. Call the prospective tenant’s
employer to verify income and length of employment.
Again, make notes of your conversations on the Tenant
References form, discussed above.
Some employers require written authorization from
the employee. You will need to mail or fax them a
copy of the release included at the bottom of the
Rental Application form, or the separate Consent to
Background and Reference Check form.
If you feel that verifying an individual’s income by
telephone or accepting a note from her boss is not
reliable enough, you may require applicants to provide
copies of recent paycheck stubs. It’s also reasonable
to require documentation of other sources of income
(such as disability or other benefits checks). Where a
large portion of an applicant’s income is from child
support or alimony payments, you might want to
ask for a copy of the court decree for the support
payments. However, don’t go overboard by asking
for copies of tax returns or bank statements, except
possibly from self-employed persons.
How much income is enough? Think twice before
renting to someone if the rent will take more than
one-third of their income, especially if they have a lot
of debts. Be careful, however, if you’re dealing with
an applicant who is disabled and who cannot meet
the “one-third” standard. If that applicant is otherwise
qualified and presents you with a cosigner, you will
need to evaluate the cosigner’s financial ability and
trustworthiness, despite any rules you may have against
dealing with cosigners. (Giebeler v. M & B Associates,
343 F.3d 1143 (2003).) Cosigners are discussed in detail
in Chapter 2; your duty to provide accommodations for
disabled renters is covered in Chapter 5.
Obtain a Credit Report From a
Credit Reporting Agency
Many landlords find it essential to check a tenant’s
credit history with at least one credit reporting
agency. These agencies collect and sell credit and
other information about consumers—for example,
whether they pay their bills on time or, if reported
by prior landlords, whether they’ve failed to pay the
rent. As long as you use the information only to help
you decide whether to rent to that person, or on what
terms, you do not need the applicant’s consent.
However, many people think that you must have
their written consent before pulling a credit report to
evaluate them as prospective tenants. For that reason,
we have explicitly called for applicants’ consent in
our application (and on a separate form). But there’s
another reason for our caution: This written consent
should help you if later, when the applicant is a tenant
(or an ex-tenant), you decide that you need an updated
credit report. For example, you may want to consult
a current report in order to help you decide whether
to sue a tenant who has skipped out and owes rent.
Without a broadly written consent, your use of a report
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Tenant References
Name of Applicant:
Address of Rental Unit:
Previous Landlord or Manager
Contact (name, property owner or manager, address of rental unit):
Date:
Questions
When did tenant rent from you (move-in and move-out dates)?
What was the monthly rent? $
Did tenant pay rent on time? ■ Yes■ No
Was tenant considerate of neighbors—that is, no loud parties and fair, careful use of common areas? ■ Yes■ No
If not, explain:
Did tenant have any pets? ■ Yes■ NoIf so, were there any problems?
Did tenant make any unreasonable demands or complaints? ■ Yes■ No If so, explain:
Why did tenant leave?
Did tenant give the proper amount of notice before leaving?
Did tenant leave the place in good condition? Did you need to use the security deposit to cover damage?
Any particular problems you’d like to mention?
Would you rent to this person again? ■ Yes■ No
Other Comments:
Will Berford
123 State Street, Los Angeles, CA
Kate Steiner, 345 Mercer Street,
Los Angeles, 310-555-5432
February 4, 20xx
December 2006 to date
$750
X
A week late a few times
X
X
Yes, he had a cat, contrary to rental
agreement
X
He wants to live someplace that allows pets
Yes
No problems
No
X Yes, but without pets
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Employment Verifi cation
Contact (name, company, position):
Date:
Salary: Dates of Employment:
Comments:
Personal Reference
Contact (name and relationship to applicant):
Date: How long have you known the applicant?
Would you recommend this person as a prospective tenant? ■ Yes■ No
Comments:
Credit and Financial Information
Notes, Including Reasons for Rejecting Applicant
Brett Field, Manager, Chicago Car Company
February 5, 20xx
$60,000 + bonus March 2004 to date
No problems. Fine employee. Will is responsible and hardworking.
Sandy Cameron, friend
February 5, 20xx five years
X
Will is very neat and responsible. He’s reliable and will be a great tenant.
Michael is very neat and responsible. He’s reliable and will be a great tenant.
Mostly fine—see attached credit report
Applicant had a history of late rent payments and kept a cat, contrary to the rental agreement.
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
at that time might be illegal. (FTC “Long” Opinion
Letter, July 7, 2000.)
Never order a credit report unless you are doing
so in order to evaluate a potential (or current or ex-)
tenant. If you ask for a report for any other reason
(such as a wish to check out the solvency of your
future son-in-law or the resources of your ex-business
partner whom you’re considering suing), you could
face a lawsuit and penalties of thousands of dollars.
Take Care Handling Credit Reports
Under federal law, you must take special care that credit
reports (and any information stored elsewhere that
is derived from credit reports) are stored in a secure
place where only those who “need to know” have
access. (“Disposal Rule” of the Fair and Accurate Credit
Transactions Act of 2003, known as the FACT Act, 69
Fed. Reg. 68690.) In addition, you must dispose of such
records when you’re done with them, by burning them
or using a shredder. is portion of the FACT Act was
passed in order to combat the increasing reports of
identity theft. It applies to every landlord who pulls a
credit report, no matter how small your operation. e
Federal Trade Commission (FTC), which interprets the
Act, encourages you to similarly safeguard and dispose
of any record that contains a tenant’s or applicant’s
personal or financial information. is would include the
rental application itself, as well as any notes you make
that include such information. For more information,
search “Disposal Rule” on www.ftc.gov.
Information covers the past seven to ten years. To
run a credit check, you’ll need a prospective tenant’s
name, address, and Social Security number (or other
identifying information, such as a driver’s license
number, ITIN, or passport number).
Some credit reporting companies also gather and
sell “investigative reports” or background checks about
a person’s character, general reputation, personal
characteristics, or mode of living. If you order one of
these background checks, federal law requires that you
disclose certain information to the prospective tenant.
(See “Background Checks Trigger Disclosures Under
the Fair Credit Reporting Act,” below.)
Background Checks Trigger Disclosures
Under the Fair Credit Reporting Act
Almost all background checks come under the
federal Fair Credit Reporting Act. (15 U.S.C. §§ 1681
and following.) If you order a background check on a
prospective tenant, it will be considered an “investigative
consumer report,” and you must:
• tell applicants within three days of requesting the
report that the report may be made, and that it
will concern their character, reputation, personal
characteristics, and criminal history, and
• tell applicants that more information about the
nature and scope of the report will be provided
upon their written request. You must provide this
additional information within five days of being
asked by the applicant.
If you own many rental properties and need credit
reports frequently, consider joining a local credit
reporting agency (they charge about $50 to $100 in
annual fees plus $10–$25 per report). You can find
tenant-screening companies in the yellow pages of the
phone book under “Credit Reporting Agencies.” Or, if
you only rent a few units each year, see if your local
apartment association (there are about two dozen in
California) offers credit reporting services. With most
credit reporting agencies, you can get a credit report
the same day it’s requested.
Landlords who have accounts or other ongoing
business relations with the credit reporting agencies
need not supply an applicant’s date of birth (DOB)
in order to get a report—a name and Social Security
number or ITIN will suffice. However, consumers
ordering their own credit report must supply their
DOB; and, presumably, small-scale landlords, who
have no reason to set up an account with a credit
reporting agency, could order reports as if they were
the applicant, after asking the applicant for their DOB.
We urge you not to try this route, because once you
have a DOB, you open the door to a discrimination
claim if you reject an older applicant who decides to
impute age discrimination motives to your decision.
Instead, investigate setting up an account or join an
apartment association.
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Tenants With “Security Freezes”
on Their Credit Reports
Consumers in California may place a “freeze” on their
credit reports, preventing anyone but specified parties
(such as law enforcement) from getting their credit
report. (CC §§ 1785.11.2 and following.) Credit reporting
agencies must implement the freeze within five days
of receiving the request. However, the consumer can
arrange for specified persons—such as a landlord or
management company—to have access to their report;
or the freeze itself can be suspended for a specified
period of time. When a consumer arranges for a freeze,
the agency must give the consumer information on how
to arrange for selective access or how to lift the freeze.
(CC § 1785.15(f).)
If an applicant has placed a freeze on his or her
credit report, you’ll need access. Our Rental Application
advises applicants that they are responsible for lifting
the freeze so that you can receive a copy of their report.
If they fail to do so, the application will be incomplete,
which is grounds for rejecting that application.
(CC§ 1785.11.2(h).)
See If Any “Tenant-Reporting
Services” Operate in Your Area
Just as regular credit reporting agencies keep tabs on
retail purchasers’ creditworthiness, businesses such
as UD Registry of Van Nuys keep tabs on eviction
suits (called unlawful detainer, hence the “UD”)
filed against tenants. The fact that a tenant has been
involved in an eviction lawsuit, regardless of the
outcome, can be reported by the tenant-reporting
services. (These agencies will have a difficult time,
however, learning of eviction lawsuits that the tenant
won, as explained below.) Your local apartment
association may recommend other services of this
type. Tenant-reporting services charge from $50
to $100. As with credit reporting agencies, if you
don’t rent to an applicant because of information
from a tenant-reporting service, you must notify the
applicant of the nature of the report and provide the
name and address of the company.
Check With the Tenant’s Bank to
Verify Account Information
If an individual’s credit history raises questions
about financial stability, you may want to take
this additional step. If so, you’ll probably need an
authorization form such as the one included at the
bottom of the Rental Application, or the separate
Consent to Background and Reference Check form.
Banks differ as to the type of information they will
provide over the phone. Generally, banks will at
most only confirm that an individual has an account
and that it is in good standing.
Be wary of an applicant who has no checking
or savings account. Perhaps the bank dropped the
individual after many bounced checks.
Review Court Records
If your prospective tenant has lived in the area, you
may want to review local court records to see if
the tenant has been sued in a collection or eviction
lawsuit. Checking court records may seem like
overkill, but now and then it’s an invaluable tool if
you suspect a prospective tenant may be a potential
troublemaker. Since court records are kept for several
years, this kind of information can supplement
references from recent landlords. You can get this
information from the superior court for the county in
which the applicant lived.
Tenant-friendly legislation narrows your ability
to learn whether an applicant has been involved
in an eviction lawsuit. Courts are required to keep
records on eviction lawsuits secret and sealed for 60
days from the date the landlord filed the unlawful
detainer complaint. If the tenant wins the case
within that 60 days, the court must keep the records
sealed indefinitely. For eviction lawsuits following
foreclosure of rental property, the court must keep
the records sealed indefinitely, unless the new owner
obtains a judgment after trial against the tenant
within 60 days of bringing suit. (See Chapter 9, “Civil
Lawsuits Involving a Tenant.”)
You’ll need to go in person and ask the civil clerk
to show you the Defendants’ Index, often available
electronically at court terminals for public use, or in
microfiche form. If a prospective tenant’s name is
listed, jot down the case number so you can check
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
the actual case file for details on the lawsuit and its
resolution. You can often determine if a prospective
tenant asserted a reasonable defense and if any
judgment against the tenant was paid off.
Checking the Megan’s Law Database
For many years, the California Department of Justice
(“DOJ”) has maintained a database on the names and
whereabouts of felons who have been convicted of
violent sexual offenses and offenses against minors.
The DOJ has made the information available on
its website, which should be viewed only by those
seeking to “protect a person at risk.” (Penal Code
§ 290.46(j)(1).)
Unfortunately, the law does not define the term
“at risk.” Common sense would suggest that women
and children fit within this category, and that, at the
very least, landlords who have multiunit properties
in which women and children already reside would
be permitted to check the database to protect these
tenants. But what about a landlord whose current
tenants happen to be men, but who correctly realizes
that it’s quite possible that subsequent tenants will
be women and families? (After all, it’s illegal to
discriminate against women or families.) Must this
landlord use the website to screen applicants in order
to protect future tenants? And suppose a landlord rents
a single-family residence, but there are women and
children next door or nearby? Can this landlord use the
website to look out for the safety of these neighbors?
We don’t know the definite answers to these
questions. The issue is troubling because the law
makes landlords liable for large money damages if
they knowingly or even carelessly expose tenants
to dangerous conditions, including dangerous
neighbors—and to avoid lawsuits, smart landlords
check the backgrounds of prospective tenants very
carefully. For example, a landlord who rented to a
repeat pedophile and failed to check references might
be liable if that applicant later injured another tenant.
Yet landlords may also be liable if they deny housing
to someone whose name they’ve found on the website
database unless they are acting to protect someone at
risk. It seems that landlords are caught between their
duties to protect other tenants and also not to use the
website database for an illegal purpose.
You’ll need to evaluate each situation on its own,
keeping in mind that your duty to watch out for the
welfare of others begins with your own tenants and is
somewhat less with respect to neighbors or strangers
or future tenants.
CAUTION
e usefulness of California’s Megan’s Law
database is debatable. Investigative reports by journalists
suggest that the records are outdated and incomplete.
Although the Department of Justice is charged with updating
the website on an “ongoing basis,” there’s no guarantee that
the information going up will be current. e lesson for
landlords is clear: Make sure that you don’t stint on checking
with references, prior landlords, and employers. orough
checking on all fronts will usually reveal the facts.
Do Not Request Proof of, or Ask
About, Immigration Status
Some of you may wish to make sure that every person
you rent to has a legal right to be in the United States.
However sensible you might think it is to know about
the legal status of your tenants or prospects, it is
illegal to ask them. (CC § 1940.3.) Do not, under any
circumstances, ask any actual or prospective tenants
about their immigration status, including whether they
are legally in this country or what kind of visa they
hold. Any local law that requires landlords to make
such inquiries has been invalidated by state law.
However, if you hire a tenant as an employee (such
as a resident manager) you must take certain steps to
determine whether the employee has the right to work
in the United States. Even then, all you can do is ask
an employee, once hired, to fill out IRS Form I-9. All
employers are required by federal law to check right-
to-work status by giving new hires this form to fill out.
Do not ask any questions about immigration status.
Just hand your employee the form and make sure that
the employee has shown you documents that appear
to satisfy the requirements on the form.
Choosing—And Rejecting—
An Applicant
After you’ve collected applications and done some
screening, you can start sifting through the applicants.
ChApter 1 |RENTING YOUR PROPERTY
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23
Start by eliminating the worst risks: people with
negative references from previous landlords or a
history of nonpayment of rent, poor credit, or previous
evictions. Then make your selection.
Assuming you choose the candidate with the best
qualifications (credit history, references, income), you
should have no legal problem. But what if you have
several more or less equally qualified applicants? The
best response is to use an objective tie-breaker. Give
the nod to the person who applied first. But be extra
careful not to always select a person of the same age,
sex, or ethnicity among applicants who are equally
qualified. For example, if you are a large landlord who
frequently chooses among lots of qualified applicants,
and who always avoids an equally qualified minority
or disabled applicant, you are exposing yourself to
charges of discrimination.
See Chapter 9 for a detailed discussion on how
to avoid illegal discrimination when choosing an
applicant.
Record Keeping
A crucial reason for any tenant-screening system is to
document how and why you chose a particular tenant.
Be sure to note your reasons for rejection—such as
poor credit history, pets (if you don’t accept pets),
insufficient income relative to the rent, a negative
reference from a previous landlord, or your inability to
verify information—on the Tenant References form or
Federal Disposal Rule
All businesses, including landlords and employers, must
take steps to safeguard and eventually destroy applicants’
and tenants’ credit reports and any information the landlord
keeps that’s derived from these reports. is “Disposal Rule”
was issued by the Federal Trade Commission (FTC), which
was charged with implementing the Fair and Accurate Credit
Transactions Act (the “FACT Act”). e rule applies to all
businesses, even one-person landlords. Here are the important
rules:
Safe retention. Anyone in possession of a credit report
is legally required to keep these reports in a secure location,
in order to minimize the chance that someone will use the
information for illegal purposes, including identity theft.
Store these reports, and any other documents that include
information taken from them, in a locked cabinet. Give
access only to known and trusted people, and only on a
need-to-know basis. Use a closely guarded pass word if you
put reports (or informa tion derived from them) on your
computer or PDA (such as a BlackBerry).
Destroy unneeded reports. e FACT Act requires you
to dispose of credit reports and any information taken from
them when you no longer need them. Deter mine when
you no longer have a legitimate busi ness reason to keep an
applicant’s or tenant’s credit report. Unfortunately, you may
need these reports long after you’ve rejected or accepted an
applicant—they may be essential in refuting a fair housing
claim. Under federal law, such claims must be filed within
two years of the claimed discrimination, but some states set
longer periods. Keep the records at least two years and
longer if your state gives plaintiffs extra time to sue.
Destroy reports routinely. Establish a system for
dumping old credit reports. Don’t rely on haphazard file
purges to keep you legal. Establish a purge date for every
applicant for whom you pull a report and use a tickle
system to remind you.
Choose an effective destruction method. e
Disposal Rule requires you to choose a level of document
destruction that is reasonable in the context of your
business. For example, a landlord with a few rentals
would do just fine with an inexpensive shredder, but
a multiproperty owner might want to contract with a
shredding service.
Don’t forget computer files. You must delete computer
files that include credit reports or informa tion from them
when you no longer need them. Use a utility that will erase
the data completely, by deleting not only the directory, but
the text as well.
e Disposal Rule comes with teeth for those who
willfully disregard it—those who know about the law and
how to comply, but deliberately refuse to do so. You could
be liable for a tenant’s actual damages (say, the cost of
covering a portion of a credit card’s unauthorized use), or
damages per violation of between $100 and $1,000, plus
the tenant’s attorney fees and costs of suit, plus punitive
damages. e FTC and state counterparts can also enforce
the FACT Act and impose fines.
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
separate paper. Keep organized files of applications,
credit reports, and other materials and notes on
prospective tenants for at least three years after you
rent a particular unit (but see “Federal Disposal Rule,”
above, for your duties for disposal).
These Tenant References forms may become
essential evidence in your defense if a disappointed
applicant complains to a fair housing agency or sues
you for discrimination. With your file cabinet full of
successful and unsuccessful applications, you can:
•find the applicant’s form and point to the stated,
nondiscriminatory reason you had for denying
the rental. Of course, the rejection must be
supported by the facts—you can’t reject on the
basis of a negative employer reference if you
never called the employer, and
•pull out other applications that show that you
consistently rejected applicants with the same
flaw (such as insufficient income), regardless of
color, religion, and so on. This kind of documen-
tation will make it difficult for someone to claim
there was a discriminatory motive at work.
Another reason to back up your decisions and keep
applications on file is that a rejected applicant may
want you to explain your reasons, apart from any
claim of discrimination, as explained below.
TIP
Make sure you organize and update your
records after a tenant moves in. Set up an individual file for
each new tenant, including the tenant’s rental application,
references, credit report, signed lease or rental agreement, and
the Landlord/Tenant Checklist (discussed in Chapter 7). After
a tenant moves in, keep copies of your written requests for
entry, rent increase notices, records of repair requests and how
and when they were handled, and any other correspondence
or relevant information. A good system to record all significant
tenant complaints and repair requests will provide a valuable
paper trail should disputes develop later—for example, over
your right to enter a tenant’s unit or the time it took for you
to fix a problem. Be sure to keep up to date on the tenant’s
phone number, place of work, and emergency contacts.
You should also note the tenant’s bank. (You can get this
information from the monthly rent check.) If a tenant leaves
owing you money above the security deposit amount and you
sue and receive a court judgment, you may be able to collect
that money from wages or a bank account.
Information You Must Provide
Rejected Applicants
The Fair Credit Reporting Act, as amended by the
Fair and Accurate Credit Transactions Act of 2003,
requires you to give certain information to applicants
whom you reject (or take other negative action toward)
as the result of a report from a credit reporting agency
(credit bureau), a tenant-screening or reference service,
or any other third party (except your own employees).
(15 U.S.C. §§ 1681 and following.) Known as “adverse
action reports,” these notices must be given not only to
applicants who are rejected, but also to those whom you
accept with qualifications, such as requiring a cosigner
on the lease, a higher deposit, or more rent than others
pay based on the report. The federal requirements do
not apply if your decision is based on information that
you (or your employee) gathered on your own.
If you do not rent to someone (or you impose
qualifications) because of negative information (even
if other factors also played a part in your decision) or
due to an insufficient credit report, you must give the
applicant the name and address of the agency that
provided the credit report. You must tell applicants
that they have a right to obtain a copy of the file from
the agency that reported the negative information,
by requesting it within the next 60 days. You must
also tell rejected applicants that the credit reporting
agency did not make the decision to reject them as a
tenant and cannot explain the reason for the rejection.
Finally, you must tell applicants that they can dispute
the accuracy of their credit report and add their own
consumer statement to their report.
Use the Notice of Denial Based on Credit Report
or Other Information form, (see the sample shown
below), to comply with the federal Fair Credit
Reporting Act when you reject an applicant because of
an insufficient credit report or negative information in
the report.
FORM
You’ll find a downloadable copy of the Notice of
Denial Based on Credit Report or Other Information on the
Nolo website. See Appendix B for the link to the forms in this
book.
ChApter 1 |RENTING YOUR PROPERTY
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25
Notice of Denial Based on Credit Report or Other Information
To:
Your rights under the Fair Credit Reporting Act and Fair and Accurate Credit Transactions (FACT) Act of 2003.
(15 U.S.C. §§ 1681 and following.)
THIS NOTICE is to inform you that your application to rent the property at
has been denied because of [check all that apply]:
■ Insuffi cient information in the credit report provided by:
■ Negative information in the credit report provided by:
■ e consumer-credit-reporting agency noted above did not make the decision not to off er you this rental. It only provided
information about your credit history. You have the right to obtain a free copy of your credit report from the consumer-
credit-reporting agency named above, if your request is made within 60 days of this notice or if you have not requested a
free copy within the past year. You also have the right to dispute the accuracy or completeness of your credit report. e
agency must reinvestigate within a reasonable time, free of charge, and remove or modify inaccurate information. If the
reinvestigation does not resolve the dispute to your satisfaction, you may add your own “consumer statement” (up to 100
words) to the report, which must be included (or a clear summary) in future reports.
■ Information supplied by a third party other than a credit-reporting agency or you. You have the right to learn of the nature of
the information if you ask me in writing within 60 days of learning of this decision. is information was gathered by someone
other than myself or any employee.
Date Landlord/Manager
Ryan Lester
1 Main Street
Vallejo, CA 94503
3 Field Street, Vallejo, CA 94503
3 ABC Credit Bureau, 310 Gonzales Way, Oakland, CA
94607; Phone: 510-555-1234; www.abccredit.com
3
10-01-20xx Jan McGillis
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Holding Deposits
Accepting a holding deposit is legal, but we don’t
advise it. This type of deposit is usually offered by
applicants who want to hold a rental unit pending the
result of a credit check, or until they can come up with
enough money for the rent and a formal deposit. Why
not take a holding deposit? Simply because it does you
little or no good from a business point of view, and all
too often results in misunderstandings or even legal
fights.
exAmple: A landlord, Jim, takes a deposit of
several hundred dollars from a prospective
tenant, Michael. What exactly is Jim promising
Michael in return? To rent him the apartment?
To rent Michael the apartment only if his credit
checks out to Jim’s satisfaction? To rent to Michael
only if he comes up with the rest of the money
before Jim rents to someone who comes up with
the first month’s rent and deposit? If Jim and
Michael disagree about the answers to any of
these questions, it can lead to needless anger and
bitterness. This can sometimes even spill over into
a small claims court lawsuit alleging breach of
contract.
Another prime reason to avoid holding deposits
is that the law is very unclear as to what portion of
a holding deposit a landlord can keep if a would-be
tenant changes his mind about renting the property or
doesn’t come up with the remaining rent and deposit
money. The basic rule is that a landlord can keep
an amount that bears a “reasonable” relation to the
landlord’s costs, for example, for more advertising and
for prorated rent during the time the property was held
vacant. Keeping a larger amount will amount to an
unlawful penalty.
If, contrary to our advice, you decide to take a
holding deposit, it is essential that both you and your
prospective tenant have a clear understanding. The
only way to accomplish this is to write your agreement
down, preferably on the holding deposit receipt,
including the amount of the deposit, the dates you will
hold the rental property vacant, the term of the rental
agreement or lease, and conditions for returning the
deposit.
We’ve provided you with a sample Receipt and
Holding Deposit Agreement that you can adapt to
your situation—it will work for a lease or a month-to-
month agreement. If your agreement to rent property
to a particular individual is not contingent upon your
receiving a credit report and satisfactory references,
simply delete this sentence from the last paragraph of
the form.
FORM
You’ll find a downloadable copy of the Receipt
and Holding Deposit Agreement on the Nolo website. See
Appendix B for the link to the forms in this book.
ChApter 1 |RENTING YOUR PROPERTY
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27
Receipt and Holding Deposit Agreement
is will acknowledge receipt of the sum of $ by
(“Landlord”) from
(“Applicant”) as a holding deposit to hold vacant the rental property at
, until at .
e property will be rented to Applicant on a basis at a rent of $ per month, if
Applicant signs Landlord’s written and pays Landlord the fi rst month’s rent
and a $ security deposit on or before that date, in which event the holding deposit will be applied to the fi rst
month’s rent.
is Agreement depends upon Landlord receiving a satisfactory report of Applicant’s references and credit history. Landlord
and Applicant agree that if Landlord off ers the rental but Applicant fails to sign the Agreement and pay the remaining rent and
security deposit, Landlord may retain from this holding deposit a sum equal to the prorated daily rent of $
per day until the unit is rerented, plus a $ charge to compensate Landlord for lost rents and the time and
expense incurred by the need to rerent.
Date Applicant
Date Landlord
500 Jim Chow
Michael Blake
123 State Street, City of Los Angeles, California
February 5, 20xx 5 P.M.
month-to-month 2,000
rental agreement
2,000
67
50
February 2, 20xx Michael Blake
February 2, 20xx J Ch
l
CHAPTER
2Understanding Leases and Rental Agreements
Oral Agreements Are Not Recommended .................................................................................................31
Written Agreements: Which Is Better, a Lease or a Rental Agreement? ................................ 32
Month-to-Month Rental Agreement ........................................................................................................ 32
Fixed-Term Lease .................................................................................................................................................. 33
Variations on the Standard One-Year Lease .......................................................................................... 34
Foreign Language Note on California Leases and Rental Agreements .................................... 35
Common Legal Provisions in Lease and Rental Agreement Forms ............................................36
How to Modify and Sign Form Agreements ............................................................................................. 54
Before the Agreement Is Signed ................................................................................................................... 58
Signing the Lease or Rental Agreement ................................................................................................... 58
After the Agreement Is Signed ..................................................................................................................... 58
Cosigners ........................................................................................................................................................................ 58
e Practical Value of a Cosigner ................................................................................................................ 60
Cosigners and Disabled Applicants ............................................................................................................60
Accepting Cosigners ........................................................................................................................................... 60
Illegal Lease and Rental Agreement Provisions ...................................................................................... 60
Waiver of Rent Control Laws ........................................................................................................................ 60
Liquidated Damages Clauses ..........................................................................................................................61
Waiver of Repair-and-Deduct Rights ........................................................................................................ 62
Right of Inspection ............................................................................................................................................. 62
Provision at the Landlord Is Not Responsible for Tenant Injuries or
Injuries to a Tenant’s Guests ...................................................................................................................... 62
Provision Giving Landlord Self-Help Eviction Rights ......................................................................... 62
Waiver of Right to Legal Notice, Trial, Jury, or Appeal .................................................................... 63
Waiver of Right to Deposit Refund ........................................................................................................... 63
Restricting Tenants’ Access to Other Tenants’ Units for Distributing Literature .............. 63
Shortening the Termination Notice Period............................................................................................ 63
Requiring the Tenant to Give Notice on a Specific Day .................................................................. 63
Requiring the Tenant to Pay Rent in Cash or Online ........................................................................ 64
Other Illegal Provisions .................................................................................................................................... 64
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FORMS IN THIS CHAPTER
Chapter 2 includes instructions for and samples of the following forms:
• Fixed-Term Residential Lease
• Month-to-Month Residential Rental Agreement
• Attachment to Lease or Rental Agreement
• Attachment: Agreement Regarding Use of Waterbed, and
• Amendment to Lease or Rental Agreement.
e Nolo website includes downloadable copies of these forms (the lease and rental
agreement forms are in both English and Spanish). See Appendix B for the link to the forms in
this book.
ChApter 2 |UNDERSTANDING LEASES AND RENTAL AGREEMENTS
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31
I
t is essential that every landlord understand
California law as it applies to rental agreements and
leases. Let’s begin with the basics. There are three
legal ways to create residential tenancies:
•oral rental agreements
•written leases, and
•written month-to-month rental agreements.
We’ll look at each of these types of agreements in
detail and provide sample lease and rental agreement
forms with a description of each specific clause. We’ll
also point out illegal lease and rental agreement
provisions.
Oral Agreements Are
Not Recommended
Oral (spoken) leases or rental agreements are perfectly
legal and enforceable for month-to-month tenancies
and for leases for a year or less (although there’s some
information you must write down, as explained below).
(CC § 1624.) Typically, you agree to let the tenant
move in, and the tenant agrees to pay a set amount
of rent, once or twice a month or even weekly. Years
ago, the amount of notice that you needed to give a
tenant to raise the rent or terminate the tenancy was
pretty simple—it corresponded to the frequency of the
rent payment. Now, however, the notice periods vary
considerably, depending on the size of the rent raise
and, for terminations, the duration of the tenancy and
the identity of who’s doing the terminating (landlord or
tenant). These complications (explained in Chapters 14
and 18) are powerful reasons to use our written rental
agreement, in which the rules are specified.
While oral agreements are easy and informal,
it is rarely wise to use one. As time passes and
circumstances change, people’s memories (including
yours) have a funny habit of becoming unreliable. You
can almost count on tenants claiming that certain oral
promises weren’t kept or “forgetting” key agreements.
Most landlords choose to impose conditions on
the tenancy, such as regulating or prohibiting pets
and subletting. In addition, landlords often include a
clause providing the landlord with the right to recover
attorney fees if it is necessary to evict a tenant.
Oral leases, while legally enforceable (for up to one
year), are even more dangerous than oral rental agree-
ments, because they require that one important term—
the length of the lease—be accurately remembered
by both parties over a considerable time. If something
goes wrong with an oral agreement, the parties are all
too likely to end up in court, arguing over who said
what to whom, when, and in what context.
This book is based on the assumption that you will
always use either a written rental agreement or a lease.
Information You Must Provide
the Tenant in Writing
Even if every other aspect of your rental agreement or lease
is reflected in an oral agreement, you must write down
certain information and give it to the tenant:
• the name, phone number, and address of the
manager, if any
• the name, phone number, and address of the
owner or someone authorized to accept service
of process and all notices and demands from the
tenant
• the name, phone number, and address of the
person authorized to receive rent (if rent may be
paid personally, include the days and hours that
the person will be available to receive payments),
and
• the form in which rent may be paid, such as check,
money order, or cash.
e law also specifies how to deliver this information.
You can include it in a written document that you give
to the tenant (such as a lease, rental agreement, or
other writing), post it in an elevator and one additional
conspicuous place on the property, or post it in two
conspicuous places. is information must be supplied
within 15 days of entering into an oral agreement and
once a year, on 15 days’ notice, if requested by the
tenant. You must keep the information up to date. (CC
§§ 1962 and 1962.5.)
If you fail to give this notice, or to keep it current, you
will be barred from evicting a tenant for nonpayment
of rent that accrued during any period you were not in
compliance with this request.
After you’ve gone to the trouble of supplying this
written information (you could model your form on
Clauses 5 and 23 of our written agreements), you’ll
realize that you may as well use our written rental
agreement or lease, which provides places for you to
convey the details.
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Written Agreements:
Which Is Better, a Lease or
a Rental Agreement?
There are two kinds of written landlord/tenant
arrangements:
•rental agreements, and
•leases.
Written rental agreements provide for a tenancy for
an indefinite period of time, and can be terminated
by either party by the giving of a written notice, very
commonly 30 days. Where the rent is paid monthly,
these are called “month-to-month” tenancies. They
automatically renew each month (or other time period
agreed to in writing) unless one of the parties gives
the other the proper amount of written notice to
terminate the agreement. The notice period is 30 days
for a month-to-month tenancy that has lasted less than
a year, 60 days if the tenant has rented for a year or
more, and 90 days if the tenant’s rent is government-
subsidized under a contract between the landlord and
a housing agency (CC § 1954.535), or in some cases,
after a new owner has purchased the property at a
foreclosure sale. See “Rental Properties Purchased at
Foreclosure” in Chapter 18.
The rental agreements in this book are month to
month.
With a written lease, you fix the term of the
tenancy—most often for six months or a year, but
sometimes longer. At the end of the lease term, you
have a few options. You can:
•decline to renew the lease
•sign a new lease for a set period, or
•do nothing—which means your lease will
convert to a month-to-month tenancy if you
continue to accept monthly rent from the tenant.
There isn’t much legal difference between a lease
and a rental agreement—with the exception, of course,
of the period of occupancy. To decide whether a lease
or rental agreement is better for you, read what follows
and carefully think about your own situation.
Month-to-Month Rental Agreement
When you rent property under a month-to-month
rental agreement, these rules apply:
•On 30 or 60 days’ written notice, you may change
the amount of rent (subject to any rent control
ordinances). You may increase (or decrease)
the amount of rent in all areas that don’t have
rent control ordinances on 30 days’ notice. For
increases over 10%, 60 days’ notice is required.
(See Chapter 14 for guidance on understanding
the 60-day situation.) Cities with rent control
ordinances may restrict the amount of rent you
may charge or add requirements for notifying the
tenant of a rent increase. (See Chapter 4 for more
on rent control.)
•On 30 days’ written notice, you may change other
terms of the tenancy. You may make other changes
in the terms of the tenancy on 30 days’ notice,
such as increasing the deposit amount (if you’re
not charging the maximum allowed by law),
adding or modifying a no-pets clause, or making
any other reasonable change. Again, however,
cities with rent control ordinances may restrict
your right to do this.
•You may end the tenancy with 30 (or 60 or 90) days’
written notice. You may end a tenancy at any
time on 30 days’ notice if the tenant has stayed
less than a year, and on 60 days’ notice if the
tenancy has lasted a year or more. However, there
are some widespread exceptions: Rent control
ordinances in some cities do not allow this type of
termination; and government-subsidized tenancies
require 90 days’ notice. (See Chapter 18 for more
information on the 60-day requirements.)
$
RENT CONTROL
Under just-cause eviction provisions of
rent control ordinances in cities such as Los Angeles
and San Francisco, you must have a good reason—one
of those listed in the ordinance—to evict a tenant. We
discuss rent control in detail in Chapter 4.
•A tenant who wants to leave needs to give you
only 30 days’ notice. A month-to-month tenancy
might mean more tenant turnover. Tenants who
know they may legally move out with only 30
days’ notice may be more inclined to do so
than tenants who make a longer commitment.
If you live in an area where it’s difficult to find
tenants, you may wisely want tenants to commit
for a longer time period, such as a year. But
as discussed below, a fixed-term lease can’t
guarantee against turnover, either.
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33
Fixed-Term Lease
With a fixed-term lease, these rules apply:
•You can’t raise the rent until the lease runs out. The
only exception is where the lease specifies a
specific increase in rent (and local rent control
laws don’t limit rent increases). It’s important
that the rent increase date and amount be stated
and certain (such as, “on June 1, 20xx, rent will
increase by $50”). A court will not enforce a
vague statement that the landlord has the right to
increase the rent.
•You can’t change other terms of the tenancy. A lease
is a contract whose terms are fixed for the lease
period. Changes are allowed only where the
lease says they’re allowed, or where the tenant
agrees in writing to a modification of the terms.
•You usually can’t evict before the lease term expires.
Unless the tenant fails to pay the rent or violates
another significant term of the lease, such as
repeatedly making too much noise or damaging
the property, you’re stuck with the tenant until
the lease term runs out. (The eviction process
and rules are described in Chapter 18.)
•You may reduce your turnover rate. Many people
make a serious personal commitment when they
enter into a long-term lease, in part because they
think they’ll be liable for quite a few months’
rent if they up and leave.
This last reason merits some explaining. It used to
be that the major advantage of leasing for fixed terms,
such as a year or more, was that a landlord obtained
a fair degree of security. The tenant was on the hook
to pay for a greater length of time than provided by
month-to-month agreements. A tenant who broke
the lease and left before it expired was still legally
responsible for the rent for the entire lease term. And, if
the tenant could be located, the landlord could sue and
obtain a court judgment for the balance of the rent.
This is no longer true in most circumstances.
Nowadays, landlords who sue the departing (lease-
breaking) tenant for the rent due for the rest of the
lease term are required to “mitigate” (or minimize)
the financial consequences the tenant would suffer as
a result of the broken lease. That means the landlord
must use reasonable efforts to rent the unit to another
suitable tenant. If the landlord rerents the unit (or if
a judge believes it could have been rerented with a
reasonable amount of effort), the lease-breaking tenant
is off the hook except for the months that the unit was
vacant while the landlord searched.
This all adds up to a simple truth: A lease no longer
provides much income security to a landlord. Indeed,
a lease is now something of a one-way street running
in the tenant’s direction. This is because, especially in
a tight market, the mitigation-of-damages rule allows
a tenant to break a lease with little or no financial
risk. And, even if the tenant does end up owing the
landlord some money for the time the unit was empty,
collecting the money can be more trouble than it is
worth. (We discuss tenants’ moving out and breaking
leases in detail in Chapter 19.) Not surprisingly,
many landlords prefer to rent from month to month,
particularly in urban areas where new tenants can
often be found in a few days.
There can still be, however, practical advantages
to leasing for a fixed period, despite these legal rules.
You’ll probably prefer to use leases in areas where
there is a high vacancy rate or it is difficult to find
tenants. Remember, if you can’t find another suitable
tenant to move in, the former tenant whose lease
hasn’t expired is still liable for the rent. So, if you are
renting near a college that is in session only for eight
months a year, or in a vacation area that is deserted
for months, you are far better off with a year’s lease.
Remember, though, that a seasonal tenant is almost
sure to try to get someone to take over the tenancy,
and unless you have sound business reasons for
rejecting the substitute, you’ll be stuck with him—or
you’ll lose your legal right to ask for more damages
from the departing tenant.
Offer a Lease in Palo Alto
e city of Palo Alto requires all landlords owning
buildings of two or more units (except duplexes in which
the owner occupies one of the units) to offer tenants
one-year leases at the outset, and upon expiration of the
previous lease. (Palo Alto Municipal Code §§ 9.68.010
through 9.68.050.) Tenants who don’t want a one-year
lease must decline it in writing. e landlord’s failure to
comply results in a defense for the tenant in an eviction
lawsuit, even one based on nonpayment of rent.
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Tenants Who May Break a Lease
or Rental Agreement
Two groups of tenants have special rights to break a lease
without responsibility for future rent.
• e Servicemembers’ Civil Relief Act helps active
duty military personnel handle legal affairs. (50
App. U.S.C.A. §§ 501 and following.) Among its
provisions, it allows tenants who enter active
military service (or are called up to the National
Guard for more than one month at a time) after
signing a lease or rental agreement to break the
lease or agreement. Chapter 19 explains the
procedures.
• Victims of domestic violence, stalking, or sexual
assault may break a lease on 30 days’ notice.
(CC§ 1946.7.) Chapter 19 explains the procedures.
Tenants may also have the right to break a lease and
move out early due to defective conditions in the rental
premises (as discussed in Chapter 11).
Variations on the Standard
One-Year Lease
If you’re planning to use a lease, chances are you’ll
select a standard one-year lease. But there are other
options available. Here are a few.
Long-Term Leases
Most leases run for one year. This makes sense, as
it allows you to raise the rent at reasonably frequent
intervals if market conditions allow. Leasing an
apartment or house for a longer period—two, three,
or even five years—can be appropriate, for example,
if you’re renting out your own house because you’re
taking a two-year sabbatical.
One danger with a long-term lease is that inflation
can eat away at the real value of the rent amount. A
good way to hedge against this danger in all leases
of more than a year is to provide for annual rent
increases that are tied to Consumer Price Index (CPI)
increases during the previous year.
Here is a sample clause:
Landlord and Tenant agree that the rent will increase
on the day of the month of each year
by the same percentage as the regional and most local
Consumer Price Index has increased during the previous
twelve months.
The Consumer Price Index most commonly used
is the “All-Urban Consumers” for the nearby large
metropolitan area. The U.S. Department of Labor
publishes figures for the Los Angeles/Long Beach/
Anaheim/Santa Monica/Santa Ana area and the San
Francisco/Oakland/San Jose area each May. In Los
Angeles, the figure is published each May 30 by the
Community Development Department. Other cities’ rent
control boards keep records of the applicable figure,
even where the rent increase allowed each year isn’t
directly tied to the CPI. (See Chapter 4 on rent control.)
Stay on Top of the CPI
If you factor in a rent increase by tying it to the CPI,
you’ll need to get accurate information on the yearly
increase. Go to the Bureau of Labor Statistics website at
http://stats.bls.gov/news.release/cpi.toc.htm (or search
on the Consumer Price Index page at www.bls.gov/cpi).
For this sort of rent increase, no formal notice is
required. Simply send tenants a letter reminding them
of the lease term calling for the increase. Demonstrate
how you calculated the amount.
Options to Renew a Lease
An option to renew is essentially a standing offer to
renew the lease, offered by the landlord to the tenant,
which the tenant can accept or not in the manner and
time frame set forth in the option. The option-to-renew
concept is not commonly used in residential rentals,
but a tenant occasionally requests one.
We usually advise against using renewal clauses, for
several reasons. First, an option to renew a lease leaves
it entirely up to the tenant as to whether to continue
the tenancy. Without such an option, both the tenant
and the landlord must agree on a renewal. Remember,
by the time the lease is about to expire, you might
ChApter 2 |UNDERSTANDING LEASES AND RENTAL AGREEMENTS
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35
not want to continue the tenancy. Unless you receive
a very high guaranteed rent for the initial term, or a
lump-sum payment in consideration for including the
option clause, you have very little to gain and a lot to
lose by giving an option to renew.
Second, when the tenant exercises the option, the
new tenancy often continues on the same terms as
before, which may not be to your advantage. Here’s
what happens: To be legal, option clauses must clearly
set forth the terms of the renewed tenancy, including
the new term, the rent (which can be different from
the rent for the first term if the option clause clearly
says so), and so forth. Most clauses do this by simply
referring to the initial lease terms. (An option clause
that leaves any significant term, such as rent or length
of term, to further negotiation, or words to that effect,
is of no effect and is not legally binding.) Since you
may be able to obtain a higher rent after the initial
term of six or 12 months, it’s obviously not in your
best interest to include an option that allows the tenant
to remain at the same rent. But since you don’t know
at the outset what a fair market rent would be—or
whether you will become fed up with the tenant’s dogs
and decide to ban pets—you can’t provide for these
new terms.
Finally, drafting option clauses can be very tricky.
Even the slightest mistake may do you a great deal of
harm or, at the very least, render the option clause of
no effect and add uncertainty to the entire situation.
If you want to include a renewal or other option in a
lease, contact an attorney.
Options to Purchase
An “option to purchase” is a contract where an owner
leases a house (usually from one to five years) to a
tenant for a specific monthly rent (which may increase
during the contract term) and gives the tenant the right
to buy the house for a price established in advance.
Depending on the contract, the tenant can exercise the
option to purchase at any time during the lease period,
or at a date specified, or for a price offered by another
person who makes a purchase offer, subject to the
tenant’s “right of first refusal” to match the offered price.
If your property should be easy to sell, why share
your chance at future appreciation with a tenant? This,
in addition to the fact that drafting option clauses is
pretty difficult, should give you pause.
Here are some situations when you might consider a
tenant’s request for a lease option:
•you have a negative cash flow and think the
short-run return (initial option fee, higher-than-
normal rent, tax advantages) is worth it
•you plan to sell your property soon and think
that it might be difficult to sell, or
•you think your tenant will take better care of
your house, and perhaps even improve it.
Needless to say, never sign a purchase option,
whether included in a lease or not, without consulting
a lawyer. If you’re thinking of selling, and a tenant
or prospective tenant asks for an option to purchase,
you might simply reply that you’ll consider selling at
the expiration of the lease. For a sample lease option
contract, see For Sale by Owner in California, by
George Devine (Nolo).
CAUTION
Don’t provide for an “automatic renewal” of the
lease term in your lease. Automatic renewals are valid only if
they are printed in boldface, 8-point type, directly above the
tenant’s signature. (CC § 1945.4.) But even if you do it right,
they are rarely a good idea. Tenants are likely to assume that
if they stay in the rental with your permission past the lease’s
ending date, they’ve become month-to-month tenants. (is
is, in fact, their legal status in the absence of a valid renewal
clause.) If you really want the tenant on the hook for a longer
period than specified in your lease, increase the lease term at
the outset instead of using a renewal clause.
Foreign Language Note
on California Leases and
Rental Agreements
If you and your tenant discuss your lease or written
month-to-month rental agreement primarily in Spanish,
Chinese, Tagalog, Vietnamese, or Korean, you must
give the tenant an unsigned version of the rental
document in that language before asking him to sign.
This rule does not apply (that is, you may present your
English version only) if the tenant has supplied his
own translator who is not a minor and who can speak
and read the particular language and English fluently.
If the translator is supplied by the tenant but does not
meet these two requirements, or if the translator is you
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
or someone in your employ or otherwise supplied by
you (for example, your fluent daughter), you will have
to present a foreign language version of your rental
document. (CC § 1632.)
Common Legal Provisions
in Lease and Rental
Agreement Forms
This section discusses each clause in the lease and
rental agreement forms provided in this book. The
instructions explain how to fill in the blanks and refer
you to the chapter that discusses important issues that
relate to your choices.
Except for the important difference in how long they
run (see Clause 4 in our forms), leases and written
rental agreements are so similar that they are sometimes
hard to tell apart. Both cover the basic terms of the
tenancy (such as amount of rent and date due). Except
where indicated below, the clauses are identical for the
lease and rental agreements included here. You should
use the one more appropriate to your rental needs.
A sample fixed-term lease is shown below; the only
clause that is different in the month-to-month rental
agreement (the term of the tenancy) is shown under
Clause 4, below.
FORM
e Nolo website includes downloadable copies
(in both English and Spanish) of the Fixed-Term Residential
Lease and the Month-to-Month Residential Rental Agree-
ment. See Appendix B for the link to the forms in this book.
CAUTION
Meet your legal responsibilities regarding
foreign language leases. If you use the Spanish language
version of the lease or rental agreement included on the Nolo
website, you will have to provide your own Spanish language
version of the information you add to the blanks. See “Foreign
Language Note on California Leases and Rental Agreements,”
above.
CAUTION
Choose your lease or rental agreement carefully!
In addition to the forms in this book, there are dozens of
different printed forms in use in California, and provisions
designed to accomplish the same result are worded differently.
Unfortunately, some of these agreements are written so
obtusely that it is hard to understand what they mean.
Ambiguous terms, fine print, and legalese will only lead to
confusion and misunderstanding with your tenants. Contrary
to what many form writers seem to believe, it is not illegal to
use plain English on lease and rental agreement forms. We
have done our best to provide clearly written agreements.
If you use a different form, be sure to avoid leases or rental
agreements with illegal or unenforceable clauses (more on this
below). You may need to use a special government lease if you
rent subsidized housing. (See Chapter 9.)
Clause 1. Identification of Landlord and Tenants
Every lease or rental agreement must identify the
landlord and the tenant(s)—usually called the “parties”
to the agreement. Any competent adult—at least 18
years of age—may be a party to a lease or rental
agreement. (Teenagers under age 18 may also be a
party to a lease if they have achieved legal adult status
through a court order, military service, or marriage.)
Fill in the date you’ll be signing. Next, fill in the
names of all adults who will live in the premises,
including both members of a married couple or
registered domestic partners. If anyone else will be
financially responsible for paying the rent (even if they
won’t be living in the premises), list their names. See
the discussion of cosigners below.
In the last blank, list the names of all landlords
or property owners who will be signing the lease or
rental agreement.
The last sentence states that all tenants are jointly
and severally liable for paying rent and adhering to the
terms of the agreement. This means that each tenant is
legally responsible for the whole agreement and rent.
(How cotenants divide that rent among themselves
is up to them, not the landlord.) This protects the
landlord, who can legally seek full compensation
from any of the tenants (or terminate as to all for the
misdeeds of one) should a problem arise. Chapter 10
discusses the legal obligations of cotenants.
Clause 2. Identification of Premises
and Occupants
In this clause, you identify the property being rented
and who will live in it. The words “for residential
ChApter 2 |UNDERSTANDING LEASES AND RENTAL AGREEMENTS
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37
purposes only” are to prevent a tenant from using the
property for conducting a business that might affect
your insurance or violate zoning laws.
In the first blank, fill in the street address of the
unit or house you are renting. If there is an apartment
number, specify that as well.
In shared housing situations, you’ll need to clearly
state, in your own words, what the rental includes.
exAmple: You are renting a small cottage in your
backyard that comes with kitchen privileges in
your house. You might fill in, “Back cottage at
1212 Parker St., Visalia, California, with kitchen
privileges in main house.”
If you need more room, perhaps to explain exactly
what the kitchen privileges or other rental conditions
include, start by filling in the address of the property.
Then add the new information to the clause. Or
you can add the words “as more fully described in
Attachment 1 to this Agreement.” Next, prepare a
separate “Attachment 1” and define the particulars
of what you are renting. Staple the attachment to the
lease or rental agreement.
Note on garages and outbuildings. If any part of the
property is not being rented, such as a garage or shed
you wish to use yourself or rent to someone else,
make this clear by specifically excluding it from your
description of the premises. If you don’t, the tenant has
rented it.
exAmple: “Single-family house at 1210 Parker St.,
Visalia, California, except for the two-car garage.”
In the last blank, list the names of any minor
children who will be living in the rental property, or
put “None,” as appropriate. If you are worried about
the possibility of overcrowding if the family has
more children, you should state the number of minor
children—“Two children, Adam and Amy.” But avoid
language that might be considered discriminatory
against children (for example, never write “…and no
children,” or “… and only one child”).
You can legally establish reasonable space-to-
people ratios, but you cannot use overcrowding as an
excuse for refusing to rent to tenants with children.
Discrimination against families with children is illegal,
except in housing reserved for senior citizens only.
To avoid discriminating against families with
children, your safest bet is to adopt an across-the-
board “two-plus-one” policy: You allow two persons
per bedroom plus one additional occupant. Thus, a
landlord who draws the line at three people to a one-
bedroom, five to a two-bedroom, and seven to a three-
bedroom unit will be on safe ground in this regard.
(For a detailed discussion of occupancy limits and
discrimination, see Chapter 9.)
Clause 3. Limits on Use and Occupancy
This clause lets the tenants know they may not move
anyone else in as a permanent resident without your
consent.
When it comes to restricting how long guests may
stay, it usually makes sense to include a reasonable
time limit in your lease or rental agreement. The
agreements in this book allow up to ten days in any
six-month period. Even if you do not plan to strictly
enforce restrictions on guests, this provision will be
very handy if a tenant tries to move in a friend or
relative for a month or two, calling this person a guest.
It will give you leverage either to ask the guest to leave
or to request that the guest apply to become a tenant,
with an appropriate increase in rent (unless any rent
control ordinance forbids an increase). Restrictions
on guests may not be based on the age or sex of the
occupant or guest.
Clause 4. Defining the Term of the Tenancy
Clause 4 is the only clause that differs between the
fixed-term lease and month-to-month rental agreement
included in this book. See “Written Agreements: Which
Is Better, a Lease or a Rental Agreement?” above, for
details.
Lease Provision
The lease form contains the provision which sets a
definite date for the beginning and expiration of the
lease and it obligates both the landlord and the tenants
for a specific term. It also includes a warning that
explains the tenants’ liability for breaking the lease.
(See Chapter 19 for more details on tenant’s liability for
breaking a lease.)
In the blanks, fill in the starting date and the
expiration date. Leases usually last six, 12, or 24
months, but of course this is up to you and the
tenants.
See Clause 4 of the sample Fixed Term Residential
Lease shown below.
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Family Day Care Homes
Under state law (H&S § 1597.40), a landlord may not
prevent a tenant from using rental premises as a licensed
family day care home. A tenant who obtains a state license
to run a family day care home may do so legally—even
if your lease or rental agreement prohibits the operation
of a business on the premises, or limits the number of
occupants. Local zoning and occupancy limits don’t apply
to a state-licensed family day care home, though building
codes do, as explained further below.
A tenant who wants to run a child care operation must
obtain a state license to run a family day care home. Before
the county’s social services department will issue a license,
it will send a fire inspector or other official to examine the
space and determine whether the planned operation is
consistent with state law, as set out in the Uniform Building
Code (counties adopt this code, which is amended every
three years). e rules are as follows (2001 California Building
Code, California Code of Regulations Title 24, Part 2,
Volume 1):
Small family day care. ese are for eight or fewer
children (any children under ten who live in the rental
count toward the total). ese day cares are exempt from
state fire and life safety regulations. ough you must allow
them, state law does not regulate their placement in the
building, as is true for larger day cares.
Large family day care. ese are for nine to 14 children
(again, children of the tenant under the age of ten
count toward the total). ese operations are regulated
depending on the nature of the rental property:
• Single-family homes, duplexes, and townhouses.
Tenants may operate large day cares, but cannot
have children above the first floor unless the building
has fire sprinklers and a direct exit from the upstairs
to the outside. Large Family Day Cares must have
two exits remotely located from each other. e
exits can’t pass through a garage. Only one exit may
be a sliding door. Inspectors have denied a permit to
tenants in a townhouse whose second exit went to
an enclosed back patio area with no way out.
• Apartments and condominiums. Tenants cannot
operate a Large Family Day Care in rental units in
these buildings, but can operate a Small Family Day
Care, and can do so in upstairs units.
In addition to meeting the requirements explained
above, you may condition a day care operation on the
following reasonable and legal rules:
• e tenant must notify you in writing of his intent
to operate a family day care home—after having first
obtained a state license—30 days before starting the
child care operation.
• You may charge a tenant who operates a family day
care home a higher security deposit than you charge
tenants with similar units, without being liable for
illegal discrimination. e maximum dollar limits on
deposits—two months’ rent for unfurnished units
and three months’ rent for furnished units—still
apply. (See Chapter 5.)
If a tenant operates a day care facility, consider the
impact this may have on your insurance. If you have a
commercial policy (you’ll have one if landlording is your
business), chances are that there is no problem (confirm
this with your broker). But if you are renting out a home
that is insured under a homeowners’ policy, your policy may
not cover damage or claims that result from the tenant’s
business. Check with your agent or broker to find out.
(Unfortunately, you probably cannot require the tenant to
obtain his own liability policy, though no court case has
made this clear.)
A landlord who uses pesticides in a child care unit, in or
about the building, within ten feet of the building, and on
or near the day care facility’s play area, must issue a written
120-hour advance warning notice of the spraying or other
application of the pesticide. (Ed. Code § 17610(b).) is
notice must specify the pesticide’s name, manufacturer,
active ingredients, the federal EPA product registration
number, the date and locations of the application, and the
reasons you’re applying the pesticide.
is means that if you have reason to believe your tenant
is operating such a day care facility, you should probably
not apply any pesticides yourself, or have any manager or
other person do it, except through a licensed pest-control
company that can assure you such a notice will be delivered.
ChApter 2 |UNDERSTANDING LEASES AND RENTAL AGREEMENTS
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39
Investigate Before Letting a
Tenant Run a Home Business
Millions of Californians run a business from their house
or apartment. If a tenant asks you to modify Clause 2
to permit a business, you have some checking to do—
even if you are inclined to say yes.
For one, you’ll need to check local zoning laws for
restrictions on home-based businesses, including the
type of businesses allowed (if any), the amount of
added car and truck traffic the business can generate,
outside signs, on-street parking, the number of
employees, and the percentage of floor space devoted
to the business. In Los Angeles, for example, dentists,
physicians (except for psychiatrists), and unlicensed
massage therapists may not operate home offices. In
addition, photo labs and recording studios are banned.
Keep in mind that you may not be able to restrict a
child care home business in California. See “Family Day
Care Homes,” above, for details. Also, if your rental unit is
in a planned unit or a condominium development, check
the CC&Rs of the homeowners’ association.
You’ll also want to consult your insurance company
as to whether you’ll need a more expensive policy to
cover potential liability of employees or guests. In many
places, a home office for occasional use will not be a
problem. But if the tenant wants to operate a business,
especially one with people and deliveries coming and
going, such as a therapy practice, jewelry importer,
or small business consulting firm, your insurance
coverage may become an issue. Also, you should
seriously consider whether neighboring tenants will be
inconvenienced. (Where will visitors park, for example?)
You may also want to require that the tenant
maintain certain types of liability insurance, so that you
won’t wind up paying if someone gets hurt on the rental
property—for example, a business customer who trips
and falls on the front steps. And you may want to insist
that you be added as “additional insured” on the tenant’s
policy, which will protect you if you are sued because
your tenant acted carelessly toward his customer or
client. (As noted earlier, you probably cannot make this a
requirement for a licensed day care business.)
Finally, be aware that if you allow a residence to be used
as a commercial site, your property may need to meet the
accessibility requirements of the federal Americans with
Disabilities Act (ADA). For more information on the ADA
check the ADA website at www.ada.gov.
Rental Agreement Provision
Clause 4 is the only clause that differs between the
fixed-term lease and month-to-month rental agreement
included in this book. See “Written Agreements: Which
Is Better, a Lease or a Rental Agreement?” above, for
details.
Here’s the language you’ll see for Clause 4 of the
rental agreement:
4. Defining the Term of the Tenancy. e rental will
begin on , 20 , and will
continue on a month-to-month basis. is tenancy
may be terminated by Landlord or Tenants and may
be modified by Landlord, by giving 30 days’ written
notice to the other, or 60 days’ notice by Landlord to
Tenant, in accordance with Civil Code Section 827 or
1946.1 (subject to any local rent control ordinances
that may apply).
In the blank, fill in the date the tenancy will begin.
With this clause, you’ll normally need to give tenants
30 days’ written notice before changing or terminating
their tenancy. (You’ll need to give 60 days’ notice for
a rent increase of more than 10% or to terminate a
tenancy that’s lasted a year or more, and 90 days to
terminate a government-subsidized tenancy.) (See
Chapters 14 and 18.) (CC §§ 827(b), 1946.1, 1954.535.)
While 30 or 60 days is the most common notice
period, you may want to agree that the tenants get a
longer notice period—say 75 or 90 days; if so, change
the clause accordingly. Interestingly, when tenants
have stayed for a year or more, they need give only 30
days’ notice to terminate the tenancy—but the landlord
must give 60 days’. Some landlords report that they
file fewer eviction lawsuits when they give tenants
a generous amount of time in which to find another
place.
CAUTION
Don’t reduce the tenant’s notice period.
Agreements reducing the notice period for terminating
the tenancy to as few as seven days used to be legal under
CC§ 1946. We think such provisions are illegal as of January
1, 2007, when Section 1946.1 became effective. Section 1946.1
does not refer to the possibility of a shortened notice period.
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
$
RENT CONTROL
A landlord’s right to terminate or change the
terms of a tenancy, even one from month to month, is
limited by local rent control ordinances. Such ordinances
not only limit rent and other terms of tenancies, but usually
also require the landlord to have a good reason to terminate a
tenancy. (We discuss rent control in Chapter 4.)
Clause 5. Amount and Schedule for
the Payment of Rent
In this provision, specify the amount of the monthly
rent and when, where, and to whom the rent is paid.
We discuss how to set a legal rent and where and
how rent is due in Chapter 3. Before you fill in the
blanks, please read that discussion.
Specify the amount of monthly rent in the first
blank. Then indicate when the monthly rent is to be
paid—usually on the first of the month, but you can
set another time frame. Next, specify to whom and
where the rent is to be paid.
5a. You need to specify what form of payment
you’ll accept, such as cash, cashier’s check, money
order, or personal check. Be sure to check all boxes
that apply. If you check the “cash” box, you’ll also have
to check at least one of the other options, too. You
cannot demand that rent be paid only in cash, unless a
tenant has previously given you a bounced check, has
issued a stop payment on a rent check, or has given
you a cashier’s check or money order that was not
honored and you gave the tenant written notice to that
effect. (In that event, your demand for cash only may
last no longer than three months. (CC § 1947.3.)) Since
the tenancy is just getting started, obviously none of
these events have occurred. See Chapter 14 for more
information on how to demand “cash only” rent, and
for a form to use when informing your tenant. (Neither
may you demand rent via online payment or electronic
funds transfer, unless you provide for an alternative
other than cash; see 5c, below.)
5b. Check this box if the tenant will pay the rent in
person at the address stated earlier in this clause. Under
state law, you must indicate the days and hours when
rent can be paid at this address—for example, “Monday
through Friday, 9 a.m. to noon; 1 p.m. to 5 p.m.”
5c. Check this box if you and the tenant decide that
rent will be paid via electronic funds transfer. This is
a convenient method that takes a bit of setting up, but
its steadiness is well worth the time and effort. You
cannot insist that tenants give you this option, unless
you provide for an alternative other than cash.
5d. Check this box if your tenants will move in
midway through the rental period—say, on the tenth of
the month when rent will normally be due on the first.
This clause allows you to specify the prorated rent due
for that first, short month. (If the tenant is moving in
toward the end of the rental period, consider asking
for the prorated rent for those few days plus the next
month’s rent, as explained in Chapter 7.) Specifying
prorated rent will avoid any question or confusion
about what you expect to be paid. Specify the move-
in date and the ending date of that rental period, such
as “November 14, 20xx through November 30, 20xx.”
Divide the monthly rent by 30 (even for 31-day months
or February—it’s easier) and multiply by the number of
days in the first rental period. For example:
$900 ÷ 30 days = $30
$30 × 22 days = $660.
Finally, fill in the prorated amount due.
New Ways to Pay the Rent
More and more owners, especially those with large
numbers of rental units, are looking for ways to ensure
that rent payments are quick and reliable. Here are two
common methods:
Credit card. If you have enough tenants to make
it worthwhile, explore the option of accepting
credit cards. You must pay a fee for the privilege—a
percentage of the amount charged—but the cost may
be justified if it results in more on-time payments and
less hassle for you and the tenants. Keep in mind that
you’ll need to have someone in your onsite office to
process the credit card payments and give tenants
receipts. And if your tenant population is affluent
enough, consider automatic credit card debits.
Automatic debit. You can ask for permission to have
rent payments debited automatically each month from
the tenant’s bank account and transferred into your
account. (CC § 1962(a)(2)(B)(ii).) Be sure to provide the
information necessary to establish an electronic funds
transfer—the names on your account and its number,
plus the name of your bank and branch, if any, including
the address and phone number. Tenants may be leery of
this idea, however, and it’s not worth insisting on.
ChApter 2 |UNDERSTANDING LEASES AND RENTAL AGREEMENTS
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41
Fixed-Term Residential Lease
1. Identifi cation of Landlord and Tenants. is Agreement is made and entered into on , 20 ,
between (“Tenants”) and
(“Landlord”).
Each Tenant is jointly and severally liable for the payment of rent and performance of all other terms of this Agreement.
2. Identifi cation of Premises and Occupants. Subject to the terms and conditions set forth in this Agreement, Landlord rents
to Tenants, and Tenants rent from Landlord, for residential purposes only, the premises located at
, California
(“the premises”). e premises will be occupied by the undersigned Tenants and the following minor children:
.
3. Limits on Use and Occupancy. e premises are to be used only as a private residence for Tenants and any minors listed in
Clause 2 of this Agreement, and for no other purpose without Landlord’s prior written consent. Occupancy by guests for
more than ten days in any six-month period is prohibited without Landlord’s written consent and will be considered a breach
of this Agreement.
4. Defi ning the Term of the Tenancy. e term of the rental will begin on , 20 and will expire
on , 20 . Should Tenants vacate before expiration of the term,
Tenants will be liable for the balance of the rent for the remainder of the term, less any rent Landlord collects or could have
collected from a replacement tenant by reasonably attempting to rerent. Tenants who vacate before expiration of the term
are also responsible for Landlord’s costs of advertising for a replacement tenant.
5. Amount and Schedule for the Payment of Rent. Tenants will pay to Landlord a monthly rent of $ ,
payable in advance on the day of each month, except when that day falls on a weekend or legal holiday,
in which case rent is due on the next business day. Rent will be paid to
at
, or at such other place as Landlord may designate.
■ a. e form of payment will be ■ cash ■ personal check ■ certifi ed funds or money order
■ credit card ■ bank debit ■ automatic credit card debit
■ b. [Check if rent will be accepted personally, not by mail.] Rent is accepted during the following days and hours:
■ c. [Check if rent will be paid by electronic funds transfer.] Rent may be paid by electronic funds transfer to account
number in the name of
at (institution),
(branch), a fi nancial institution located at
(bank address), and and can reached at (telephone number).
■ d. [Prorated rent.] On signing this agreement, Tenants will pay to Landlord for the period of ,
20 , through , 20 , the sum of $ as rent, payable in advance.
6. Late Charges. Because Landlord and Tenants agree that actual damages for late rent payments are very diffi cult or
impossible to determine, Landlord and Tenants agree to the following stated late charge as liquidated damages. Tenants will
pay Landlord a late charge if Tenants fail to pay the rent in full within days after the date it is due. e late charge
will be $ , plus $ for each additional day that the rent continues to be unpaid. e
total late charge for any one month will not exceed $ . Landlord does not waive the right to insist on payment
of the rent in full on the date it is due.
November 14 xx
Sharon and Hank Donaldson
Lionel Jones
123 Sendaro Street, Fresno
Jan Donaldson
November 14 xx
November 30
xx
900
1st
Lionel Jones
125 Sendaro Street, Fresno, California 93656
X
November 14
xx November 30 xx 660
five
10 5
35
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Clause 6. Late Charges
Late charges provide an incentive for tenants to
pay rent on time and make sense when used with
discretion. Unfortunately, landlords sometimes try
to charge excessive late fees and, by so doing, get
themselves into legal hot water and incur tenant
hostility. Your late fee must correspond as closely as
possible to the real monetary consequences you suffer
(called “actual damages”) when the rent is late. See
Chapter 3 for help in setting legal late fees.
$
RENT CONTROL
Some cities with rent control ordinances
regulate the amount of late fees. Check any rent control
ordinances or regulations applicable to your property before
establishing a late fee.
In the first blank, specify when you will start
charging a late fee. You can charge a late fee the first
day rent is late, but many landlords don’t charge a late
fee until the rent is two or three days late. Next, fill in
the late charge for the first day rent is late, followed by
the amount for each additional day. Finally, fill in the
maximum late charge.
Clause 7. Returned Check and
Other Bank Charges
It’s legal to charge the tenant an extra fee if a rent check
bounces—assuming you agree to accept checks. (If
you’re having a lot of trouble with bounced checks, you
may decide to change your agreement to accept only
cash or money order payments for rent. See Chapter
3.) As with late charges, bounced check charges must
be reasonable. You should charge no more than the
amount your bank charges you for a returned check
(such as $15 to $25 per returned item; check with your
bank), plus a few dollars for your trouble.
In the blank, fill in the amount of the returned
check charge. If you won’t accept checks, fill in “N/A”
or “Not Applicable.”
For more detail on returned check charges, see
Chapter 3.
Clause 8. Amount and Payment of Deposits
By law, any payment, fee, deposit, or charge that is
paid by the tenant “at the beginning of the tenancy”
(other than credit check fees; see Chapter 1) is a
security deposit, as long as the landlord intends to use
it for any of the purposes mentioned in (1) through (4)
of Clause 8. A fee that is intended to “reimburse the
landlord for costs associated with processing a new
tenant” also comes within this definition of a security
deposit. We think that this means that so-called
“tenant initiation expense reimbursement” fees (“TIER”
fees), which are up-front fees that cover the time spent
moving the tenant in and processing the paperwork,
are no longer legal.
In short, any “cleaning deposit,” “cleaning fee,”
“security deposit,” or “last month’s rent,” or anything
paid by the tenant up front other than the first month’s
rent or a legitimate credit check fee, is a security
deposit (CC § 1950.5(b)), and subject to the laws that
control the amount and uses of security deposits.
The use and return of security deposits is a frequent
source of disputes between landlords and tenants. For
example, a tenant may assume that the deposit, if it is
equal to one month’s rent, is the same as “last month’s
rent” and try to apply it this way a month before
moving out. To avoid confusion, our lease and rental
agreements are clear on the subject. You should make
the point again in a move-in letter. (See Chapter 7.)
The amount and use of security deposits are limited
by state law. To determine the maximum amount of
security deposit you can charge, read Chapter 5 before
completing this section. Chapter 20 provides details
on returning deposits, including requirements that a
tenant be offered the option of an initial, pre-move-out
inspection and the opportunity to correct problems
before moving out, penalties for failing to return
deposits within the three weeks required by state
law, and a requirement that you provide receipts for
cleaning and repairs.
Once you’ve decided how much security deposit
you can charge, fill in that amount in the blank. Then
check either “a” or “b.” Check “a” if your property
is not located in a city that requires payment of
interest. Check “b” if interest payments must be made
or credited, and summarize the requirement. You
may copy the explanation from the chart of “Cities
Requiring Interest or Separate Accounts for Security
Deposits,” found in Chapter 5.
ChApter 2 |UNDERSTANDING LEASES AND RENTAL AGREEMENTS
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43
TIP
Consider offering interest even if you aren’t
legally required to do so. Tenants will appreciate your
willingness to give them the interest their money has earned.
Since state law doesn’t regulate the manner in which you
should handle interest, you can choose any convenient and
fair method. For example, you might use the same rate as
offered by a major bank on savings accounts, and you could
give a rent credit at the end of six months’ residence.
Clause 9. Utilities
This clause helps prevent misunderstandings.
Normally, landlords pay for garbage (and sometimes
water, if there is a yard) to help make sure that the
premises are well maintained. Tenants usually pay for
other services, such as phone, gas, and electricity. In
the blank, fill in the utilities you—not the tenants—
will be responsible for paying. If you’ll pay a portion
of the utilities, indicate that—for example, “all utilities
except phone” or “half of the electricity and half of the
gas.” If the tenant will pay all utilities, fill in “N/A” or
“Not Applicable,” or edit the clause accordingly.
As mentioned in Chapter 1, state law requires
landlords to notify all prospective tenants, before
they move in, if their gas or electric meter serves any
areas outside their dwelling. (CC § 1940.9.) This law
specifically applies where:
•there are not separate gas and electric meters for
each unit, and
•a tenant’s meter serves any areas outside his unit
(even a lightbulb not under the tenant’s control
in a common area).
If both these conditions apply, you are required to
do one of the following:
•pay for the utilities for the tenant’s meter
yourself, by placing that utility in your own name
•correct the situation by separately metering the
area outside the tenant’s unit, or
•enter into a separate written agreement with the
tenant, under which the tenant specifically agrees
to pay utilities on his own meter, knowing he’s
paying for others’ utilities, too.
We prefer the first and second methods above.
Regardless of how few dollars a month a tenant may
be paying for another tenant’s or the common area
utilities, a tenant faced with this sort of uncertainty
will usually demand a concession on rent; this will
probably cost you more in the long run than if you
either added a new meter or simply paid for the
utilities yourself.
Here are some examples of ways to handle shared
utility arrangements.
exAmple 1: “Landlord will pay for the utilities for
the Tenants’ meter, and will place that utility in
Landlord’s own name.”
exAmple 2: “Tenants will pay for gas and
electricity charged to their meter, with the
understanding that they may be paying for others’
utility charges.”
In a situation where you share housing with the
tenant, or where there is only one meter for several
units, define who is responsible for what portion of
the utilities in more detail. If you do, replace Clause 9
of our form with these words: “Tenants shall pay for
utility charges as follows: [fill in the charges].”
Clause 10. Prohibition of Assignment
and Subletting
Clauses 1–3 spell out the total number of adult
occupants, and let tenants know that they may not
move anyone else in as a permanent resident. Clause
10 enforces this with an antisubletting clause, breach
of which is grounds for eviction.
Clause 10 won’t stop a tenant from bringing in a
spouse or child later; in fact, if you tried to do so, you
could be sued for illegal discrimination as discussed in
Chapter 9. You may not want to strictly enforce Clause
3’s restriction on guests, but it will be very handy to
have if a tenant tries to move in a friend or relative
for a month or two, calling her a guest. Restrictions
on guests may not be based on the age or sex of the
occupant or guest, as discussed in Chapter 10.
Clause 10 is designed to prevent your tenant from
leaving in the middle of the month or of a lease term
and finding a replacement—maybe someone you
wouldn’t choose to rent to—without your consent.
It also prevents a tenant from subleasing during a
vacation or renting out a room to someone unless you
specifically agree.
By including Clause 10 in your lease, you have the
option not to accept a sublet or assignment if you don’t
like or trust the person your tenant proposes to take
over the lease. If, however, the tenant wishes to leave
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
early and provides you with another suitable tenant,
you can’t both hold the tenant financially liable for
breaking the lease and unreasonably refuse to rent
to another tenant who is in every way suitable. (We
discuss lease-breaking tenants in detail in Chapter 19.)
The issue of who is and who is not a tenant, and
legal liability for paying the rent and meeting all the
conditions of the lease or rental agreement, can be
very confusing and cause all kinds of problems. See
Chapter 10 for a discussion of this topic and how using
California’s “lock-in” option may limit your financial
losses when a tenant leaves early.
Clause 11. Condition of the Premises
Clause 11 makes it clear that if tenants damage the
premises (for example, by breaking a window or
scratching hardwood floors), it’s their responsibility to
pay for fixing the problem.
In the blanks after the words “except as noted
here,” clearly describe any defects or damages to the
premises. If there are none, state that. You and your
tenants may find it easiest to go through the rental unit
before the tenants move in and fill out a Landlord/
Tenant Checklist, describing what is in the rental unit
and noting any problems.
Chapter 7 provides details on the Landlord/Tenant
Checklist and other means to minimize disputes about
who’s responsible for damage or repairs. If you decide
to use the checklist, fill in the words “See Landlord/
Tenant Checklist, attached.”
FORM
You’ll find a downloadable copy of the Landlord/
Tenant Checklist on the Nolo website. See Appendix B for
the link to the forms in this book.
Clause 11 requires tenants to alert you to defective
or dangerous conditions. We can’t emphasize enough
the importance of establishing a system for tenants to
regularly report on the condition of the premises and
defective or dangerous conditions. This is covered in
detail in Chapter 11.
CAUTION
Don’t fail to maintain the property. If your
tenants or their guests suffer injury or property damage as
a result of poorly maintained property, you may be held
responsible for paying for the loss. Chapter 12 covers liability-
related issues.
Clause 12. Possession of the Premises
This clause explains that if the tenants choose not
to move in after they have signed a lease or rental
agreement, they will still be required to pay rent and
satisfy other conditions of the lease or rental agreement.
Of course, you would be legally required to begin
reasonable efforts to rerent the unit, and would be able
to collect rent from the original, would-be occupants
only until you rented the unit to someone else. (See
Chapter 19 for an explanation of the “mitigation of
damages” rule.)
This clause also protects you if you’re unable, for
reasons beyond your control, to turn over possession
after having signed the agreement—for example, if a
fire spreads from next door and destroys the premises,
or if you can’t turn over possession because the current
tenant refuses to leave (and becomes a “holdover
tenant”). It limits your financial liability to new tenants
to the return of any prepaid rent and security deposits
(the “sums previously paid” in the language of the
clause). A disappointed tenant would not be able to
sue you for the cost of temporary housing while he
waited for you to evict a holdover tenant. And if the
only substitute rental the waiting tenant could find
was more expensive than the rent he would have paid
you, he could not sue you for the difference. You don’t
need to add anything to this clause.
Clause 13. Pets
This clause is designed to prevent tenants and their
guests from keeping pets without your written
permission. This is not to say that you will want to
apply a flat “no-pets” rule. It does provide you with
a legal mechanism to keep your premises from being
knee-deep in Irish wolfhounds. Without this sort
of provision, particularly in a fixed-term lease that
can’t be terminated on 30 days’ notice, there’s little to
prevent your tenant from keeping dangerous or non-
housebroken pets on your property (except for city
ordinances prohibiting tigers and the like).
Check “a” if you want to forbid pets. You have the
right to prohibit all pets, with the exception of trained
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7. Returned Check and Other Bank Charges. In the event any check off ered by Tenants to Landlord in payment of rent or
any other amount due under this Agreement is returned for lack of suffi cient funds, a “stop payment,” or any other reason,
Tenants will pay Landlord a returned check charge in the amount of $ .
8. Amount and Payment of Deposits. On signing this Agreement, Tenants will pay to Landlord the sum of $
as a security deposit. Tenants may not, without Landlord’s prior written consent, apply this security deposit to the last month’s
rent or to any other sum due under this Agreement. Within three weeks after Tenants have vacated the premises, Landlord
will furnish Tenants with an itemized written statement of the reasons for, and the dollar amount of, any of the security
deposit retained by the Landlord, receipts for work done or items purchased, if available, along with a check for any deposit
balance. Under Section 1950.5 of the California Civil Code, Landlord may withhold only that portion of Tenants’ security
deposit necessary to: (1) remedy any default by Tenants in the payment of rent; (2) repair damages to the premises exclusive
of ordinary wear and tear; (3) clean the premises if necessary to restore it to the same level of cleanliness it was in at the
beginning of the tenancy; and (4) remedy any default by tenants, under this Agreement, to restore, replace, or return any of
Landlord’s personal property mentioned in this Agreement, including but not limited to the property referred to in Clause 11.
Landlord will pay Tenants interest on all security deposits as follows:
■ a. Per state law, no interest payments are required.
■ b. Local law requires that interest be paid or credited, or Landlord has decided voluntarily to do so, which will occur as
follows:
.
9. Utilities. Tenants will be responsible for payment of all utility charges, except for the following, which shall be paid by
Landlord:
.
■ Tenants’ gas or electric meter serves area(s) outside of their premises, and there are not separate gas and electric meters
for Tenants’ unit and the area(s) outside their unit. Tenants and Landlord agree as follows:
.
10. Prohibition of Assignment and Subletting. Tenants will not sublet any part of the premises or assign this Agreement
without the prior written consent of Landlord.
11. Condition of the Premises. Tenants agree to: (1) keep the premises clean and sanitary and in good repair and, upon
termination of the tenancy, to return the premises to Landlord in a condition identical to that which existed when Tenants
took occupancy, except for ordinary wear and tear; (2) immediately notify Landlord of any defects or dangerous conditions
in and about the premises of which they become aware; and (3) reimburse Landlord, on demand by Landlord, for the cost of
any repairs to the premises, including Landlord’s personal property therein, damaged by Tenants or their guests or invitees
through misuse or neglect.
Tenants acknowledge that they have examined the premises, including appliances, fi xtures, carpets, drapes, and paint, and
have found them to be in good, safe, and clean condition and repair, except as noted here:
.
20
1,000
X
garbage and water
See Landlord/Tenant Checklist attached.
Fixed-Term Residential Lease (continued)
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animals used by physically or mentally disabled people.
You may not charge an extra pet deposit on account of
any trained service animal. (CC §§ 54.1, 54.2.)
To allow pets, check “b” and identify the type and
number of pets—for example, “one cat.” If you allow
pets, you’re wise to spell out your pet rules—for
example, you may want to specify that the tenants will
keep the yard free of all animal waste. You may also
want to charge a higher security deposit, if you aren’t
already requiring the maximum allowed by law.
It is important to educate tenants from the start that
you will not tolerate dangerous or even apparently
dangerous pets, and that as soon as you learn of a
worrisome situation, you have the option of insisting
that the tenant get rid of the pet (or move). You
may want to use the space under part “b” to advise
tenants that their pets must be well trained and non-
threatening; or you could set out your policy in your
Rules and Regulations, if you have them. As long as
you or your management follow through with your
policy—by keeping an eye on what goes on and
listening to and acting on any complaints from other
tenants or neighbors—such a clause will help you evict
if you discover a dangerous pet on your property. Your
policy might look something like this:
“Tenant’s pet(s) will be well behaved, will be under
Tenant’s control at all times, and will not pose a threat
or apparent threat to the safety of other tenants, their
guests, or other people on or near the rental premises.
If, in the opinion of Landlord, tenant’s pet(s) pose such
a threat, Landlord will serve Tenant with a Three-Day
Notice to Cure (remove pet from the premises) or Quit
(move out).”
CAUTION
Enforce no-pets clauses. When faced with tenants
who violate no-pets clauses, landlords often ignore the situation
for a long time, then try to enforce it later when friction
develops over some other matter. is could backfire. In general,
if you know a tenant has breached the lease or rental agreement
(for example, by keeping a pet) and do nothing about it for a
long time, you risk having legally waived your right to object.
You can preserve your right to object by promptly giving the
tenant an informal written notice as soon as the pet appears,
then following through with a ree-Day Notice to Perform
Covenant or Quit. See Chapter 4 for details on rent control and
Chapter 18 for a discussion of three-day and 30-day notices.
Renting to Pet Owners
Project Open Door, an ambitious program of the San
Francisco Society for the Prevention of Cruelty to
Animals (SPCA), seeks to show landlords how to make
renting to pet-owning tenants a satisfying and profitable
experience. e SPCA offers landlords:
• checklists to help screen pet-owning tenants
• pet policy agreements to add to standard leases
and rental agreements, and
• free mediation if landlords and tenants have
problems after moving in, such as neighbor
complaints.
For more information, contact the San Francisco
SPCA at 201 Alabama Street, San Francisco, CA 94103,
415-554-3000, or check their website at www.sfspca.org/
program-services/open-door.
Should You Require a Separate
Security Deposit for Pets?
Some landlords allow pets but require the tenant to pay
a separate deposit to cover any damages caused by the
pet. is is legal only if the deposit charged for the pet,
when added to the amount charged for the security
deposit, does not exceed the maximum amount that
can be charged for a deposit. (See Chapter 5.)
Separate pet deposits are usually a bad idea because
they limit how you can use that part of the security
deposit. For example, if the pet is well behaved but the
tenant trashes your unit, you can’t use the pet portion
of the deposit to clean up after the human. If you want
to protect your property from damage done by a pet,
you are probably better off charging a slightly higher
rent or an undifferentiated security deposit to start with
(assuming you are not restricted by rent control or the
upper security deposit limits). It is also illegal to charge
an extra pet deposit for legally disabled people with
service animals.
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Clause 14. Landlord’s Access for
Inspection and Emergency
The law limits your right to enter property in the
tenant’s absence or without the tenant’s permission.
Although these limits apply regardless of what an
agreement or lease says, it’s best to put the limits in
writing to avoid problems later on.
This clause makes it clear to the tenant that you
have a legal right of access to the property to make
repairs or show the premises for sale or rental,
provided you give the tenant reasonable notice, which
is presumed to be 24 hours. However, the notice
period is 48 hours if the purpose of the entry is a
move-out inspection requested by the tenant regarding
possible security deposit deductions. (See Chapters
5 and 20 for information on collecting and returning
deposits.) Chapter 13 provides details on a landlord’s
right to enter rental property and notice requirements.
Clause 15. Extended Absences by Tenants
This clause requires that the tenants notify you when
leaving your property for an extended time.
In the blank, fill in the number of consecutive
days that you’d like to be notified of. Fourteen days is
common, but you may opt for an altogether different
period of time. For example, if you live in Truckee or
anywhere else where it snows, checking your property
on a daily basis during a snowstorm may be prudent,
to make sure the pipes haven’t burst.
Waste and Nuisance: What Are They?
In legalese, waste is the causing of severe property
damage to real estate, including a house or apartment
unit, which goes way beyond ordinary wear and tear.
Punching holes in walls, pulling out sinks and fixtures,
and knocking down doors are examples of “committing
waste.”
Nuisance means behavior that prevents neighbors from
fully enjoying the use of their own homes. Continuous loud
noise and foul odors are examples of legal nuisances that
may disturb nearby neighbors. So, too, are selling drugs
or engaging in other illegal activities that greatly disturb
neighbors.
Clause 16. Prohibitions Against Violating
Laws and Causing Disturbances
This type of clause is found in most form leases
and rental agreements. Although it’s full of legal
gobbledygook, it’s probably best to leave it as is,
since courts have much experience in working with
these terms. If the tenant causes a nuisance, seriously
damages the property, or violates the law—for
example, deals drugs—you may be able to evict even
without such a provision in the agreement. It will,
however, be easier to evict if you can point to an
explicit lease provision.
If you want to add specific rules—for example, no
loud music played after midnight—add them to Clause
25: Additional Provisions.
Take a moment to look again at the first sentence
in this clause, which states that tenants are entitled
to “quiet enjoyment.” As just explained, this means
that neighboring tenants are entitled to peace and
quiet—and if the tenant who’s signing this document
seriously interferes with this right, you have the power
to terminate his tenancy. It also means that you are
promising to maintain an atmosphere of peace and
quiet. So, if the tenant who signs this lease comes to
you with credible proof that a neighboring tenant is
making it impossible to reasonably enjoy his rented
home, you must, according to your promise in the
lease or rental agreement, take steps to calm things
down (or clean them up). If you don’t, your aggrieved
tenant can point to your violation of this clause as
grounds for breaking the lease (with no liability for
future rent).
Clause 17. Repairs and Alterations
The first part of this clause forbids the tenant from
rekeying the locks or installing a burglar alarm system
without your consent, and provides that you are
entitled to duplicate keys and instructions on how
to disarm the alarm system. See Chapter 12 for more
information on your responsibility to provide secure
premises, and Chapter 13 for information on your right
to enter rental property in an emergency.
The second part of Clause 17 makes it clear that
alterations and repairs without the landlord’s consent
aren’t allowed. The “except as provided by law”
language is a reference to the “repair-and-deduct”
remedy the tenants may use to repair health- or safety-
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12. Possession of the Premises. If, after signing this Agreement, Tenants fail to take possession of the premises, they will be
responsible for paying rent and complying with all other terms of this Agreement. In the event Landlord is unable to deliver
possession of the premises to Tenants for any reason not within Landlord’s control, including, but not limited to, failure of prior
occupants to vacate or partial or complete destruction of the premises, Tenants will have the right to terminate this Agreement.
In such event, Landlord’s liability to Tenants will be limited to the return of all sums previously paid by Tenants to Landlord.
13. Pets. No animal, bird, or other pet may be kept on the premises without Landlord’s prior written consent, except properly
trained dogs needed by blind, deaf, or disabled persons and:
■ , under the following conditions:
.
14. Landlord’s Access for Inspection and Emergency. Landlord or Landlord’s agents may enter the premises in the event of an
emergency or to make repairs or improvements, supply agreed services, show the premises to prospective buyers or tenants,
and conduct an initial move-out inspection requested by tenants. Except in cases of emergency, Tenants’ abandonment of
the premises, or court order, Landlord will give Tenants reasonable notice of intent to enter and will enter only during regular
business hours of Monday through Friday from 9:00 a.m. to 6:00 p.m. and Saturday from 10:00 a.m. to 1:00 p.m. e notice
will include the purpose, date, and approximate time of the entry.
15. Extended Absences by Tenants. Tenants agree to notify Landlord in the event that they will be away from the premises for
consecutive days or more. During such absence, Landlord may enter the premises at times reasonably necessary to maintain
the property and inspect for damage and needed repairs.
16. Prohibitions Against Violating Laws and Causing Disturbances. Tenants are entitled to quiet enjoyment of the premises.
Tenants and their guests or invitees will not use the premises or adjacent areas in such a way as to: (1) violate any law or
ordinance, including laws prohibiting the use, possession, or sale of illegal drugs; (2) commit waste or nuisance; or (3) annoy,
disturb, inconvenience, or interfere with the quiet enjoyment and peace and quiet of any other tenant or nearby resident.
17. Repairs and Alterations
a. Tenants will not, without Landlord’s prior written consent, alter, rekey, or install any locks to the premises or install or
alter any burglar alarm system. Tenants will provide Landlord with a key or keys capable of unlocking all such rekeyed or
new locks as well as instructions on how to disarm any altered or new burglar alarm system.
b. Except as provided by law or as authorized by the prior written consent of Landlord, Tenants will not make any repairs
or alterations to the premises. Landlord will not unreasonably withhold consent for such repairs, but will not authorize
repairs that require advanced skill or workmanship or that would be dangerous to undertake. Landlord will not authorize
repairs unless such repairs are likely to return the item or element of the rental to its predamaged state of usefulness and
attractiveness.
18. Damage to the Premises. In the event the premises are partially or totally damaged or destroyed by fi re or other cause, the
following will apply:
a. If the premises are totally damaged and destroyed, Landlord will have the option to: (1) repair such damage and restore
the premises, with this Agreement continuing in full force and eff ect, except that Tenants’ rent will be abated while
repairs are being made; or (2) give written notice to Tenants terminating this Agreement at any time within thirty
(30) days after such damage, and specifying the termination date; in the event that Landlord gives such notice, this
Agreement will expire and all of Tenants’ rights pursuant to this Agreement will cease.
b. Landlord will have the option to determine that the premises are only partially damaged by fi re or other cause. In that
event, Landlord will attempt to repair such damage and restore the premises within thirty (30) days after such damage.
If only part of the premises cannot be used, Tenants must pay rent only for the usable part, to be determined solely by
Landlord. If Landlord is unable to complete repairs within thirty (30) days, this Agreement will expire and all of Tenants’
rights pursuant to this Agreement will terminate at the option of either party.
X
one cat
10
Fixed-Term Residential Lease (continued)
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threatening defects. By law, landlords must maintain
and repair their rental property in accordance with
certain minimum standards. (CC § 1941.1.) If a landlord
refuses to do so, after reasonable notification by
the tenant, a tenant may arrange for certain repairs
and deduct the cost from the next month’s rent. (CC
§ 1942.) The tenant always has the right to use this
statutory procedure, no matter what a lease says. (See
below.) If you don’t keep the property in habitable
condition, tenants may also have the right to withhold
rent and even sue. (See Chapter 11.)
If mutually agreeable to you and the tenants, the
tenants may agree in writing to perform necessary
repairs or maintenance such as mowing the lawn in
exchange for a rent reduction. See below for more
details on this type of arrangement.
Section b in this clause makes it clear that alter-
ations and repairs without your written consent aren’t
allowed. If you wish, you may authorize a tenant
improvement or alteration, such as the installation
of a bookshelf or plantings in the backyard. Use the
Tenant Alterations to Rental Unit form, which is fully
explained in Chapter 11.
Clause 18. Damage to the Premises
This clause addresses what will happen if the
premises are seriously damaged by fire or other
calamity. This provision places responsibility on
tenants for damage caused by their acts or by people
they’ve allowed in the premises. Basically, it seeks
to limit your risk to 30 days’ rental value, even if
the damage was your responsibility. You don’t need
to add anything to this clause. (See Chapter 11 for
a discussion of liability for rent if the premises are
partially or totally destroyed.)
Clause 19. Tenants’ Financial Responsibility
and Renters’ Insurance
This clause forces the tenants to assume responsibility
for damage to their own belongings. It also suggests
that tenants obtain renters’ insurance.
One change you may wish to make in this clause
involves requiring renters’ insurance. If you absolutely
wish to require insurance, substitute the following
paragraph for the last sentence of Clause 19:
Optional Insurance Paragraph for Clause 19
Landlord assumes no liability for such loss and requires
Tenants, within 10 days of the signing of this Agreement,
to obtain insurance that will:
a. reimburse Landlord for cost of fire or water damage
and vandalism to the premises
b. indemnify Landlord against liability to third parties for
any negligence on the part of Tenants or their guests or
invitees and
c. cover damage to Tenants’ personal possessions to a
minimum of $ . Tenants will provide
Landlord with proof of such insurance.
Your move-in letter (see Chapter 7) is the place to
highlight your policy on renters’ insurance.
Clause 20. Waterbeds
Whether you can refuse to rent to a tenant with a
waterbed depends on when the property was built.
Here are the rules.
Property built before January 1, 1973. If your property’s
“certificate of occupancy” (final approval of initial
construction by local building department) was issued
before January 1, 1973, you may legally refuse to rent
to a tenant who has a waterbed. This isn’t to say that
you should ban waterbeds if your property was built
before 1973. Wooden floors built to current standards,
or even the standards 20 or 30 years ago, can with-
stand pressures of at least 60 pounds per square foot,
and a typical queen-sized waterbed exerts about 50
pounds per square foot. (Poured concrete floors, of
course, pose no problem.)
Property built on or after January 1, 1973. If your
property was built after 1973, you may have no choice.
State law prohibits landlords of such property from
refusing to rent to (or renew leases with) tenants
because they have waterbeds, or refusing to allow
tenants to use waterbeds, if:
•the tenant obtains a replacement-value $100,000
waterbed insurance policy
•the pressure the waterbed puts on the floor does
not exceed the floor’s pounds-per-square-foot
weight limitation (as stated above, this should be
no problem for dwellings constructed after 1973)
•the waterbed is held together by a pedestal or
frame
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
•the tenant installs, maintains, and moves the
waterbed in accordance with the standards of
the manufacturer’s retailer or state, whichever are
more stringent
•the tenant gives the landlord at least 24 hours’
written notice of his intention to install, move, or
remove the waterbed, and allows the landlord to
be present when this occurs
•the waterbed conforms to construction standards
imposed by the State Bureau of Home Furnishings
and displays a label to that effect, and
•the waterbed was constructed after January 1,
1973. (CC § 1940.5.)
If your property was built before 1973 and you wish
to ban waterbeds, you may cross off or delete the
words “without Landlord’s written consent.”
If you choose to allow waterbeds, or your property
was built in 1973 or later and your tenant plans to have
a waterbed, check the box, fill in the number of the
attachment, and complete the self-explanatory fill-in-
the-blanks Attachment: Agreement Regarding Use of
Waterbed, a sample of which is shown below.
FORM
e Nolo website includes a downloadable copy
of the Attachment: Agreement Regarding Use of Waterbed.
See Appendix B for the link to the forms in this book.
TIP
Security deposits may be increased. You can
charge a higher security deposit for tenants with waterbeds,
equal to an additional one-half month’s rent. (See Chapter 5.)
Clause 21. Tenant Rules and Regulations
Many landlords don’t worry about detailed rules and
regulations (“R and Rs”), especially when they rent
single-family homes or duplexes. However, in large
buildings, rules are usually important to control the
use of common areas and equipment.
Check the box if you plan to use tenant rules, and
fill in the attachment number. Remember to also label
the rules and regulations with the attachment number.
This clause gives you the authority to evict a tenant
who persists in seriously violating your code of tenant
rules and regulations.
The final sentence in Clause 21 gives you the
right to vary your rules and regulations, and to do
so without needing to give notice. A word of caution
here: Don’t be tempted to push key provisions of
the rental into your R and Rs, thinking that doing so
enables you to change them at will (which you can’t
do when the provision is in a lease or rental agreement
attachment). A judge will see this ruse for what it is
and will side with a tenant who protests when, for
example, you ban pets in your R and Rs (but the
tenant’s lease says nothing about pets). Instead, use
your R and Rs to spell out day-to-day details of how
your building works, as explained below in “What’s
Covered in Tenant Rules and Regulations.”
What’s Covered in Tenant
Rules and Regulations
Tenant rules and regulations typically cover issues such as:
• elevator safety and use
• pool rules
• garbage disposal and recycling times and places
• parking garage regulations
• lockout and lost key charges
• security system use
• excessive noise
• pet behavior
• use of grounds
• maintenance of balconies and decks (for instance,
no drying clothes on balconies)
• display of signs in windows, and
• laundry room rules.
Clause 22. Payment of Attorney
Fees in a Lawsuit
Many landlords assume that whenever they sue a
tenant over the interpretation of the lease (or to
enforce it) and win, the court will order the losing
tenant to pay the landlord’s attorney fees and court
costs, such as filing fees and deposition costs.
However, this is true only if a written agreement
specifically provides for it, or if the law underlying the
landlord’s winning case specifically provides for the
loser to pay the winner’s costs and fees. This is why it
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Attachment: Agreement Regarding Use of Waterbed
Landlord and Tenants agree that Tenants may keep water-fi lled furniture in the premises located at
,
subject to the legal requirements of Civil Code Section 1940.5, key provisions of which are summarized as follows:
1. Insurance
Tenants agree to obtain a valid waterbed insurance policy or certifi cate of insurance for property damage, with a minimum
replacement value of $100,000. Such insurance policy shall be furnished to Landlord prior to installation of the waterbed and
shall be maintained in full force and eff ect until the waterbed is permanently removed from the premises.
2. Weight Limitation
e pressure the waterbed puts on the fl oor shall not exceed the fl oor’s pounds per square foot weight limitation. e
weight shall be distributed on a pedestal or frame which is approximately the same dimensions as the mattress itself.
3. Installation, Moving, and Removal
Tenants shall install, maintain, and move the waterbed in accordance with the standards of the manufacturer, retailer, or
state, whichever are most stringent.
4. Notice to and Inspection by Landlord
Tenants agree to give Landlord at least 24 hours’ written notice of their intention to install, move, or remove the waterbed,
and shall allow Landlord to be present when this occurs. If anyone other than Tenants installs or moves the waterbed,
Tenants shall give Landlord a written installation receipt that states the installer’s name and address and any business
affi liation.
5. Waterbed Construction Standards
e waterbed shall conform to construction standards imposed by the State Bureau of Home Furnishings and shall display a
label to that eff ect. e waterbed must have been constructed on or after January 1, 1973.
6. Security Deposit
Landlord may increase Tenants’ security deposit in an amount equal to an additional one-half month’s rent.
Landlord or Manager Date
Tenant Date
Tenant Date
Tenant Date
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can be important to have an “attorney fees” clause in
your lease. That way, if you hire a lawyer to bring an
eviction suit and win, the judge will order your tenant
to pay your attorney fees.
By law, an attorney fees clause in a lease or rental
agreement works both ways. (CC § 1717.) That is, if
your tenants prevail in a lawsuit, and the lease or
written rental agreement contains such a clause, you
must pay their “reasonable attorney fees” in an amount
determined by the judge. This is true even if the clause
is worded so that it requires payment of attorney fees
only by the tenant if you win and not vice versa.
Attorney fees clauses don’t cover all legal disputes.
They cover fees only for lawsuits that concern the
meaning or implementation of a rental agreement
or lease—for example, a dispute about rent, security
deposits, or your right to access (assuming that the
rental document includes these subjects). An attorney
fees clause would not apply in a personal injury lawsuit.
You may not want to provide for attorney fees.
Some landlords choose not to allow for attorney fees
because of their experience that money judgments
against evicted tenants are very often uncollectible. So,
in practice, the clause does not help the landlord. And
such a clause may actually hurt, because it works both
ways: If the landlord loses a lawsuit, the landlord pays
the tenant’s attorney fees, and that judgment will be
collectible.
If you intend to do your own legal work in any
potential eviction or other lawsuit, even if the tenant
hires a lawyer, you will almost surely conclude that
it is wiser not to allow for attorney fees. You don’t
want to be in a situation where you’d have to pay the
tenant’s attorney fees if the tenant wins, but the tenant
wouldn’t have to pay yours if you won because you
didn’t hire a lawyer.
If you don’t want to allow for attorney fees, check
the first box before the words “will not” and cross out
the word “will.”
If you want to be entitled to attorney fees if you
win—and you’re willing to pay attorney fees if you
lose—check the second box before the words “will
recover” and cross out the words “will not.”
Clause 23. Authority to Receive Legal Papers
By law, you must give your tenants information about
everyone who is authorized to receive rent and notices
and legal papers, such as lawsuits from the tenants.
(CC §§ 1961–1962.7.) For this purpose, you must provide
the name, phone number, and street address of:
•the manager, if any, or any other person who
receives rent payments, and
•you or someone else you authorize to receive
notices and legal papers on your behalf.
These written disclosures, as well as ones regarding
where and how rent must be paid (Clause 5, above),
are required even if the agreement is oral. You must
provide this information to the tenant within 15 days of
entering into an oral rental agreement, and once each
year (if asked) on 15 days’ notice. Since you must use a
written document to convey this information, you may
as well use the written rental agreement we provide.
In the meantime, if your agreement with your tenant is
oral, use the language above and in Clause 5 to draft
the required written disclosure.
CAUTION
Do you trust your manager? It’s unwise to have
a manager you don’t trust receive legal papers on your behalf.
You don’t, for example, want a careless apartment manager
to throw away a notice of a lawsuit against you without
informing you. at could result in a judgment against you
and a lien against your property in a lawsuit you didn’t
even know about. (For more information on using property
managers, see Chapter 6.)
Clause 24. Cash-Only Rent
As noted in the instructions for Clause 5, landlords
may not insist on cash-only rent payments unless
the tenant bounces a check or stops payment on a
cashier’s check or money order. This law presents an
interesting problem for tenants with leases. By nature,
a lease is a contract that can’t be changed unless the
parties mutually agree (or a judge declares part or
some of it void because it violates a law or public
policy). In other words, you can’t use 30-day notices
to change leases. Yet the law tells landlords they can
do precisely that. We hope that clean-up legislation
will address this issue some day, perhaps after tenants’
lawyers have challenged the law. In the meantime,
landlords whose leases include a clause like this one
should be on solid ground if they need to demand
cash only, since the tenant is agreeing in the lease that
the lease can be changed via a 30-day notice in this
situation only. (It’s a bit like writing a rent increase into
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c. In the event that Tenants, or their guests or invitees, in any way caused or contributed to the damage of the premises,
Landlord will have the right to terminate this Agreement at any time, and Tenants will be responsible for all losses,
including, but not limited to, damage and repair costs as well as loss of rental income.
d. Landlord will not be required to repair or replace any property brought onto the premises by Tenants.
19. Tenants’ Financial Responsibility and Renters’ Insurance. Tenants agree to accept fi nancial responsibility for any loss or
damage to personal property belonging to Tenants and their guests and invitees caused by theft, fi re, or any other cause.
Landlord assumes no liability for any such loss. Landlord recommends that Tenants obtain a renters’ insurance policy from a
recognized insurance fi rm to cover Tenants’ liability, personal property damage, and damage to the premises.
20. Waterbeds. No waterbed or other item of water-fi lled furniture may be kept on the premises without Landlord’s written
consent.
■ Landlord grants Tenants permission to keep water-fi lled furniture on the premises. Attachment : Agreement
Regarding Use of Waterbed is attached to and incorporated into this Agreement by reference.
21. Tenant Rules and Regulations
■ Tenants acknowledge receipt of, and have read a copy of, tenant rules and regulations, which are labeled Attachment
and attached to and incorporated into this Agreement by reference. Landlord may change the rules and
regulations without notice.
22. Payment of Attorney Fees in a Lawsuit. In any action or legal proceeding to enforce any part of this Agreement, the
prevailing party ■ will not/■ will recover reasonable attorney fees and court costs.
23. Authority to Receive Legal Papers. Any person managing the premises, the Landlord, and anyone designated by the
Landlord are authorized to accept service of process and receive other notices and demands, which may be delivered to:
■ a. the manager, at the following address and telephone number:
■ b. the Landlord, at the following address and telephone number:
■ c. the following:
24. Cash-Only Rent. Tenants will pay rent in the form specifi ed above in Clause 5a. Tenants understand that if Tenants pay rent
with a check that is not honored due to insuffi cient funds, or with a money order or cashier’s check whose issuer has been
instructed to stop payment, Landlord has the legal right to demand that rent be paid only in cash for up to three months
after Tenants have received proper notice. (California Civil Code § 1947.3.) In that event, Landlord will give Tenants the legally
required notice, and Tenants agree to abide by this change in the terms of this tenancy.
25. Additional Provisions
■ a. None
■ b. Additional provisions are as follows:
.
X
X
87 Skyview Terrace, Fresno, California.
123-456-8990
X
Fixed-Term Residential Lease (continued)
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
the lease.) In addition, it is unlawful for landlords to
insist that rent be paid via electronic transfer.
Clause 25. Additional Provisions
In this clause, you may list any additional provisions
you want to address in the lease or rental agreement. If
there are no additional provisions, check “a.”
If you want to include additional clauses in your
lease or rental agreement, check “b.” For example, if
you agree that the unit will be repainted before the
tenant moves in, with you supplying the paint and
painting supplies and the tenant contributing labor,
you could add a clause to the rental agreement like the
one shown below.
Landlord will pay for up to $150 worth of paint and
painting supplies. Tenant will paint the living room, halls,
and two bedrooms, using off-white latex paint on the
walls, and water-based enamel on all wood surfaces (doors
and trim). Paint and supplies will be picked up by Tenant
from ABC Hardware and billed to Landlord.
Clause 26. State Database Disclosure
Every lease or rental agreement must include this
disclosure regarding registered sex offenders (see the
discussion “Checking the Megan’s Law Database” in
Chapter 1 for details). You need not add anything to
this clause.
Clause 27. Lead-Based Paint and
Other Disclosures
Under federal law, you must disclose any known lead-
based paint hazards in rental premises constructed
prior to 1978. California landlords are also legally
obligated to make several other disclosures to
prospective tenants, including the property’s location
near a former military base and any shared utility
arrangements. For details on your legal disclosure
responsibilities, see “Landlord Disclosures” in Chapter
1; this includes an overview of environmental hazard
disclosures, but full details regarding these hazard
disclosures (including the official lead-based paint
disclosure form) are in Chapter 12.
You can add these disclosures to your rental
application, using the Disclosures by Property
Owner(s) form shown in Chapter 1 (and available
for download on the Nolo website). Or you can
make these disclosures part of your lease or rental
agreement. If you make them part of your lease or
rental agreement, follow the advice in Chapters 1 and
12 and fill in Clause 27 accordingly.
Clause 28. Grounds for Termination
This clause states that any violation of the lease or
rental agreement by the tenants, or by the tenants’
business or social guests, is grounds for terminating
the tenancy, according to the procedures established
by state or local laws. Making the tenants responsible
for the actions of their guests can be extremely
important—for example, you’ll want to be able to
take action if you discover that the tenant’s family
or friends are dealing illegal drugs on the premises
or have damaged the property. Chapter 12 discusses
terminations and evictions for tenant violations of a
lease or rental agreement.
This clause also tells tenants that if they have made
false statements on the rental application concerning
an important fact—such as prior criminal history—you
may terminate the tenancy. You don’t need to add any
language to this clause.
Clause 29. Entire Agreement
This clause states that all important aspects of the
rental deal between you and the tenant have been
addressed in the lease or rental agreement. It protects
you against any claim by the tenant that there were
additional oral understandings that you must comply
with. Similarly, you will not be able to claim that the
tenant orally agreed to an important provision that’s
not reflected in the document. Finally, it establishes
that any changes must be in writing.
How to Modify and Sign
Form Agreements
Our lease and rental agreement forms have been
designed to protect your broad legal interests, but they
may not fit your exact situation. For example, if your
building has a garage, you may want to incorporate
rules in the lease or rental agreement regarding
specific parking requirements.
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55
26. State Database Disclosure. Notice: Pursuant to Section 290.46 of the Penal Code, information about specifi ed registered
sex off enders is made available to the public via an Internet website maintained by the Department of Justice at www.
meganslaw.ca.gov. Depending on an off ender’s criminal history, this information will include either the address at which the
off ender resides or the community of residence and ZIP Code in which he or she resides.
27. Lead-Based Paint and Other Disclosures. Tenant acknowledges that Landlord has made the following disclosures regarding
the premises:
■ Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards
■ Other disclosures:
.
28. Grounds for Termination of Tenancy. e failure of Tenants or Tenants’ guests or invitees to comply with any term of this
Agreement, or the misrepresentation of any material fact on Tenants’ Rental Application, is grounds for termination of the
tenancy, with appropriate notice to Tenants and procedures as required by law.
29. Entire Agreement. is document constitutes the entire Agreement between the parties, and no promises or
representations, other than those contained here and those implied by law, have been made by Landlord or Tenants. Any
modifi cations to this Agreement must be in writing signed by Landlord and Tenants.
Landlord/Manager PhoneDate
Landlord/Manager’s Street Address, City, State, & Zip Phone
Tenant PhoneDate
Tenant PhoneDate
Tenant PhoneDate
Lionel Jones 555-1234 November 5, 20xx
87 Skyview Terrace,
Fresno, California 95123
Sharon Donaldson
555-9876 November 5, 20xx
Hank Donaldson 555-9876 November 5, 20xx
Fixed-Term Residential Lease (continued)
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
How to Edit or Add a Lease or
Rental Agreement Clause
It’s easy to make changes to the lease or rental
agreement form by using the electronic versions
available for download on the Nolo website—for
example, if you want to:
• edit or add something to a clause
• delete a clause (for example, Clause 21 on tenant
rules and regulations, if you don’t have a separate
set of these), or
• add a new clause.
However, if you want to make the changes at a later
date (after all parties have signed the lease or rental
agreement), you’ll have to use a separate document—an
Attachment—as described below, and attach it to the
original. (If your additions or modifications are very
slight, and can be done in the margins of the lease or
rental agreement, you may want instead to enter them
there. If you do this, be sure that you and all tenants
initial and date the insertions.)
1. At the first place that you run out of room,
or want to add a clause or change a clause,
begin your entry and then write “Continued
on Attachment 1.” Similarly, if there is another
place where you run out of room, add as much
material as you can and then write “Continued on
Attachment 2,” and so on.
2. Fill in the relevant section that applies on the
Attachment form (Continued, Modified, or
Augmented) and delete the sections that don’t
apply.
3. Using the Attachment to Lease/Rental Agreement
form included on the Nolo website, number the
attachment “1,” “2,” and so on, in the form’s title.
You’ll need a separate attachment page every time
you continue a clause, modify a clause, or add a
new clause.
4. Be sure to have everyone who signs the original
lease or rental agreement sign and date the
attachment.
5. Staple the Attachment page to the lease or rental
agreement.
Additional Provisions You May Want to Add
Some landlords find it helpful to spell out exactly how
they expect their tenants to take care of the premises.
Here are some key areas:
Smoking
Under CC § 1947.5, all landlords have the right to restrict
or even completely ban smoking on all or part of the
premises, as specified in a lease. In the case of a month-
to-month tenancy, you can also specify this in the rental
agreement, or by giving a 30-day notice of change of
terms of tenancy.You can allowsmoking in certain
common areas, if you want, but must specify that in the
lease, rental agreement, or notice of change of terms of
tenancy.
If you decide to impose a no-smoking policy, and have
multiple units in the same building, we suggest you treat
everyone the same, subject to honoring existing lease
terms though the date of lease expiration, to avoidbeing
accused of discriminating.
If your property offers a children’s play area or a “tot
lot” sandbox area, you must prohibit smoking within 25
feet. (H&S §104495.)
Smoke detectors (frequency for checking and
replacing batteries)
Tenants agree to test all smoke detectors at least
once a month and to report any problems to
Landlord in writing. Tenants agree to replace all
smoke detector batteries as necessary.
Yard work and other maintenance
Tenants agree to regularly water and maintain the
grounds, including lawn, shrubbery, and flowers.
Rules for taking care of furniture or other items on
thepremises
Tenants will keep the hot tub covered when not in
use. Tenants will use and clean the hot tub regularly,
according to the manufacturer’s instructions
attached to this Agreement as Attachment 1.
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57
Attachment to Lease/Rental Agreement
is Attachment is made by ,
Landlord and ,
, and
, Tenant(s).
It pertains to the residential lease/rental agreement signed on for the property at
.
Landlord and Tenant(s) agree that clauses specifi ed below of the lease/rental agreement are:
■ Continued. Clause continues as follows:
■ Modifi ed. Clause is modifi ed as follows:
■ Augmented. New Clause is added as follows:
Landlord or Manager Date
Tenant Date
Tenant Date
Tenant Date
1
Lenny D. Landlord
Terrance D. Tenant
March 1, 20xx
4567 Monterey Rd., Gilroy, CA
3 2
Specifically excepted from the rented premises is an outdoor tool shed in the backyard, which shall be reserved for
landlord’s exclusive use.
3 14
Landlord may access the outdoor tool shed without written notice, but shall give reasonable telephoned notice in
advance.
Lenny D. Landlord 3-1-20xx
Terrance D. Tenant 3-1-20x x
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
FORM
You’ll find a downloadable copy of the
Attachment page on the Nolo website. See Appendix B for
the link to the forms in this book.
Before the Agreement Is Signed
The easiest way to change one of the form agreements
included here is to edit the electronic version included
on the Nolo website. For example, if you do not have
any additional provisions in your lease, you would
delete Clause 25 of our form agreement and renumber
the remaining clauses. If the changes are lengthy, you
may want to add a separate attachment page, rather
than just rewrite a particular clause. See “How to Edit
or Add a Lease or Rental Agreement Clause,” above, for
advice.
Remember, that if you and your tenant discuss
your lease or rental agreement primarily in Spanish,
Chinese, Tagalog, Vietnamese, or Korean, you must
give the tenant an unsigned version of the rental
document in that language before asking him or her to
sign. See “Foreign Language Note on California Leases
and Rental Agreements,” earlier in this chapter, for
more details.
Finally, if you make fundamental changes to a lease,
rental agreement, or rental form, be sure to have your
work reviewed by an experienced landlords’ lawyer,
especially if your property is covered by rent control.
See Chapter 8 for advice on finding and working with
a lawyer.
Signing the Lease or Rental Agreement
Prepare two identical copies of the lease or rental
agreement to sign, including all attachments. You and
each tenant should sign both copies. At the end of the
lease or rental agreement, there’s space to include the
signature. phone number, and street address at which
the landlord and anyone authorized to manage the
premises may receive rent, notices, or legal papers.
There’s also space for the tenants’ signatures, phone
numbers, and the dates they signed.
Be sure your tenants review the lease or rental
agreement before signing and are clear about all your
terms and rules and regulations. Chapter 7 discusses
how to get your new tenancy off to the right start.
If you’ve altered our form after the tenant originally
renewed it, be sure that you and all tenants initial the
changes when you sign the document.
Give each tenant a copy of the signed lease or rental
agreement, and keep one signed copy for your files.
After the Agreement Is Signed
All amendments to your lease or rental agreement
must be in writing to be legally binding.
If you want to change one or more clauses in a
month-to-month rental agreement, there is no legal
requirement that you get the tenant’s consent (although
it’s always a good idea to do so). You can simply send
the tenant a 30-day notice of the change, unless a
local rent control ordinance requires more notice or
prohibits the change you want to make. However, if
the change is a rent increase of more than 10%, you
must give 60 days’ notice, as explained in Chapter 14.
Also, if you use a lease, you cannot unilaterally change
the terms of the tenancy. We discuss the mechanics of
changing terms of a rental agreement by use of such
notice in Chapter 14.
If you wish to make mutually agreed-upon changes
to a written rental agreement or lease after it is signed,
there are two good ways to accomplish it. The first is
to agree to substitute a whole new agreement for the
old one. The second is to add the new provision as an
amendment to the original agreement. An amendment
need not have any special form, so long as it clearly
refers to the agreement it’s changing and is signed by
the same people who signed the original agreement.
A sample Amendment to Lease or Rental Agreement
form is shown below.
FORM
You’ll find a downloadable copy of the
Amendment to Lease or Rental Agreement on the Nolo
website. See Appendix B for the link to the forms in this book.
Cosigners
Some landlords require cosigners on rental agreements
and leases, especially when renting to students who
depend on parents for much of their income. The
cosigner signs a separate agreement or the rental
ChApter 2 |UNDERSTANDING LEASES AND RENTAL AGREEMENTS
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59
March 18 xx
Olivia Matthews
Steve Phillips
123 Flower Lane, San Diego, California
1. Beginning on June 1, 20xx Tenant shall rent a one-car garage, adjacent to the main premises, from Landlord
for the sum of $75 per month.
2. Tenant may keep one German Shepherd dog on the premises. The dog shall be kept on a leash in the
yard unless Tenant is present. Tenant shall clean up all animal waste from the yard on a daily basis. Tenant agrees to
repair any damages to the yard or premises caused by his dog, at Tenant’s expense.
Ovi M ws May 20, 20xx
Steve Phillips May 20, 20xx
Amendment to Lease or Rental Agreement
is is an Amendment to the lease or rental agreement dated , 20 (the “Agreement”)
between (“Landlord”) and
(“Tenants”)
regarding property located at
(“the premises”).
Landlord and Tenants agree to the following changes and/or additions to the Agreement:
In all other respects, the terms of the Agreement shall remain in eff ect.
Landlord or Manager Date
Tenant Date
Tenant Date
Tenant Date
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
agreement or lease, agreeing to pay any rent or
damage-repair costs the tenant fails to pay.
e Practical Value of a Cosigner
In practice, a cosigner’s promise to guarantee the
tenant’s rent obligation often has little value, because
the threat of eviction is the primary factor that
motivates a tenant who’s reluctant to pay the rent. The
problem is, you cannot sue a cosigner along with the
tenant in an eviction suit. The cosigner must be sued
separately either in a regular civil lawsuit or in small
claims court. So as far as going after the cosigner on
the tenant’s rent obligation is concerned, your best
weapon—the possibility of an eviction lawsuit—is
unavailable.
Another legal obstacle to enforcing a cosigner’s
promise is that the promise is not enforceable if
the lease or rental agreement has been changed
without the cosigner’s written approval. (See Wexler
v. McLucas, 48 Cal. App. 3d Supp. 9 (1975).) Even the
simple renewal of a lease involving the signing of a
new document by the landlord and the tenant (but not
by the cosigner) will eliminate the cosigner’s liability—
so may a rent increase or other change in the terms
of tenancy. Taking this one step further, a court might
refuse to hold a cosigner liable for any period beyond
that of the original lease term, where the tenancy has
since become a month-to-month agreement. Since
lease expirations, renewals, and rent increases usually
occur over the life of a residential tenancy, a landlord
who forgoes the nuisance of getting the cosigner’s
signature every time an element of the tenancy
changes may wind up with a worthless promise.
In sum, the benefits of having a lease or rental
agreement cosigned by someone who won’t be living
on the property are almost entirely psychological. A
tenant who thinks you can look to the cosigner—
usually a relative or close friend of the tenant—may be
less likely to default on the rent. Similarly, a cosigner
asked to pay the tenant’s debts may persuade the
tenant to pay.
Cosigners and Disabled Applicants
Because of the practical difficulties associated with
cosigners, many landlords refuse to consider them,
which is legal in every situation but one: If a disabled
tenant with insufficient income (but otherwise suitable)
asks you to accept a cosigner who will cover the rent if
needed, you must relax your blanket rule at least as far
as investigating the suitability of the proposed cosigner.
If the proposed cosigner is solvent and stable, federal
law requires you to accommodate that applicant by
allowing the cosigner, despite your general policy.
(See Chapter 9 for more on accommodating disabled
applicants and tenants.)
Accepting Cosigners
If you decide to accept a cosigner, you may want to
have that person fill out a separate rental application
and agree to a credit check—after all, a cosigner
who has no resources or connection to the tenant
will be completely useless. Should the tenant and the
prospective cosigner object to these inquiries and
costs, you may wonder how serious they are about
the guarantor’s willingness to stand behind the tenant.
Once you are satisfied that the cosigner can genuinely
back up the tenant, add a line at the end of the lease
for the dated signature, phone, and address of the
cosigner.
Illegal Lease and Rental
Agreement Provisions
Some landlords have used leases and rental agreements
that contain provisions that attempt to take away
various tenant protections of California law. The Civil
Code expressly forbids the use of many types of illegal
provisions. (CC § 1953.)
Unfortunately, a few landlords intentionally include
illegal provisions to try to intimidate tenants. Doing
this is counterproductive, because a lease or rental
agreement containing too many illegal clauses may be
disregarded in its entirety should you ever end up in
court. In addition, several district attorneys have sued
landlords who routinely and flagrantly use leases with
illegal clauses. Here’s a lineup of the most egregious
illegal clauses:
Waiver of Rent Control Laws
Cities that have rent control ordinances specifically
forbid lease or rental agreement provisions by which
ChApter 2 |UNDERSTANDING LEASES AND RENTAL AGREEMENTS
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61
a tenant gives up (or waives) any rights granted by
the rent control ordinance. California’s statewide
rent control law, which limits the ability of cities to
impose certain aspects of rent control (such as vacancy
control), does nothing to change this rule. Thus, any
rental agreement provision excusing the landlord from
complying with rent ceilings or just-cause-for-eviction
requirements would be of no legal effect. Moreover,
attempting to do so may result in fines and even
criminal prosecution.
$
RENT CONTROL
See Chapter 4 for a detailed discussion of rent
control.
Liquidated Damages Clauses
If your tenant breaks an important lease provision or
house rule, such as the promise to use only a certain
parking space, and you suffer economic damages as a
result of the tenant’s lease violation, you can sue the
tenant to recoup those losses. For example, a tenant
who deliberately uses the parking spot reserved for
delivery trucks, making it impossible for supplies to
be delivered, could reasonably be asked to cover your
cost of sending your manager to pick up the supplies
offsite.
Landlords sometimes attempt to deter tenant rule-
breaking, and save themselves a trip to court, by
announcing in the lease or rental agreement—in
advance of any misbehavior by the tenant—that
violations of lease clauses or rules and regulations will
result in a predetermined monetary penalty. The effect
of a clause like this is to put a definite money value
on the violation, regardless of the actual monetary
damages suffered by the landlord. In legalese, these
clauses are called “liquidated damages” clauses. (CC
§ 1671.) You can successfully use them only if it would
be extremely difficult to measure the actual damages—
if and when they occur; and you must make that
statement in your lease clause (see Clause 6 on late
fees, for example). But landlords are rarely in this
position—if your tenant violates a lease provision that
ends up costing you money, you can usually calculate
the amount after the dust has settled—which means
that a liquidated damages clause is rarely appropriate
in your business. (See Orozco v. Casimiro, 121 Cal.
App. 4th Supp. 7 (2004).)
This said, the fact is that many California landlords
routinely use uncalled-for liquidated damages clauses
in their leases and rental agreements—and get away
with it. Practically speaking, if the amount you charge
is reasonably close to your actual losses, a tenant gains
little by challenging it. The reason: A judge might
throw out the clause, but you can still sue for your
actual damages—which means that, in the end, the
tenant will end up paying your actual losses if you
can prove your case. The lesson here is that if you
choose to use a liquidated damages clause, be fair and
reasonable when setting the amount.
CAUTION
Be prepared to prove that your liquidated
damages amount is fair. Even if your lease or rental agreement
states that the parties have agreed that liquidated damages are
called for (see the language in Clause 6), this doesn’t mean that
you’ll automatically get this amount if you sue. You’ll still have
to prove that it represents your losses. If you have to go to this
trouble to enjoy the benefits of this clause, why bother—you
might as well just sue for the amount directly. ere may,
however, be a psychological advantage in having the tenant
know, from the start, what late rent is likely to cost.
exAmple: Martin allowed his tenant Sonya to
keep a dog, but because he was concerned about his
landscaping, he wanted to make sure the dog was
on leash at all times. The pet clause in Martin’s lease
included a statement that damages were extremely
difficult to determine and, for that reason, the parties
had agreed to a liquidated damages amount, specified a
$100 fee if a tenant’s dog was observed off leash, and a
$150 fee for subsequent incidents.
Sonya’s terrier Moka got loose one day and tore up a
tulip bed near the rental office. When Martin attempted
to collect, Sonya protested, arguing that there was
much less than $100 worth of damage. Martin sued in
small claims court, but the judge agreed with Sonya and
awarded Martin only $50, representing the actual cost of
replacing the bulbs and one hour of the gardener’s time
for replanting.
The next time Martin spied Moka on the loose,
he got smart. Since his lease provided that repeated
and serious violations of the lease were grounds for
termination, Martin terminated Sonya’s lease.
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Waiver of Repair-and-Deduct Rights
Landlords must maintain and repair their rental property
in accordance with certain minimum standards. (CC
§ 1941.) If a landlord refuses to do so, a tenant may
arrange for certain repairs and deduct the cost from the
next month’s rent. (CC § 1942.) Further, a tenant cannot
give up or modify those rights in a lease or rental
agreement. (CC § 1942.1.)
There is one exception to this rule, however: If the
tenant specifically agrees to repair and maintain all or
part of the property in exchange for lower rent, the
repair-and-deduct rule can be waived. Although in
principle this would seem to be a broad exception, it is
not broad in practice. Judges look to see if the tenant’s
promise to keep the premises in repair was really in
exchange for lower rent and was not just a way for the
landlord to avoid legal responsibilities. Chances are the
tenant’s waiver will be upheld if, in the written lease,
a tenant handy with tools agrees to repair or maintain
the property in exchange for rent that’s considerably
lower than fair market rent, but not otherwise.
Following is an example of a valid clause that could
be included in your lease or rental agreement.
exAmple: Tenants agree to be responsible for all
routine repairs and maintenance to the premises
covered by this lease in exchange for a monthly
rent of $900. This amount is approximately $200
less than the fair market rent for the premises,
which is agreed to be $1,100.
All said and done, we advise against this sort of
arrangement. For one thing, even if you include this
provision, it doesn’t relieve you of your obligation to
the city or county to comply with local housing codes.
You retain this obligation even if tenants breach a
rental agreement or lease provision requiring them
to maintain the premises in compliance with city and
county regulations. In other words, the city and county
have no interest in what you and the tenant agree
to, but will hold you responsible if there is a code
violation problem.
A better approach is this: If you want your tenant
to fix up the property, fine, but pay the tenant by
the hour or the job for work agreed on in advance.
It’s better to pay the tenant separately and collect the
regular market rent. That way, if you’re unhappy with
the tenant’s work, you can simply fire the tenant and
still be entitled to the full rent. If, on the other hand,
you agree to reduce the rent in exchange for work,
you may be stuck for a long time with reduced rent in
exchange for the tenant’s poor-quality work. (Chapter
11 discusses landlords’ liability and tenants’ repair-and-
deduct rights in detail.)
Right of Inspection
A landlord can’t just walk in any time to inspect
or repair the property or to show it to prospective
renters or buyers. Except in an emergency, the law
requires a landlord to give a tenant reasonable notice,
which is generally 24 hours (though you must give
48 hours’ notice when scheduling an initial move-
out inspection). Nevertheless, some leases and rental
agreements have provisions that purport to allow a
landlord to enter with little or no notice. This type of
provision is illegal. (CC § 1953.) (Chapter 13 covers
landlords’ right of entry and tenants’ privacy.)
Provision at the Landlord Is Not
Responsible for Tenant Injuries or
Injuries to a Tenant’s Guests
Often called an “exculpatory clause,” this provision
says that if the landlord fails to maintain the property
and the tenant or her guests suffer injury or property
damage as a result, the landlord can’t be held
responsible for paying for the loss. This provision is
void and of absolutely no use to a landlord, and will
not be upheld in court if a tenant or a guest suffers
personal injury or property damage that results from
the landlord’s negligence. (For more on landlords’
liability, see Chapter 12.)
Provision Giving Landlord Self-
Help Eviction Rights
Some leases and rental agreements contain a clause that
appears to allow the landlord to come in and throw
the tenant out, or at least change the locks and remove
property, if the tenant doesn’t pay the rent. This clause
is void. (CC § 1953.) If you do resort to illegal means to
evict a tenant, this type of clause won’t protect you in
a tenant’s lawsuit for unlawful eviction. No matter what
the lease says, you have to sue and get a court order to
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63
remove an unwilling tenant legally. (See Chapters 17 and
18 and The California Landlord’s Law Book: Evictions
for details on evictions.)
Waiver of Right to Legal Notice,
Trial, Jury, or Appeal
A lease or rental agreement clause under which a
tenant gives up any procedural right in a lawsuit you
or the tenant might bring to enforce the lease or rental
agreement is also void. This protects the tenant’s right
to proper service of a Three-Day Notice to Pay Rent or
Quit (three-day notice periods cannot be reduced by
agreement) or other termination notice, and the right
to present a defense in a lawsuit, trial by jury, appeal,
and so on. (CC § 1953; Grafton Partners LP v. Superior
Court (Pricewaterhouse Coopers LLP), 36 Cal. 4th 944
(2005).) You also cannot include a clause forcing the
tenant to submit personal injury claims to binding
arbitration (though if a dispute or a lawsuit were to
develop over such an issue, you and the tenant could
always agree later to abide by binding arbitration).
(Jaramillo v. JH Real Estate Partners, Inc., 3 Cal.
Rptr. 3d 525 (2003).) The Jaramillo case leaves you
free to require in the lease or rental agreement that
tenantability claims (habitability claims raised under
CC § 1941.2) be handled through binding arbitration,
but we strongly recommend against doing so. By the
time you’re done with arbitration (including, if you
win, a trip to court to record the arbitrator’s decision),
you may as well have initiated an eviction lawsuit.
Waiver of Right to Deposit Refund
A landlord must, within three weeks after the tenant
vacates the property, mail the tenant a refund of his
deposit or, if the deposit is not completely refunded,
a written itemization as to how it was applied to back
rent, costs of cleaning, repairs, and the like. (See
Chapter 20 for details on returning security deposits.)
Any provision waiving or modifying the tenant’s rights
in this respect is void and of no effect. (CC § 1953.)
Restricting Tenants’ Access to Other
Tenants’ Units for Distributing Literature
A clause in a lease or rental agreement that attempts
to prevent or restrict a tenant from communicating
with other tenants (for the purpose of organizing a
tenants’ association, for example) is illegal. However,
under very limited circumstances, you may be able
to legally limit the posting or dropping of flyers or
other advertisements, political in nature or not, on,
near, or under tenants’ doors. Proceed with extreme
caution, however. First, by law any person invited
by a residential tenant to provide “information
regarding tenants’ rights” or to participate in a tenants’
association, may not be barred from the common
areas. (CC § 1942.6.) Also, the California Supreme
Court has ruled that a landlord may properly forbid
the posting and delivery of flyers only where access to
common hallways is forbidden to all solicitors, where
locked doors secure common hallways from visitors,
and only if the lease, rental agreement, or properly
distributed house rules or regulations clearly state
the prohibition. (Golden Gateway Center v. Gateway
Tenants’ Assn., 26 Cal. 4th 1013 (2001).) Because this
exception is so limited and this area is fraught with
serious potential liability, we recommend that you
contact a lawyer before attempting to limit access
in this manner. Better still, especially if tenants are
organizing in opposition to you, meet with them
(and use a mediator if necessary) and deal with their
concerns directly.
Shortening the Termination
Notice Period
As we saw earlier in the discussion of Clause 4 of our
form Agreement, your ability to shorten the notice
periods when terminating a month-to-month tenant
has been curtailed. If the tenant has resided in the unit
for a year or more, you must give 60 days’; and for all
others, you must give 30 days’ notice. A court will not
enforce any shorter periods—in other words, if you
file an eviction lawsuit based on the tenant’s refusal to
move following your too-short notice period, your case
will be tossed out of court by the judge and you’ll have
to start over, with the correct notice period.
Requiring the Tenant to Give
Notice on a Specific Day
Some landlords want month to month tenants to give
tenancy termination notices on a specific day of the
month, typically the last day. Under this scheme, a
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termination notice delivered on any other day won’t
take effect until the last day of the month, which means
that a tenant who gives a 30-day notice on, say, the
tenth, will in effect be giving 50 days’ notice (because
the landlord won’t recognize it until the 30th of the next
month). The tenant can, of course, vacate at any time,
but the landlord will argue that it is entitled to rent for
the entire 50-day period. Typically, the landlord will
deduct the unpaid rent from the security deposit.
No California statute or case directly addresses
whether requiring notice on a specific day of the
month is legal. We think that it is unlikely that a court
would uphold such a requirement, especially if the
rule applies to tenants only (that is, where the landlord
remains free to deliver a 30-day notice at any time,
and the 30 days begins as of the day of delivery).
Even when the limitation applies to both parties
however, the legality is iffy, because the provision
has the effect of modifying the landlord’s proper
use of the security deposit (CC § 1950.5), which is
unenforceable. In addition, the notice statute currently
does not address whether the landlord can modify
the 30- and 60-day rules in this manner (CC § 1946.1).
(This statute replaced the older CC § 1946, which did
allow landlords to shorten the notice period to as little
as seven days; by implication, the new law’s omission
of this short-notice option means that the Legislature
intended that no variations on the rules would be
allowed.) Though it may be convenient for you to deal
with tenant turnover on the day rent is due and avoid
having to prorate rent (and though the prospect of
requiring that rent be paid over an extended period
is attractive), we urge you to resist this ploy and stick
with “30 (or 60) days’ notice, delivered at any time.”
Requiring the Tenant to Pay
Rent in Cash or Online
As mentioned in the discussion of Clause 5 (Amount
and Schedule for the Payment of Rent) above, a
landlord cannot initially insist that a tenant pay rent
only in cash. Later, though, if the tenant bounces a rent
check or stops payment on a rent check, you can insist
on cash payment of the rent, but you must first give
the tenant written notice, and the demand for cash
payment may last no longer than three months.
Also, landlords may not insist that tenants pay
rent only via electronic funds transfer. (CC §1947.3.)
Specifically, the law allows you and the tenant to agree
to pay rent in cash or via electronic funds transfer, but
the landlord must allow another payment alternative,
such as check unless, as explained above, the tenant
bounces a check.
Other Illegal Provisions
Just because a particular type of lease clause isn’t listed
above doesn’t mean it’s legally enforceable. Courts
can and do exercise the power to refuse to enforce
what they consider to be illegal or outrageous clauses
in leases and rental agreements. Some examples:
provisions for excessive late charges (discussed in
Chapter 3), and shortcuts the landlord can use to
recover possession if he believes the property to be
abandoned (covered in Chapter 21). Also, the legality
of certain provisions may depend on such factors as
the date your property was built (see, for example,
Clause 20 of our lease or rental agreement regarding
waterbeds).
l
CHAPTER
3Basic Rent Rules
How Much Can You Charge? ..............................................................................................................................66
When Rent Is Due ......................................................................................................................................................66
Weekends and Holidays .................................................................................................................................... 67
Grace Periods .......................................................................................................................................................... 68
Where and How Rent Is Due ..............................................................................................................................68
Late Charges ................................................................................................................................................................. 69
Returned Check Charges ...................................................................................................................................... 71
Partial Rent Payments ............................................................................................................................................ 71
Routinely Accepting Partial Payment........................................................................................................ 71
Accepting Partial Payment After a ree-Day Notice ..................................................................... 73
Written Agreements to Accept Late Rent ..............................................................................................73
Oral Agreements to Accept Late Rent ......................................................................................................74
FORMS IN THIS CHAPTER
Chapter 3 includes instructions for and samples of the Notice of Reinstatement
of Terms of Tenancy and the Agreement for Partial Rent Payments. e Nolo website
includes downloadable copies of these forms. See Appendix B for the link to the forms in this
book.
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T
o state the obvious, one of your foremost
concerns as a landlord is receiving your rent—
on time and without hassle. It follows that you
need a good grasp of the legal rules governing rent.
In this chapter, we review California’s basic rent
laws. However, several topics we discuss in other
chapters can affect your rights under these laws,
including:
Condition of the premises. If a landlord fails to fulfill
his obligation to keep up the premises, the tenant’s
duty to pay rent is affected correspondingly. Under
state law, a tenant may claim that the landlord’s
failure to repair and maintain the property justifies
withholding rent. The validity of such claims, and the
amount of rent, if any, that can legally be withheld,
may ultimately be determined by a judge in an eviction
lawsuit. We discuss this process in detail in Chapter 11.
How and when you notify tenants of rent increases.
Chapter 14 describes the legal process for raising rents.
How you enforce rent payments. You can give tenants
who don’t pay their rent on time a Three-Day Notice to
Pay Rent or Quit. We show you how in Chapter 16.
Local rent control laws. Sixteen California cities have
rent control ordinances that dictate how much rent
you can charge (and cover many other aspects of your
business). These ordinances are in turn affected by a
statewide law, the Costa-Hawkins Rental Housing Act.
We discuss rent control in Chapter 4.
$
RENT CONTROL
Cities With Rent Control Ordinances
Berkeley
Beverly Hills
Campbell (mediation only)
East Palo Alto
Fremont (mediation only)
Gardena (mediation/
arbitration)
Hayward
Los Angeles
Los Gatos (mediation/
arbitration)
Oakland
Palm Springs
San Francisco
San Jose
Santa Monica
ousand Oaks
West Hollywood
How Much Can You Charge?
There is no state or federal law that dictates how
much rent landlords can charge. In other words, you
can legally charge as much rent as you want (and a
tenant will pay) unless your premises are subject to a
local rent control ordinance. You may wish to check
Craigslist for comparable rents in your area, or contact
local real estate and property management companies.
Many wise landlords choose to charge slightly less
than the going rate as part of a policy designed to find
and keep excellent tenants.
As with any business arrangement, it usually pays
in the long run to have your tenants feel they are
getting a good deal. In exchange, you hope the tenants
will be responsive to your needs as a landlord. This
doesn’t always work, of course, but it’s our experience
that tenants who feel their rent is fair are less likely to
complain over trifling matters. Certainly, it’s obvious
that tenants who think you are trying to squeeze every
last nickel out of them are unlikely to think twice
before calling you about a clogged toilet at 11 p.m.
When Rent Is Due
Most lease and rental agreements, including the ones
in this book, call for rent to be paid monthly, in
advance, on the first day of the month. The first of the
month is customary and convenient because many
people get their paychecks on the last workday of
the month, just in time to pay rent on the first of the
following month. Also, beginning a new month itself
reminds people to pay monthly bills that are due on
the first. (Hopefully, your tenant will learn to associate
flipping the calendar page with paying the rent on
time.)
It is perfectly legal to require rent to be paid on a
different day of the month, which may make sense if
the tenant is paid at odd times. Some landlords make
the rent payable each month on the date the tenant
first moved in. We think it’s easier to prorate rent for
a short first month and then require that it be paid
on the first of the next month. (See Chapter 7.) But if
you only have a few tenants, and don’t mind having
different tenants paying you on different days of the
month, it makes no legal difference.
You are not legally required to have your tenant
pay rent on a monthly basis. If you wish, you and the
tenant can agree that the rent be paid twice a month,
each week or on whatever schedule suits you. The
most common variation on the monthly payment
arrangement is having rent paid twice a month. This
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67
is a particularly good idea if you have tenants who
receive government benefits or who have relatively
low-paying jobs and get paid twice a month. Such
tenants may have difficulty saving the needed portion
of their midmonth check until the first of the month.
If your rental agreement (whether written or oral)
is for an unspecified term (as opposed to a lease
for a specific period), you should be aware that the
length of time between rent payments affects other
important rights. Specifically, the notice period you
must give your tenant in order to change the terms of
the tenancy (and the notice the tenant must give you
to terminate it) is normally the same number of days as
the period between rent payments—typically 30 days.
The notice you must give the tenant to terminate such
a tenancy is a minimum of 30 days, and a minimum
of 60 days if the tenant has lived there a year or more.
(CC §§ 827(a), 1946, 1946.1.) This is true unless your
rental agreement specifically establishes a different
notice period (but with a minimum of 30 or 60 days,
for you to terminate the tenancy), or a local rent
control ordinance changes the rules on termination
(a topic covered in Chapter 4). This general rule also
applies to the amount of notice you must give your
tenants to raise the rent, subject, of course, to any rent
increase limitations of local rent control ordinances.
In addition, you must give 60 days’ notice of a rent
increase of more than 10%, as explained in Chapter 14.
(CC § 827(b).)
exAmple 1: On March 10, landlord Marion signs
a month-to-month rental agreement with Carol.
Carol rents an apartment for $550, payable on the
tenth day of each month. Because the interval
between rent payments is a month, Marion must
give Carol at least 30 days’ written notice if she
wants to raise the rent, change any other term of
the rental agreement, or terminate the tenancy.
(However, Carol is entitled to 60 days’ notice of
termination if she stays for a year or more, as
explained in Chapter 18.) If Carol wants to leave,
she too must give 30 days’ notice to Marion.
exAmple 2: Ken rents out rooms on a weekly
basis, with the rent payable every Friday. Because
the interval between rent payments is one week,
Ken must give his tenants one full week’s notice
if he wishes to raise the rent or have them move
out. So for a rent increase or termination of
tenancy to take effect the following Friday, Ken
must give his tenants written notice to that effect
no later than the Friday before.
Once you have established the rental amount and
the day of payment, you should insist that rent be
paid in advance to cover the following month or other
period. For example, rent should be due on the first
day of the month for that month, and it should be paid
on or before that day. It may seem obvious to require
tenants to pay rent in advance. You would probably
never consider allowing a tenant who moved in on the
first day of the month to wait to pay rent until the 31st.
We belabor this point because California law, following
an ancient rule traceable to feudal times, states that in
the absence of an agreement to the contrary, rent is
due at the end of the rental term. (CC § 1947.) In other
words, unless the agreement states that rent is due in
advance, you may have trouble getting the tenant to
pay at the beginning of the rental period.
Weekends and Holidays
If the rent due-date specified in a lease or rental
agreement falls on a weekend or holiday, the rule is
that the tenant must still pay on the due-date specified
in the agreement. For example, if the lease says that
rent is due on the first day of each month, it is due
on January 1, even though that day is a holiday, New
Year’s Day. As another example, if the rent is due on
the 15th day of the month, but one month that day
falls on a Saturday or Sunday, the rent is still legally
due on the 15th. Although some laws might be read
to give the tenant an extension of time to pay the
rent if the due-date falls on a weekend or holiday (CC
§§ 7, 11; CCP § 12a), the courts have ruled that these
laws do not extend deadlines under a lease or rental
agreement. (Gans v. Smull, 111 Cal. App. 4th 985
(2003).) This case, however, does not apply, in our
opinion, to eviction procedures governed by the Code
of Civil Procedure. See LaManna v. Vognar, 17 Cal.
App.4th Supp. 4 (1993).
Of course, if the lease or rental agreement
specifically gives the tenant the option of paying
rent on the next business day—as do the lease and
rental agreements in this book—then the due-date
will be extended as provided in the rental document.
(Returning to the example in the paragraph above,
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under the Nolo lease and rental agreement, for
example, rent would be due on January 2, as long
as that day is a weekday. If January 1 is a Friday,
however, rent isn’t due until the following Monday.)
In the absence of a “next business day” provision, the
lease means what it says as far as the date on which
the rent is due.
Figuring the exact due-date isn’t really all that
important unless you have to file an eviction lawsuit
based on the tenant’s nonpayment of the rent, where
counting days correctly can be crucial. Chapter 16
covers starting the eviction process with a Three-Day
Notice to Pay Rent or Quit; evictions are covered in
detail in The California Landlord’s Law Book: Evictions.
Grace Periods
Now let’s clear up a giant myth. Lots of tenants are
absolutely convinced that if they pay by the 5th (or
sometimes the 7th or even the 10th) of the month,
they have legally paid their rent on time and should
suffer no penalty because they are within a legal
grace period. Some states give tenants a grace period,
but not California. Quite simply, there is no law in
California that gives tenants a five-day or any other
grace period when it comes to paying the rent. As we’ll
discuss more thoroughly in Chapter 16, a landlord can
legally proceed with the first step necessary to evict
a tenant—serving a Three-Day Notice to Pay Rent or
Quit—the day after the rent is legally due but unpaid.
In practice, most tenants get a grace period, because
landlords usually don’t get upset about late rent until
it’s more than a few days late, and many rental agree-
ments and leases do not begin assessing the tenant late
charges until at least five days after the due-date. But
you are definitely within your legal rights to insist that
the rent be paid on the day it is due. In our opinion,
if you wait more than five days to collect your rent,
you are running your business unwisely, unless your
particular circumstances warrant a longer period.
Where and How Rent Is Due
You should specify in your lease or rental agreement
where and how the tenant should pay the rent. (See
Clause 5 in Chapter 2.) Some form rental agreements
require the rent to be paid personally at the landlord’s
place of business. This makes the tenant responsible
for getting the rent to the landlord or manager at
a certain time or place, and avoids issues such as
whether a rent check was lost or delayed in the mail.
You should also specify whether rent should be
paid by cash, check, or money order. Some landlords,
concerned with security and the need to write receipts,
accept checks only. Others are more concerned about
bounced checks and will accept only certified checks
or money orders. Be aware, however, that you cannot
insist on cash rent unless the tenant has bounced a
rent check, has issued a stop payment order on a rent
check, or has given you a money order or cashier’s
check that was not honored. (Even then, you cannot
insist on cash only for more than three months, and
you must give the tenant proper notice of this change
in the terms of his tenancy. See Chapter 14.)
Some landlords require tenants to deposit the rent
into the landlord’s bank account. Because of the
difficulty of tracking deposits—and stopping them if
necessary after terminating a tenancy—we urge you
not to accept rent this way. If you must do this, your
lease or rental agreement should specify the name and
street address of the bank or other financial institution
where rent deposits are to be made. The place of
deposit must be within five miles of the property. (CC
§ 1962; CCP § 1161(2).)
Once in a while, when relations between a landlord
and a tenant are beginning to break down for other
reasons, there will be misunderstandings about where
and how the rent must be paid. Sometimes a landlord
who’s been burned by late rent from a particular
tenant will suddenly demand that rent must be paid in
person and only during certain hours at the manager’s
office. Be careful. It may be illegal to suddenly change
your terms for payment of rent. For example, if your
lease or rental agreement doesn’t say where and how
rent is to be paid, the law states that past practice
generally controls how rent is paid until you properly
notify the tenant of a change.
It’s not a good practice to accept rent by mail,
except as an accommodation where the lease or rental
agreement requires rent to be paid personally to the
landlord or manager. In the absence of a provision
requiring tenants to pay rent in person, a landlord’s
ChApter 3 |BASIC RENT RULES
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69
practice of accepting rent by mail may enable the
tenant to continue paying by mail, and to claim “the
check’s in the mail” in response to a Three-Day Notice
to Pay Rent or Quit. If you want to require tenants
to pay rent at your office, home, or other place, you
should specify that in the lease or rental agreement,
along with the days and hours someone will be
present to accept the rent. If you want to change your
practice and the tenancy is month to month, you must
formally change the agreement with a written 30-day
notice.
If you rent under a lease, you will have to wait until
the lease runs out and change your terms for payment
of rent in the new lease.
Do not accept postdated checks under any
circumstances. A postdated check is legally a note
promising to pay on a certain date. If you accept a
postdated check, you have accepted a note, rather than
cash, for the rent, and a tenant facing eviction could
argue that you accepted the “note” in lieu of cash.
Rent “Allotments” From Servicemembers
If your tenant is a member of the United States military,
you may be asked to accept a direct deposit, called an
allotment, from the tenant’s military pay. e procedure
is explained in the Military Pay Manual, Chapter 42,
Sections 4201 and following. Servicemembers can use
an online tool, called “My Pay,” to set up and change
allotments.
Keep in mind that this rent payment method is
not much different than agreeing that rent will be
transferred directly from the tenant’s bank account to
yours, described earlier in this section. We cautioned
against this rent payment method, since it’s difficult
to track (and stop) such payments. On the other hand,
it is convenient for servicemembers who are overseas
to pay the rent this way (and the allotment is taken
out before the balance of the paycheck is available
to the servicemember). Should you decide to accept
allotments, be sure you understand how they work and
whether the transfer can be timed to coincide with the
rent due-date.
CAUTION
Be sure the tenant knows the details on how and
where rent is to be paid. Before you prepare ANY three-day
notice for nonpayment of rent (see Chapter 16),make sure you
have previously complied with the requirement of CC §§1962
and 1962.5, to notify the tenant of the name and street
address of the owner or manager responsible for collection of
rent, how rent is to be paid, and who is available for service
of notices; you can do this either in a separate writing or in
a written rental agreement or lease. You may not evict for
nonpayment of any rent that came due during any period you
were not in compliance with this requirement. If you have not
done so, provide the tenant the required information. You
then will have to wait until the next month’s rent comes due,
and give the tenant a three-day notice demanding rent—but
only after you’ve complied.
Late Charges
A common and effective way to encourage tenants
to pay the rent on time is to impose a late charge
or fee. You may safely do so only if your fee closely
approximates your real losses, and only if your lease or
rental agreement includes a sentence like this one:
Because Landlord and Tenant agree that actual damages
for late rent payments are very difficult or impossible to
determine, Landlord and Tenant agree to the following
stated late charge as liquidated damages.
You may be wondering how, if you can set a late fee
that approximates your losses, you can also say that
“actual damages” are extremely hard to gauge (after
all, you just did it). We don’t presume to understand,
either. All we can say is that’s the law. (Orozco v.
Casimiro, 212 Cal. App. 4th Supp. 7 (2004).)
Be aware that, if your tenant refuses to pay and you
end up suing, you’ll have to “plead and prove” your
damages—that is, prove to the judge that the amount
is reasonable, and that you could not figure that
amount after the rent was late. That’s the same amount
of work you’d have to do in the absence of a late fees
clause (what you’d do if you were simply suing for
your actual damages). The true value of a late fees
clause lies in advising the tenant what rule-breaking is
likely to cost, and in hoping that an errant tenant will
just pay up and not, in fact, force you to go to court.
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$
RENT CONTROL
Some cities with rent control ordinances
explicitly regulate the amount of late fees. Check any rent
control ordinances that affect your properties.
For these reasons, you must be very careful how
you structure your late fee policy. Your fee should
correspond as closely as possible to the real monetary
consequences of getting the rent late. You should be
on safe footing as long as you follow these principles:
•The late charge should not begin until after a
reasonable grace period of three to five days.
Imposing a stiff late charge if the rent is only one
or two days late may not be upheld in court.
•If you use a flat fee, it should not exceed 4% –6%
of the rent ($30 to $45 on a $750-per-month
rental). A late charge much higher than this (say,
a 10% charge of $75 for being one day late with
rent on a $750-per-month apartment) would
probably not be upheld in court.
•If you adopt a late charge that increases with
each additional day of lateness, it should be
moderate and have an upper limit. A late charge
that increases without limit each day could be
considered interest charged at a usurious rate.
(Ten dollars a day on a $1,000 per month rent is
3,650% annual interest.) A more acceptable late
charge would be $10 for the first day rent is late,
plus $5 for each additional day, with a maximum
late charge of 4%–6% of the rental amount.
•Don’t try to disguise excessive late charges by
giving a “discount” for early payment of rent.
One landlord we know concluded he couldn’t
get away with charging a $100 late charge on a
late $925 rent payment, so, instead, he designed
a rental agreement calling for a rent of $1,025
with a $100 discount if the rent was not more
than three days late. Ingenious as this ploy
sounds, it is unlikely to stand up in court, unless
the discount for timely payment is very modest.
Giving a relatively large discount is in effect the
same as charging an excessive late fee, and a
judge is likely to see it as such and throw it out.
•If your tenant fails to pay the rent, let alone the
late fee, and you have to serve a three-day notice
to pay or quit, do not add the late fee to the
amount due. If your lease or rental agreement
describes the fee as “additional rent,” you can take
it from the security deposit (and then demand
that the deposit be replenished). Landlords in rent
control cities may not label late fees as additional
rent, because doing so will probably increase rent
beyond the permissible limit.
Anyway, we think all this fooling around with late
charges is wasted energy. If you want more rent for
your unit, raise the rent (unless you live in a rent
control area). If you are concerned about tenants
paying on time—and who isn’t—put your energy into
choosing responsible tenants. Be consistent about
enforcing rent due-dates, following through with a
Three-Day Notice to Pay Rent or Quit—the first legal
step in a possible eviction—no later than six or seven
days after the rent is due.
If you have a tenant with a month-to-month tenancy
who drives you nuts with late rent payments, and a
reasonable late charge doesn’t resolve the situation,
terminate the tenancy with a 30-, 60-, or 90-day notice,
as described in Chapter 18.
Late Fees: Below the Legal Radar?
As this section on late charges explains, the practice
of announcing a preset late fee is worky and arguably
illogical (your lease or rental agreement has to state that
the consequences to you of receiving the rent late are
very hard to calculate—yet you must do that calculation
if you want your preset fee to survive judicial scrutiny).
But wait, there’s more—an argument routinely used by
legal aid attorneys in Southern California has real punch
(frankly, we can’t understand why it hasn’t prevailed yet).
Here’s the deal:
Civil Code § 3302 provides that when a debtor fails to
pay on time, the only damages available are principal and
interest. How can a landlord prove that damages flowing
from the tenant’s failure to pay on time were “extremely
difficult” to determine, when it’s a simple mathematical
calculation to figure simple interest from the principal
amount of the unpaid rent? We think it’s only a matter
of time before a judge agrees. In the meantime, a
landlord’s practice of setting a fee that is reasonably
low (and includes compensation for the landlord’s time
and trouble) will continue to skate by. (See “Late Fees in
Residential Leases Are Questionable as Legal Remedies,”
San Francisco Daily Journal, April 12, 2006.)
ChApter 3 |BASIC RENT RULES
|
71
$
RENT CONTROL
Local rent control ordinances may regulate the
way you handle a termination. If you can’t use a 30-, 60-, or
90-day notice, either because the tenant has a lease or because
rent control laws are too restrictive, serve the tenant with a
ree-Day Notice to Pay Rent or Quit the day after the rent is
due, and follow through with an eviction if the rent isn’t paid
in full within the three-day period.
Returned Check Charges
In Chapter 2, we suggest a rental agreement provision
requiring the tenant to pay bad check charges equal
to what the bank charges you, plus a few dollars for
your trouble (Clause 7 in Chapter 2). State law sets a
limit of $25 for the first bounced check and $35 for
subsequent checks. (CC § 1719.) State law also provides
that anyone who fails to pay a bounced check is liable
for a penalty equal to three times the amount of the
check up to $1,500, plus the amount of the check, plus
service charge. However, this penalty can be collected
only by waiting 30 days after sending the person who
wrote the check a demand letter, then filing a regular
civil lawsuit in superior court or small claims court.
This law is of little use to landlords for two reasons:
•First, a landlord faced with a check-bouncing
tenant should never wait 30 days, but should
give the tenant a Three-Day Notice to Pay Rent
or Quit right away, then sue for eviction if the
tenant doesn’t make the check good within three
days.
•Second, even if a landlord served a Three-Day
Notice to Pay Rent or Quit on the tenant, plus
a 30-day bad check demand letter, he would
have to file two separate lawsuits: a fast-moving
unlawful detainer lawsuit for eviction, and a
regular civil lawsuit for the bounced check
penalty. Two lawsuits are necessary because the
law doesn’t allow landlords to ask for any money
other than rent in eviction lawsuits.
CAUTION
Don’t call bounced check fees “additional rent,”
thinking you can collect them with the rent. is ploy might
work for commercial leases, but it won’t get you very far with a
residential tenancy.
It’s better to serve the tenant a three-day notice demand ing
the rent (but not a late charge or bad check charge) as soon as
you find out a tenant’s check bounces. en follow through
with an eviction lawsuit—well before 30 days have passed—
and forget about penalties you may ultimately be unable to
collect anyway.
CAUTION
Don’t redeposit rent checks that bounce. It is a
poor idea to let your bank redeposit rent checks that bounce,
something they will normally do unless you request that bad
checks be returned to you immediately instead. Why should
you prevent resubmissions? Because this alerts you to the
fact that the rent is unpaid much sooner than if the check is
resubmitted and returned for nonpayment a second time. You
can use this time to contact the tenant to ask that the check
be made good immediately. If it is not, you can promptly serve
a three-day termination notice. (See Chapter 18.)
CAUTION
Eviction warning! Do not demand late charges or
bad check charges when you give a tenant a ree-Day Notice
to Pay Rent or Quit. We discuss the proper procedures for
giving a written three-day notice preceding an eviction lawsuit
in Chapter 16.
Partial Rent Payments
On occasion, a tenant suffering a temporary financial
setback will offer something less than the full month’s
rent, with a promise to catch up in partial payments as
the month proceeds, or full payment at the first of the
next month. Although generally it isn’t good business
practice to allow this, you may wish to make an
exception where the tenant’s financial problems truly
appear to be temporary and you have a high regard
for the person. But we recommend that you verify a
tenant’s hard-luck tale by asking questions and then
calling the hospital, the employer, or anyone else the
tenant says can back up the story.
Routinely Accepting Partial Payment
There is generally no legal problem if you accept
partial rent payments. If you accept less than a full
month’s rent from a tenant, you certainly do not give
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
up the right to the balance. Indeed, you can normally
accept a partial payment one day and demand full
payment the next. Even the words “paid in full” on a
tenant’s check can be ignored if you’re careful: You
will not lose your right to more money owed you by
cashing the tenant’s check if you cross out the offending
language before you cash the check. (CC § 1526.)
If you regularly accept rent in installment payments
(despite a written agreement that rent is due in one
payment in advance), you may have legally changed
the terms of your rental agreement.
exAmple: You routinely allow your tenant Larry,
whose $800 rent is due on the first of the month,
to pay $400 on the first and the other $400 on
the 15th. Nine months later, you get tired of this
arrangement. After receiving $400 on the first
day of the month, you give Larry a three-day
notice on the second of the month to pay the
rest of the rent or quit. This may not work. You
may be stuck with getting $400 on the first and
$400 on the 15th for the balance of the term of
the lease or, in the case of a written or oral rental
agreement, until you give him a written notice of
change in the terms of tenancy. (See Chapter 14.)
Why? Because a judge in an eviction lawsuit may
rule that, by giving Larry this break every month
for almost a year, coupled with his reliance on
your practice, you in effect changed the terms of
the lease or rental agreement. Viewed this way,
your three-day notice to pay the full rent or leave
would be premature, because the second $400
isn’t due until the 15th.
If the tenancy is from month to month, you can
reinstate the original payment terms by “changing” the
terms back to what the rental agreement says they are,
with a 30-day written notice. A sample form is shown
below. You don’t have to worry about this problem if
you accept partial payments only a few times on an
irregular basis. And accepting partial payments more
often than this really isn’t good landlording anyway,
unless you truly are willing to change the terms of the
lease or rental agreement. If you are, do it in writing.
FORM
You’ll fi nd a downloadable copy of the Notice of
Reinstatement of Terms of Tenancy on the Nolo website. See
Appendix B for the link to the forms in this book.
Notice of Reinstatement of Terms of Tenancy
To: ,
Name(s)
Tenant(s) in possession of the premises at ,
Street Address
City of , County of , California.
When you rented the premises described above, the rental agreement specifi ed that your rent would be due and payable on the
fi rst day of each month. Although the undersigned has allowed you to vary this payment arrangement, your late rental payments
can no longer be tolerated.
erefore, please be advised that eff ective 30 days from the date of service on you of this notice, your monthly rent will be due
and payable on the fi rst day of the month, for that month.
Landlord or Manage
rD
ate
Sam Jones
123 Fourth Street
Los Angeles Los Angeles
Roy Jefferson August 12, 20xx
ChApter 3 |BASIC RENT RULES
|
73
Accepting Partial Payment
After a ree-Day Notice
It’s a trickier situation if you accept partial rent
payments after giving the tenant a three-day notice to
pay the rent in full or quit. The basic legal rule is this:
If your tenant responds to a three-day notice with less
than the amount stated in the notice, you can either
refuse to accept it or accept the lesser amount and
serve a new three-day notice demanding the balance.
You probably cannot accept the partial payment and
base an eviction lawsuit on the original three-day
notice. This is simply because the law requires that in
any eviction lawsuit you file, the rent that’s past due
as of the date of filing must be the same as the rent
demanded in the three-day notice.
For example, if you served a notice demanding the
rent of $600, and the tenant paid $500, you would
be filing a defective eviction suit based on a $600
three-day notice since only $100 was still due. Also,
accepting rent after serving the tenant a three-day
notice waives the breach complained of in the notice,
which means you’ll have to serve a new notice,
demanding only the balance. The California Landlord’s
Law Book: Evictions gives a fuller explanation and
provides step-by-step advice on how to do your own
evictions.
Written Agreements to Accept Late Rent
If you do give a tenant a little more time to pay,
monitor the situation carefully. You don’t want to
Agreement for Partial Rent Payments
is Agreement is made between ,
hereinafter “Tenant(s),” and
, hereinafter “Landlord/Manager,” who agree as follows:
1. at
(Tenants) has/have paid
on , 20 , which was due , .
2. at
(Landlord/Manager) agrees to accept all the remainder of the rent on or before , 20
and to hold off on any legal proceeding to evict
(Tenants) until that date.
Landlord or Manager Date
Tenant Date
Tenant Date
Tenant Date
Betty Wong
John Lewis
Betty Wong
one-half of her $1,000 rent for Apartment #2 at 111 Billy St., Fair Oaks, CA
March 1 xx March 1 xx
John Lewis
March 15 xx
Betty Wong
John Lewis March 2, 20xx
B y W n g March 2, 20xx
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
provide extension after extension, until the tenant is
three months in arrears with no chance to bring the
account current. One way to prevent this is to put a
payment schedule in writing. This binds you—you can’t
lose patience and demand the rent or initiate an eviction
lawsuit sooner. But more important, it gives both you
and the tenant a benchmark against which to measure
the tenant’s efforts to catch up on the rent. If you give
the tenant two weeks to catch up but the rent remains
unpaid, the written agreement precludes any argument
that you had really said “two to three weeks.”
A sample form you can use to accept partial rent
payments is shown above.
FORM
e Nolo website includes a downloadable
copy of the Agreement for Partial Rent Payments form. See
Appendix B for the link to the forms in this book.
If the tenant does not pay the rest of the rent when
promised, you can, and should, follow through with
a Three-Day Notice to Pay Rent or Quit (covered in
Chapter 16) and, if need be, initiate an eviction lawsuit
if payment is still not forthcoming.
Oral Agreements to Accept Late Rent
Don’t rely on an oral agreement with a tenant who
promises to catch up on back rent. To be legally
binding, an oral agreement must include a promise by
the tenant to give you something of value over and
above a promise to pay rent already due. For example,
the tenant could agree to pay a late fee.
exAmple 1: Nancy approaches her landlord
Robin with a sad story about needing to send
money to her ailing mother. Nancy asks if she
can pay half the rent on the first of the month
(the day it is due) and the remaining half two
weeks late. Robin agrees, but nothing is written
and Nancy does not promise to provide any extra
payment or other advantage in exchange for
Robin’s forbearance. The next day, Robin finds
out Nancy has lost her job and been arrested for
possession of cocaine. He asks her to pay the full
rent immediately. This is legal. Nancy’s original
promise was not legally binding because Robin
received nothing of value in exchange for it.
exAmple 2: Now let’s change this example slightly
and assume that in exchange for the right to pay
half of the rent late, Nancy promised to sweep
the parking lot twice a week and turn on the pool
filter every morning. Now, Nancy and Robin have
entered into a valid contract, and Robin has a
legal obligation to stick to his end of the bargain
as long as Nancy honors her agreement.
l
CHAPTER
4Rent Control
Property Exempt From Rent Control ...........................................................................................................77
Local Rent Control Administration ............................................................................................................... 77
Registration of Rental Properties .................................................................................................................... 77
Rent Formula and Individual Adjustments ............................................................................................... 78
Mild Rent Control ................................................................................................................................................ 78
Moderate-to-Strict Rent Control................................................................................................................. 78
Hearings and Rent Adjustments .................................................................................................................. 79
Rent Agreed to by the Tenant ....................................................................................................................... 79
Security Deposits ....................................................................................................................................................... 79
Certification of Correct Rent Levels by Board ......................................................................................... 79
Vacancy Decontrol ...................................................................................................................................................80
Tenant Protections: Just Cause Evictions ...................................................................................................80
Tenant Violates Lease or Rental Agreement ......................................................................................... 81
Landlord or Immediate Family Member Wants to Move Into
Rent-Controlled Property............................................................................................................................ 81
Other Reasons for Just Cause Evictions ...................................................................................................82
Rent Control Board Hearings ............................................................................................................................. 83
Initiating the Hearing ......................................................................................................................................... 83
Preparing for the Hearing ................................................................................................................................ 83
e Hearing ............................................................................................................................................................. 84
Appealing the Decision ..................................................................................................................................... 85
Legal Sanctions for Violating Rent Control ...............................................................................................86
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C
alifornia has no statewide law establishing rent
control, nor does it have a state law preventing
rent control. Consequently, cities may establish
rent control on a local basis, either through the initiative
process or by the act of a city council. However,
California does have a state law that restricts the ability
of local governments if they wish to enact rent control
for their localities. This law, called the Costa-Hawkins
Rental Housing Act, forbids the imposition of any rent
control on new tenancies in single-family homes and
condos (applies to tenancies that began after January 1,
1996) and requires that controls on rent be lifted when
there is a voluntary vacancy or a vacancy following
an eviction for a good reason (such as nonpayment of
rent). (CC §§ 1954.50–1954.53.)
Some form of rent regulation now exists in 16
California cities. You’ll need to read this chapter if
your property is located in a city with rent control
ordinances; see the list below.
$
RENT CONTROL
Cities With Rent Control Ordinances
Berkeley
Beverly Hills
Campbell (mediation only)
East Palo Alto
Fremont (mediation only)
Gardena (mediation/
arbitration)
Hayward
Los Angeles
Los Gatos (mediation/
arbitration)
Oakland
Palm Springs
San Francisco
San Jose
Santa Monica
ousand Oaks
West Hollywood
Rent control ordinances generally control more than
how much rent a landlord may charge. For example:
•Many cities’ ordinances also govern how—and
under what circumstances—a landlord may
terminate a tenancy, even one from month to
month, by requiring the landlord to have just
cause to evict.
•Several cities, most notably Los Angeles, require
landlords to register their properties with a local
rent control agency.
•Finally, several cities regulate security deposits (by
requiring interest) and impose notice require ments
for rent increases and termination of tenancies
that are different from the state law requirements
we discuss in Chapters 5, 14, 16, and 18.
No two rent control ordinances are identical, even
as to how rents may be increased. For example, some
cities have elected or appointed boards that have the
power to adjust rents; others automatically allow a
certain percentage rent increase each year as part
of their ordinances. We review basic rent control
provisions in this chapter and how they compare
among cities. We summarize each city’s ordinance in a
Rent Control Chart in Appendix A.
CAUTION
Get up-to-date information. Cities change their
rent control laws frequently, and court decisions also affect
them. In short, you should read the material here to get a
broad idea of rent control. If the property you rent is in a city
that has rent control, it is imperative that you also contact
your city or county to get an up-to-date copy of the ordinance
and any regulations interpreting it. Your city’s website
will likely also have useful information. (See the website
information in Appendix A.)
Where to Get Information
About Rent Control
e following organizations can help answer questions
about rent control ordinances in your area:
• Your city rent control board can supply you
with a current copy of the local ordinance, and
sometimes also with a brochure explaining the
ordinance. (Unfortunately, many cities’ staffs don’t
provide much help over the phone on specific
questions.) Check the Rent Control Chart in
Appendix A for the address, phone number, and
website of your local rent control board.
• Your local apartment owners association can
also give you general information on rent control
ordinances in the area it serves. For the name
of your local association, contact the California
Apartment Association, 980 9th Street, Suite 200,
Sacramento, CA 95814, 800-967-4222, or check
their website at www.caanet.org.
• Local attorneys can be an additional resource. See
Chapter 8 for advice on finding attorneys who
specialize in landlord/tenant law.
ChApter 4 |RENT CONTROL
|
77
Property Exempt From
Rent Control
Not all rental housing within a rent-controlled city is
subject to rent control. Under state law, property that
was issued a certificate of occupancy after February
1, 1995 is exempt from rent control. (CC § 1954.52.)
Furthermore, almost all cities have exempted from rent
control any “new construction” built after the effective
date of the ordinance. Most cities also exempt owner-
occupied buildings with four (or sometimes three or
two) units. A few cities also exempt “luxury units” that
rent for more than a certain amount. And all tenancies
for single-family homes and most condos are exempt
under state law if the tenancy began after January 1,
1996. Finally, most cities also exempt government-
subsidized tenancies from rent control (Berkeley is an
exception).
Unfortunately, an ordinance can sometimes be
ambiguous, leaving the landlord and tenant to wonder
whether the property is covered. If the local rent board
can’t give you a straight answer—or you’re reluctant
to contact them—you may need to consult an attorney
who’s familiar with your community’s rent control
ordinance.
Local Rent Control
Administration
Most rent control ordinances are administered by a
rent control board whose members are appointed
(elected in Santa Monica and Berkeley) by the mayor
or city council (board of supervisors in San Francisco).
In some cities, these boards determine the amount of
an allowable across-the-board rent increase each year,
applicable to all properties covered by the ordinance.
They also conduct individual hearings where landlords
seek an additional increase over and above that
amount. As a general rule, appointed boards are more
evenhanded than elected ones. The name, address,
phone number, and website of each board is given in
the Rent Control Chart in Appendix A.
Registration of Rental Properties
The cities of Berkeley, East Palo Alto, Los Angeles,
Palm Springs, Santa Monica, Thousand Oaks, and West
Hollywood all require the owners of rent-controlled
property to register the property with the agency that
administers the rent control ordinance. This allows the
rent board to keep track of the city’s rental units, as
well as to obtain operating funds from the registration
fees.
These cities forbid landlords who fail to register
their properties from raising the rent. In fact, cities
may require a landlord to refund past rent increases
if the increases were made during a period in which
the landlord failed to register property. The courts
have ruled that it is unconstitutional for rent control
ordinances requiring registration to allow tenants to
withhold rents just because the property isn’t registered.
(Floystrup v. Berkeley Rent Stabilization Board, 219 Cal.
App. 3d 1309 (1990).)
Some cities, including Berkeley and Santa Monica,
impose fines on landlords who fail to register property.
However, both fines and refunding past increases are
limited by state law (CC § 1947.7) when the landlord’s
failure to register was not in bad faith and was quickly
corrected (that is, the landlord registered the property)
in response to a notice from the city. To make things
easier for landlords who make honest mistakes, state
law requires cities to allow landlords to phase in,
over future years, any rent increases that would have
been allowed had the property been registered, if the
following conditions are met:
•the landlord’s original failure to register the
property was unintentional and not in bad faith
•the landlord has since registered the property as
required by the city and paid all back registration
fees, and
•the landlord has paid back to the tenant any
rents collected in excess of the lawful rate during
the time the property wasn’t properly registered.
exAmple: Three years ago, Carla bought a triplex
in a rent control city. She planned to live in one
of the units three months out of the year, and
rent it out the other nine months. Carla had been
advised by her family lawyer (incorrectly) that
her property was “owner occupied,” and thus
not subject to registration or rent controls, even
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
though she only lived there three months out of
the year. Each time Carla rented her property to
a new tenant for nine months, she increased the
rent by 10%. She also increased the rent for the
other units each year. A tenant complained to
the rent board, which determined the property
should have been registered. Since it hadn’t been
registered, Carla’s three years of rent increases
were illegal, and the proper rent was what she
charged three years before. If Carla registers the
property and refunds the excess rent she collected
to all her tenants, she can phase in the increases
the city would have allowed during her three
years, had the property been registered. The city
can’t fine Carla for failure to register her property
because she had acted in good faith on the poor
advice of a lawyer.
This law is fairly complicated, as are the typical
local ordinances and regulations in cities that require
registration of units. Should you run afoul of your city’s
rent control board and be faced with having to refund
back rent increases for a substantial period or pay
other substantial penalties, you should probably see a
lawyer familiar with the local rent control ordinance
and regulations.
Rent Formula and
Individual Adjustments
Each city has a slightly different mechanism for
allowing rent increases. All cities allow periodic
(usually yearly) across-the-board increases for existing
tenants. The amount of the increase may be set by
the rent control board, or the ordinance may allow
periodic increases of either a fixed percentage or a
percentage tied to a local or national consumer price
index.
Mild Rent Control
Rent control is considered mild in the Bay Area cities
of San Jose, Hayward, and Los Gatos. To begin with,
none of these cities’ ordinances require landlords to
register units with the board.
Although the rent control ordinances of these areas
set forth a certain formula by which rents can be
increased each year (usually fairly generous, in the
5%–8% range), it is possible for landlords to raise
the rent above this figure and still stay within the
law. Each of these cities’ ordinances requires a tenant
whose rent is increased above the formula level to
petition the board within a certain period (usually 30
days) and protest the increase. If no tenants protest the
increase within the time allowed, the increased rent
is legally effective, even though it is higher than the
formula increase. If a tenant protests the increase, then
the board schedules a hearing to decide if the entire
increase should be allowed.
Rent Mediation
Some cities, most notably the Bay Area cities of Campbell
and Fremont, have adopted voluntary rent guidelines or
landlord/tenant mediation services. Voluntary guidelines,
of course, do not have the force of law. However, it’s
often an excellent idea for you to comply with voluntary
rent guidelines or to handle a dispute by mediation.
e alternative may be hiring a lawyer to sue a tenant
who refuses to pay a rent increase and going to court to
obtain a money judgment you may never collect.
Keep in mind that several cities have rent control at
least in part because some landlords completely ignored
voluntary guidelines and mediation services, causing
tenants to show up at polls and support rent control in
record numbers.
We discuss mediation in more detail in Chapter 8.
Moderate-to-Strict Rent Control
Unlike the practice in cities with mild rent control,
landlords in cities with moderate-to-strict rent control
bear the burden of petitioning the rent board for an
above-formula rent increase and of justifying the need
for such an increase based on certain cost factors listed
in the ordinance, such as increased taxes or capital
improvements. These cities also require the landlord
to show a good reason (called “just cause”) to evict a
tenant.
The rent control laws of Los Angeles, San Francisco,
Beverly Hills, Oakland, Palm Springs, and Thousand
ChApter 4 |RENT CONTROL
|
79
Oaks have traditionally been considered “moderate,”
while the rent control laws of Berkeley, East Palo
Alto, Santa Monica, and West Hollywood have been
considered “strict.”
Until 1996, the main difference between moderate
and strict rent control was that cities with the moderate
approach allowed a landlord to raise the rent when a
tenant vacated the property voluntarily or was evicted
for just cause. This was known as “vacancy decontrol.”
Strict rent control cities did not allow for such increases
(these cities practiced “vacancy control”). But, as of
January 1, 1996, state law requires all cities to allow
vacancy decontrol. (CC § 1954.53.) (We discuss vacancy
decontrol in more detail below.) This means there is
now little difference between rent control in moderate
cities and rent control in strict cities. (One of the
remaining differences is that landlords in strict rent
control cities must register their properties with the
rent control board. Berkeley and Santa Monica also
allow tenants to petition for lower rents based on a
landlord’s failure to maintain or repair rental property.)
Landlords may not, however, raise rents (even after
a voluntary vacancy or eviction for cause) where the
landlord has been cited for serious health, safety, fire,
or building code violations that the landlord has failed
to remedy for six months preceding the vacancy. (CC
§ 1954.53 (f ).)
Hearings and Rent Adjustments
Almost all cities with rent control have a hearing
procedure to handle certain types of complaints and
requests for rent adjustments. The hearing procedures
are described in detail below.
Rent Agreed to by the Tenant
In cities with moderate and strict rent control, which
require the landlord to petition the board before
increasing the rent over a certain amount, a landlord
can’t circumvent the ordinance by having the tenant
agree to an illegal rent. Even tenants who agree in
writing to pay a higher rent and pay it can sue to get
the illegal rent back. (Nettles v. Van de Lande, 207 Cal.
App. 3d Supp. 6 (1988).) This cannot happen, however,
in cities with mild rent control that require the tenant
to object to a rent increase or have it go into effect.
Security Deposits
Several local rent control ordinances require landlords
to keep security deposits (including “last month’s
rent”) in interest-bearing accounts and to pay interest
on them. Several ordinances require landlords to
not only pay interest, but to place the deposits in a
bank insured by the FSLIC (Federal Savings & Loan
Insurance Corporation) or the FDIC (Federal Deposit
Insurance Corporation). If the interest-bearing accounts
at these institutions pay less interest than that required
by the ordinance, you do not have to abide by the
ordinance—you need only pay the interest that the
bank is paying. (Action Apartment Association v. Santa
Monica Rent Control Board, 94 Cal. App. 4th 587
(2002).) However, at least one city—San Francisco—
does not require landlords to place deposits in an
account insured by these corporations. Because these
landlords can theoretically invest the deposits in
higher-yield ways, they must pay the rate of interest
mandated by their ordinance, even if it is higher than
the rate offered by money-market accounts that are
insured by the FDIC or the FLSIC. (Small Property
Owners of San Francisco, et al. v. City and County of
San Francisco, 141 Cal. App. 4th 1388 (2006).) See
“Other Features” in the Rent Control Chart in Appendix
A for details on various cities’ deposit laws.
Certification of Correct
Rent Levels by Board
Cities that require registration must certify in writing,
on request of the landlord or tenant, the correct rent
level for the property under state law. (CC § 1947.8.)
When the landlord or tenant requests such a certificate
from the board, the board must send copies to both
the landlord and tenant. Each of them then has 15 days
to file an appeal with the board challenging the rent
level, by filing a written notice on a form available
from the board. The board must then decide the
appeal within 60 days. If the certificate rent level is not
appealed by the landlord or tenant within 15 days, it
cannot be challenged later, except by the tenant if the
landlord was guilty of intentional misrepresentation or
fraud with regard to information supplied to the city in
the request for the certificate.
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Vacancy Decontrol
Landlords have free rein to raise the rent when a
unit is vacated. This rule is called vacancy decontrol.
In practice, it means that rent control applies to a
particular rental unit only as long as a particular tenant
(or tenants) lives there. If that tenant voluntarily leaves
or is evicted for nonpayment of rent, the property
will be subject to rent control again after the new
(and presumably higher) rent is established. But in
Hayward, Palm Springs, and Thousand Oaks, the
property will no longer be subject to rent control
following a voluntary vacancy.
The effect of this state law is unclear where the
tenant is evicted for a reason other than nonpayment
of rent (such as a violation of a lease clause). City
ordinances with their own vacancy decontrol
provisions generally allow increases, but state law
doesn’t seem to do so. So if your property is subject
to rent control (and is not in Hayward, Palm Springs,
or Thousand Oaks), check with your rent board
before increasing rents following a vacancy for a lease
violation (or illegal act) other than nonpayment of rent.
CAUTION
Tenants may try to get around vacancy
decontrol. Some tenants try to keep the rent low by
unofficially subletting part or all of the premises to a new
tenant, who may in turn sublet to someone else, and so forth.
Under some rent control ordinances, a landlord cannot raise
the rent, and cannot evict the tenant, unless the lease or
rental agreement forbids subleasing or assignment without
your permission (as ours does). (See Clause 10 of our form
agreements in Chapter 2.) As long as subletting is a breach of
the lease or rental agreement, you can legally evict tenants
who sublet, or, under the Costa-Hawkins law, you can legally
raise the rent in accordance with the formula. A landlord’s
consent to a sublease cannot be unreasonably withheld.
However, if the tenant’s subleasing of the property is designed
to circumvent the rent control ordinance’s provision for
higher rent when occupancy changes, the landlord’s refusal
to consent to the sublease isn’t unreasonable. (For details on
subtenants and subleasing, see Chapter 10.)
If, however, the tenant acquires a roommate, and
you treat the new occupant as a tenant (by accepting
rent from him or her, for example), you may not be
able to raise the rent when the original tenant leaves.
(CC § 1954.53(d).)
Tenant Protections: Just
Cause Evictions
Unfortunately, some unscrupulous landlords have
sought to evict tenants solely in order to take
advantage of vacancy decontrol. In other words, in
order to charge more rent, which could only be done
with a new tenancy, the landlord would evict the
current tenant, often for little or no reason beyond
the desire for more rent. To guard against such abuse,
most rent control ordinances require the landlord
to show “just cause” for eviction. Cities that require
landlords to show just cause to evict require the
landlord, for example, to give a reason for eviction in
a notice terminating a month-to-month tenancy, even
though state law does not require it. Under such just
cause eviction provisions, the landlord must also prove
the reason in a court proceeding.
Most cities that require just cause for eviction also have
rent control. However, two cities without rent control also
require landlords to show just cause to evict: San Diego
(for tenants renting two years or more) and Glendale.
(See Chapter 18, Terminating Tenancies.)
Under CC § 1954.53(c), landlords whose property
is subject to rent control may raise rents pursuant to
state law only where the tenant left voluntarily or was
evicted for nonpayment of rent. So, state law gives no
advantage to landlords who evict for any reason other
than nonpayment of rent.
$
RENT CONTROL
Cities at Require Just Cause for Eviction
Berkeley Palm Springs
Beverly Hills San Diego
East Palo Alto San Francisco
Glendale Santa Monica
Hayward ousand Oaks
Los Angeles West Hollywood
San Jose and Los Gatos, two of the mild rent control
cities, do not have just cause eviction. The ordinances,
however, penalize a landlord who tries to evict a
tenant in retaliation for asserting a tenant right. The
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tenant has the burden of proving that the landlord’s
motive was retaliatory. (See Chapter 15 for details on
retaliatory evictions.)
The cities of Richmond and Ridgecrest require just
cause to evict, but only for properties purchased at
foreclosure, so we do not list those cities above.
Rent control ordinances that require just cause
for eviction list acceptable reasons for eviction. The
common reasons are discussed below.
See Chapter 18 for more details and procedures on
evicting tenants in rent control cities requiring just
cause for eviction.
Tenant Violates Lease or
Rental Agreement
If a tenant violates the lease or rental agreement, the
landlord has just cause for eviction. The landlord must
first serve the tenant with a three-day notice. (The
particular type of notice depends on the violation—see
Chapters 16 and 18.) City ordinances list violations that
are just cause for eviction. Typical reasons are:
•Tenant has not paid rent after being served with
a Three-Day Notice to Pay Rent or Quit. This is
the most common way tenants violate their lease
or rental agreement.
•Tenant continues to violate a lease or rental
agreement provision, such as keeping a dog on
the property in violation of a no-pets clause,
after being served with a three-day notice to
correct the violation or leave.
•Tenant has caused substantial damage to
the premises and has been served with an
unconditional three-day notice specifying the
damage done and telling the tenant to vacate.
Some cities require the landlord to give the
tenant the option of repairing the damage.
•Tenant is seriously disturbing other tenants or
neighbors, and has been given a three-day notice
specifically stating when and how this occurred.
Some cities require that the notice give the tenant
the option of stopping the offending conduct.
•Tenant has committed an illegal activity on the
premises and has been given a three-day notice
setting forth the specifics. Minor illegal activity,
such as smoking marijuana, is not sufficient
cause, although dealing drugs is. In fact,
landlords who fail to evict drug dealers can face
serious liability. (See Chapter 12.)
Other activities that constitute cause for eviction
include engaging in an illegal business (such as
prostitution), or even an otherwise legal business that’s
in violation of local zoning laws, or overcrowding the
unit in violation of local health codes.
Some just cause eviction provisions are more
stringent than others. In Berkeley and Santa Monica,
a tenant who violates a lease or rental agreement—
for example, moves in too many people, damages
the premises, makes too much noise—must first be
notified of the problem in a written notice (often called
a cease-and-desist notice) and given a “reasonable”
time to correct it (even though state law does not
always require this). What is reasonable depends on
the circumstances. A tenant who makes too much
noise should be able to stop doing so in a day at
most, whereas a tenant who damages the premises by
breaking a window might reasonably be given a week
to fix the window. Only after such a notice is given,
and the tenant still fails to correct the problem, can
you evict the tenant for the lease or rental agreement
violation, starting with a three-day notice.
Landlord or Immediate Family
Member Wants to Move Into
Rent-Controlled Property
All rent control cities that require just cause to evict
allow a landlord to terminate a month-to-month or
other periodic tenancy if the landlord wants to reside
in the unit, or wants to provide it to an immediate
family member. These cities generally require that
no similar unit be available for the landlord or family
member in the same or in another building the
landlord owns, and that the landlord give the tenant
a 30-day termination notice setting this out as the
basis for eviction. San Francisco has a permanent
moratorium on certain owner move-in evictions. For
details, see the Rent Control Chart in Appendix A.
“Family member” is defined differently in different
cities. In Berkeley and Santa Monica, family members
include only parents and children. In cities with more
inclusive definitions, such as San Francisco and Los
Angeles, family members also include brothers, sisters,
grandparents, and grandchildren. When several people
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own property, either as cotenants or through a joint
venture, small corporation, or partnership, cities have
different ways of defining who qualifies for the status
of a landlord for purposes of claiming priority over
an existing tenant if the landlord, or a family member,
wish to live in the property.
There has been some abuse of this provision by
landlords who evict a tenant claiming they or a family
member wants to rent the premises, but then, after
the tenant has moved out, simply move in a nonfamily
member—at a higher rent. Under the Costa-Hawkins
law, no rent increase is allowed unless the tenant
leaves voluntarily or is evicted for nonpayment of rent.
In response, cities have amended their ordinances, and
the Legislature has passed a law, to impose fines on
landlords who do this. State law requires that in rent-
controlled cities that mandate registration, landlords
who evict tenants on the basis of wanting to move
a relative (or the landlord) into the property must
have the relative actually live there for six continuous
months. (CC § 1947.10.) Some cities impose a longer
residence period (notably San Francisco, which
requires three years). If the relative stays a shorter
time, the tenant can sue the landlord in court for actual
and punitive damages.
If a court determines that the landlord or relative
never intended to stay in the unit, the tenant can move
back in. The court can also award the tenant three
times the increase in rent the tenant paid while living
somewhere else and three times the cost of moving
back in. If the tenant decides not to move back into
the old unit, the court can award three times the
amount of one month’s rent of the old unit and three
times the costs incurred moving out of it. The tenant
can also recover attorney fees and costs. (CC § 1947.10.
See also Zimmerman v. Stotter, 160 Cal. App. 3d 1067,
207 Cal. Rptr. 108 (1984). In this case, the landlord
had earlier won an eviction lawsuit, on the basis that
he didn’t use the phony relative ploy. Despite the
landlord’s win, the tenant was allowed to bring suit
for damages, claiming that the landlord did use the
phony relative ploy, although it didn’t become obvious
until after the tenant was evicted and the property
rerented. The tenant won the case.) In another case,
the court awarded a San Francisco tenant $200,000 for
a wrongful eviction based on a phony relative ploy.
(Beeman v. Burling, 216 Cal. App. 3d 1586, 265 Cal.
Rptr. 719 (1990).)
Other Reasons for Just Cause Evictions
In cities that require landlords to show just cause
for eviction, landlords can also terminate a month-
to-month or other periodic tenancy for any of the
following reasons. The landlord must, however, give
the tenant a 30-day termination notice if the tenant has
occupied the property for less than a year, 60 days’
notice if the tenant has stayed a year or more, and
90 days’ for certain government-subsidized tenancies.
The notice must specifically set forth the basis for the
eviction.
•The tenant refuses to enter into a new lease
containing the same terms as a previous expired
one.
•The tenant refuses, following a written request,
to allow the landlord to enter the premises when
the landlord has a right to do so. For example,
the tenant refuses to allow the landlord access
to fix a hazardous condition on the property, a
reason for which the landlord has a legal right to
enter. (See Chapter 13.)
•The landlord seeks to substantially remodel the
property, after having obtained the necessary
building permits. However, the current tenant
must be allowed the right of first refusal to move
back in after the remodeling is completed—at
the original rent plus any extra “pass-through”
increases allowed by the particular rent control
ordinance. This provision is designed to allow
the landlord to recoup part of the cost of capital
improvements.
•The landlord, after having complied with any
local condominium conversion ordinance and
having applied for and received the necessary
permits, seeks to convert an apartment complex
to a condominium complex.
•The landlord seeks to permanently remove
the property from the rental market under the
Ellis Act. For this type of termination, 120 days’
notice is required, and if the tenant is disabled
or a senior citizen, one year’s notice is needed.
(Government Code §§ 7060–7060.7.)
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Rent Control Board Hearings
Disputes over rent usually get hammered out in a
hearing before the local rent board. The hearing may
be initiated by a tenant who protests a rent increase
that is higher than the formula amount in a mild rent
control city, or by a landlord in a city that requires
landlords to first obtain permission before exceeding
the formula increase.
In either case, the landlord must demonstrate the
need for a rent increase higher than that normally
allowed. This most often means establishing that
business expenses (such as taxes, maintenance, and
upkeep costs or applicable utility charges), as well as
the amortized cost of any capital improvements, make
it difficult to obtain a fair return on the landlord’s
investment given the current rent.
Initiating the Hearing
A hearing is normally initiated by the filing of
a petition or application with the rent board. In
describing this process, let’s assume that a landlord is
filing a petition in a strict or moderate rent control city
that requires landlords to obtain permission before
raising rents above the formula increase allowed.
This process is approximately reversed in mild rent
control cities that require the tenant to protest such an
increase.
In some cities, including Los Angeles and San
Francisco, there are two types of petitions a landlord
seeking an above-formula rent increase can file.
If an increase is sought because of recent capital
improvements, the landlord files a “petition for
certification” of such improvements. If a rent increase
is sought on other grounds, a “petition for arbitration”
is filed. The rent board can tell you which document
you need to file.
The application form will ask for your name and
mailing address; the address of the property or
properties for which you’re seeking the increase,
including the numbers of any apartments involved;
the affected tenants’ names and mailing addresses;
the dollar amounts of the proposed increases; and
the reason for the requested increase, such as higher
repair, maintenance, or utility charges, or a pass-
through of recent capital improvements. Make sure that
your local ordinance justifies an increase.
Usually, you must pay a nominal filing fee, often
based on the number of units or properties for which
you’re seeking an increase. After filing your application
and paying your fees, you and the tenant (who in
some cities may file a written reply to your request)
will be notified by mail of the date and place of the
hearing, usually within a few weeks. In Los Angeles,
San Francisco, and some other cities, city employees
may inspect your property before the hearing. You
are, of course, well advised to cooperate as fully as
possible with such inspections.
Preparing for the Hearing
As a general rule, you will greatly increase your
chances of winning your rent increase if you appear
at the hearing fully prepared and thoroughly familiar
with the issues, and make your presentation in an
organized way.
Here’s how to prepare:
Step 1. Obtain a copy of the ordinance and any
applicable regulations for the area in which your
property is located. Then determine which factors the
hearing officer must weigh in considering whether
to grant your request. For example, in San Francisco,
the hearing board will consider the cost of capital
improvements, energy conservation measures, utilities,
taxes, and janitorial, security, and maintenance services.
Your job is to show that the increase you are requesting
is allowed by the rent control ordinance. Sometimes an
outline on a 3" x 5" index card will help you focus.
Step 2. Gather all records, including tax statements,
employee pay statements, and bills for repairs,
maintenance, and any other costs (remodeling, repairs,
or other capital improvements) having to do with the
property.
Step 3. Be prepared to testify how each item of
documentation relates to your monthly operating
costs. Also be prepared to produce witnesses who
are familiar with any items you think might be
contested. For example, if you know tenants are likely
to argue that you didn’t make major improvements
to the building when in fact you did, arrange for the
contractor who did the work to appear at the hearing.
If for some reason your witness cannot appear
in person, you may still present a sworn written
statement or declaration from that person. The
declaration should be as specific as possible, including
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a description of the work done, dates, costs, and
any other relevant information. At the end of the
declaration, the contractor or other person should
write, “I declare under penalty of perjury under the
laws of the State of California that the foregoing is
true and correct,” putting the date and her signature
afterward. A sample Declaration follows.
Step 4. Before your hearing, go and watch someone
else’s hearing. (If your city’s hearings are not open to
the public, you can almost always arrange to attend as
an observer if you call ahead.) Seeing another hearing
may make the difference between winning and losing
at yours. This is because both your confidence and
your capabilities will grow as you understand what
interests the hearing officers who conduct the hearing.
By watching a hearing, you will learn that while they
are relatively informal, all follow some procedural
rules. It is a great help to know what the common
practices are so you can swim with the current, not
against it.
Step 5. If you feel it’s necessary, consult an attorney
or someone else thoroughly familiar with rent
board hearings to discuss strategy. You may have an
attorney represent you at a rent adjustment hearing,
but this is probably not a good idea. You might
prefer to be represented by your apartment manager
or management company. If you do a careful job in
preparing your case, you will probably do as well
alone as with a lawyer or other representative. And
remember, hearing officers (and rent boards) are local
citizens who may well react negatively to a landlord
who pleads poverty while also able to pay a lawyer.
e H e a r i n g
Once you’ve prepared for the hearing, it’s time to make
your case. Here’s how to be most effective.
Before the Hearing Begins
Arrive at the hearing room at least a few minutes
before it is set to begin. Check in with the clerk or
other official. Ask to see the file that contains the
papers pertaining to your application. Review this
material to see if there are any comments by office
workers, rent board investigators, or your tenants. Read
the tenants’ comments very closely and prepare to
answer questions from the hearing officer on any of
the points they raise.
Declaration of Terry Jarman, Contractor
I, Terry Jarman, Licensed Contractor, declare:
I am a general construction contractor, licensed by the California State Contractor’s Licensing Board. My contractor’s
license number is A-1234567.
Between January 1 and February 1, 20xx, I contracted with Maria Navarro, the owner of the apartment complex at 1234
Fell Street, San Francisco, to replace plumbing, heating, and electrical systems installed in the 1930s and to repair a roof
that had developed numerous leaks over six of the apartment units. e total cost was $75,000, which Ms. Navarro paid
me in full.
Pursuant to the contract, I engaged the necessary plumbing, heating, electrical, and roofi ng subcontractors to perform the
necessary work, which was completed on February 1, 20xx.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Terry Jarman, Licensed Contractor Date
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As you sit in the hearing room, you will probably
see a long table, with the hearing officer seated at
the head. In a few cities, the hearing is before several
members of the rent board, and they may sit more
formally on a dais or raised platform used by the city
council or planning commission. In any event, you,
any tenants who appear, your representative, and any
witnesses will be asked to sit at a table or come to the
front of the room.
A clerk or other employee may make summary
notes of testimony given at the hearing. In some cities,
hearings are taped. If your city does not keep records,
you have the right to have the proceedings transcribed
or tape recorded at your own expense.
e Hearing Officer’s Role
Rent board hearings are usually heard by a “hearing
officer” who is a city employee or volunteer mediator
or arbitrator. In a few cities, the rent board itself
conducts hearings, with the chairperson presiding
over the hearing. The hearing officer or rent board
chairperson will introduce himself or herself and any
other people in the room. If you have witnesses, tell
the hearing officer. The hearing officer, or sometimes
an employee of the rent board, will usually summarize
your application, taking the information from your file.
At some point, you will be sworn to tell the truth; it is
perjury to lie at the hearing. When these preliminaries
are complete, you or your tenant, depending on who
initiated the proceeding, will have an opportunity
to speak. A rent adjustment hearing is not like court.
There are no formal rules of evidence. Hearing officers
will usually allow you to bring in any information that
may be important, though it might not be admissible
in a court of law. Relax and just be yourself.
Making Your Case
Present your points clearly, in a nonargumentative way.
You’ll normally have plenty of time to make your case,
so don’t rush. At the same time, don’t get carried away
in unnecessary details. The hearing officer may well
ask you questions to help you explain your position.
Make sure you present all documentary evidence and
witnesses necessary to back up your case.
Later, the hearing officer will allow the tenant or
the tenant’s representative to present his case and
to ask you questions. Answer the questions quietly.
It is almost always counterproductive to get into
an argument. Even if you feel the tenant is lying or
misleading, don’t interrupt. You will be given time
later to rebut the testimony. Direct all your argument
to the hearing officer, not to the tenant or the tenant’s
representative.
When your witnesses are given the opportunity
to testify, the normal procedure is simply to let them
have their say. You may ask questions if the witness
forgets something important, but remember, this is not
a court, and you don’t want to come on like a lawyer.
Very likely, the hearing officer will also ask your
witnesses questions. The tenant has the right to ask
the witnesses questions as well. Similarly, you have the
right to ask questions of the tenant and any witnesses.
In rare instances, you may get a hearing officer or
rent board chairperson who dominates the hearing or
seems to be hostile to you or to landlords in general.
If so, you will want to stand up for your rights without
needlessly confronting the hearing officer. Obviously,
this can be tricky, but if you know your legal rights
and put them forth in a polite but direct way, you
should do fine. If you feel that the hearing officer is
simply not listening to you, politely insist on your
right to complete your statement and question your
witnesses.
Just before the hearing ends, the hearing officer
should ask if you have any final comments to make.
Don’t repeat what you have already said, but make
sure all your points have been covered and heard.
At the end of the hearing, the hearing officer will
usually tell you when you can expect the decision. A
written decision will usually be mailed to you within a
few days or weeks of the hearing. Some cities, however,
do not issue written decisions; the hearing officer just
announces the decision at the end of the hearing.
Be assured that it is illegal for hearing officers and
rent boards to unfairly penalize landlords who made
innocent mistakes filing or serving legal notices.
(CC § 1947.7.) A landlord’s good faith (“substantial
compliance”) in attempting to obey an ordinance
prevents a rent board from imposing penalties.
Appealing the Decision
In most cities in which applications for increases are
heard by a hearing officer, you have the right to appeal
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to the full rent board if you are turned down. Your
tenants have this same right if you prevail. A form
for making an appeal will be available from the rent
board.
If you make an appeal, you must file it within a
certain time. You may or may not have the opportunity
to appear in person before the rent board.
The rent board will probably take as truth the facts
as found by the hearing officer and limit its role to
deciding whether the hearing officer applied the law
to these facts correctly. (There is an exception to this
general rule in some cities. If you arranged for a typed
transcript of the original hearing at your expense or
have paid to have the tape recording of the hearing
made by the hearing officer typed, the rent board
may review it.) On the other hand, the rent boards
of some cities (including Los Angeles) will allow
the entire hearing to be held all over again. (This is
sometimes called a “de novo” hearing.) In addition,
the board will not usually consider any facts you raise
in your statement that you could have brought up at
the hearing but didn’t. If you’ve discovered a new
piece of information since the time of the first hearing,
however, the board may consider the new information.
If your tenants are appealing and you are satisfied
with the earlier decision, you will want to emphasize
the thoroughness and integrity of the earlier procedure
and be ready to present detailed information only if it
seems necessary.
The entire rent board will generally have more
discretion to make a decision than does a single
hearing officer. If your case is unique, the entire board
may consider the implications of establishing a new
legal rule or interpretation.
If you again lose before the entire board, or if
your city permits only one hearing in the first place,
you may be able to take your case to court if you are
convinced the rent board or hearing board failed to
follow the law or their own procedures. However, if
yours is a situation where the hearing officer or board
has broad discretion to decide issues such as the one
you presented, you are unlikely to get the decision
overturned in court. Speak to an attorney about this
as soon as possible, as there is a time limit (usually 30
days) on how long you can take to file an appeal in
court.
Legal Sanctions for
Violating Rent Control
When rent control laws were first adopted in the 1970s,
many landlords came up with imaginative ways to
circumvent them. In cities with vacancy decontrol,
landlords began terminating month-to-month tenancies
so that they could raise rents. As noted above, this
caused localities to enact just-cause-for-eviction
protections. Similarly, where ordinances allowed
landlords to evict tenants in order to make major
repairs to the property or move in themselves or move
in relatives, some landlords used these reasons to
evict, but didn’t follow through. That is, after evicting
their tenants, they made few, if any, repairs, or failed to
move themselves or a relative in for any length of time.
exAmple: After purchasing a duplex, a Los
Angeles landlord immediately served a 30-day
notice on the tenant, on the grounds that she (the
landlord) wanted to move her mother into the
unit. The landlord evicted the tenant, but did not
move her mother into the vacant unit. Instead, the
landlord put the duplex back on the market for
a much higher price. The tenant who had been
evicted sued the landlord for many thousands
of dollars and ultimately received a substantial
settlement.
Other landlords deliberately reduced services or
adopted obnoxious behavior to encourage their tenants
to leave “voluntarily.” This, in turn, was followed
by more amendments to close such loopholes, with
landlords devising more refined ways to avoid the new
rules, and so forth.
Many landlords did get rid of low-paying tenants
and raised rents. However, newer rent control
ordinances, as well as recent changes in state law,
have closed many of the original loopholes and now
assess heavy financial penalties against landlords who
try to circumvent a rent control or just-cause eviction
ordinance, such as by evicting tenants on false grounds
of moving in relatives. A court case in Los Angeles
gives an example of how much these loopholes
have been tightened. A group of tenants obtained a
$1.7 million settlement against the new owner of a
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residential hotel. The tenants alleged that the owner
tried to drive out low-income residents, in violation of
Los Angeles’ just-cause eviction laws, to make way for
higher-paying tenants. (Clark Hotel Tenants’ Assn. v.
May Wah International Enterprises, Inc., Los Angeles
County Superior Court No. C-725383 (L.A. Daily
Journal, August 1, 1991).)
Here are other penalties landlords may face for
violating rent control ordinances:
•The law allows tenants to sue a landlord for
having made life miserable, under the legal
theory of “intentional infliction of emotional
distress.” The landlord’s repeated refusals to
repair (see Chapter 11), privacy violations (see
Chapter 13), or threats can be the basis for such
a lawsuit. (Newby v. Alto Rivera Apartments, 60
Cal. App. 3d 288, 131 Cal. Rptr. 547 (1976).)
•All rent control ordinances (except that of Palm
Springs) forbid lease or rental agreement clauses
where tenants supposedly give up or waive their
rights under the law. Thus, lease clauses that say
“tenant knowingly gives up all rights under any
applicable rent stabilization ordinance” are of no
legal effect. (See “Rent Agreed to by the Tenant,”
above.)
•State law provides that in rent-controlled cities
that require registration, a landlord who charges
illegally high rent can be sued by the tenant in
court for up to three times the rent collected in
excess of the certified level, plus attorney fees
and costs. (CC § 1947.11.)
CAUTION
Don’t count on your insurance company to
defend you if you break rent control laws and are sued by
your tenants. Berkeley landlords who evicted tenants under
the pretense that they intended to move family members into
the house were successfully sued by the former tenants after
the landlords rented the unit to someone else. e landlords’
attempts to get their insurance carrier to foot the bill (for
lawyers’ fees and the eventual settlement) were unavailing. e
court ruled that the illegal eviction was not covered under the
landlords’ homeowners’ insurance policy. (Swain v. California
Casualty Insurance Co., 99 Cal. App. 4th 1 (2002).)
The best way to avoid the possibility of legal hassles
is to forget about trying to circumvent the intent
behind a rent control law, if indeed you ever thought
about it. Be aware that tenants and rent boards have
become more sophisticated in spotting and countering
landlord maneuvers.
Be extra careful to avoid a “retaliatory eviction.” The
few cities that don’t require just cause for evicting a
tenant do forbid evictions intended to retaliate against
a tenant who exercised rights under the rent control
law—by objecting to an illegal rent increase, for
example. State law forbids this, too. The tenant has to
prove in court that the landlord’s reason for eviction
was retaliation. (See Chapter 15 and The California
Landlord’s Law Book: Evictions, which covers evictions
in detail, including all the causes allowed for eviction
in rent control cities.)
Save your energies for working toward a repeal or
amendment of any rent control law you think is unfair.
If you live in a strict rent control city, you may want to
consider selling your properties and buying others in
areas that make it easier for you to operate. This may
not be as difficult to do as you might imagine, given
the number of groups of unrelated adults who are
purchasing housing together as tenants-in-common.
l
CHAPTER
5Security Deposits
Security Deposits Must Be Refundable ....................................................................................................... 90
How Landlords May Use Deposits .................................................................................................................. 91
Dollar Limits on Deposits ..................................................................................................................................... 91
How to Increase Deposit Amounts ................................................................................................................92
Last Month’s Rent ..................................................................................................................................................... 92
Interest, Accounts, and Record Keeping on Deposits ........................................................................ 93
Insurance as a Backup to Deposits .................................................................................................................95
When Rental Property Is Sold ........................................................................................................................... 95
Seller Refunds the Deposit to Tenants...................................................................................................... 95
Seller Transfers Deposit to New Owner ................................................................................................... 95
When You’re Purchasing Rental Property ................................................................................................. 96
FORMS IN THIS CHAPTER
Chapter 5 includes instructions for and a sample of the Notice of Sale of
Real Property and Transfer of Security Deposit Balance. e Nolo website includes a
downloadable copy of this form. See Appendix B for the link to the forms in this book.
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M
ost landlords quite sensibly ask for a
security deposit before entrusting hundreds
of thousands of dollars worth of real estate
to a tenant. But it’s easy to get into legal trouble over
deposits, because they are strictly regulated by state
law, and sometimes also by city ordinance. State law
dictates how large a deposit you can require, how
you can use it, when you must return it, and more.
Some cities also require landlords to pay interest on
deposits, and a few require landlords to put deposits
in a separate account. What’s more, you cannot modify
these terms—regardless of what you put in a lease or
rental agreement. It goes almost without saying that
it is absolutely essential that you know the laws on
security deposits and that you follow them carefully.
Exception for short-term rentals. The rules on deposits
discussed in this chapter do not apply to short-term
rentals where the occupancy is for 30 days or less.
Someone who frequently rents out a vacation house,
for example, for short periods need not worry about
the laws discussed in this chapter.
RELATED TOPIC
Issues regarding security deposits are also
covered in other chapters. See:
• Lease and rental agreement provisions on security
deposits: Chapter 2
• Highlighting security deposit rules in a move-in letter to
the tenant: Chapter 7
• Importance of insurance as a backup to security
deposits: Chapter 12
• Using 30-day notices to raise the security deposit:
Chapter 14
• Procedures on returning tenants’ deposits and how
to deduct for cleaning, damages, and unpaid rent:
Chapter20.
Security Deposits Must
Be Refundable
In the eyes of the law, a security deposit is money that
a landlord collects from a tenant and holds in case the
tenant fails to pay the rent or does not pay for damage
the tenant has caused to the rental unit. It doesn’t
matter what the landlord calls this money—a “cleaning
deposit,” “pet fee,” or “last month’s rent”—it’s legally a
security deposit as long as it’s held for that purpose
and used for that purpose. In legal shorthand, failing
to pay the rent and not paying for damage are known
as “tenant defaults.”
Landlords typically collect a security deposit when
the tenant moves in, along with the first month’s rent.
But the first month’s rent is not considered part of
the security deposit—for the simple reason that this
rent money is being paid on time. On the other hand,
money collected in advance can cover the tenant’s last
month’s rent, because the landlord holds it as a kind of
insurance in case the tenant leaves without paying for
the last month.
Just about any money the tenant pays up front
is considered a security deposit, except the initial
(usually first month’s) rent payment and a legitimate
credit check fee of up to $40. (See Chapter 1 for more
on credit check or other screening fees.) Any other
money you collect up front for administrative costs
associated with choosing tenants or moving them into
a rental unit, whatever you call such fees (cleaning
deposits, cleaning fees, administrative charges, or
“tenant initiation expense reimbursement” (TIER)
fees), is also a security deposit, which means it must
be returned to the tenant. To put it another way, it is
no longer legal to ask the tenant to pay administrative
costs.
It’s also illegal to charge a hidden nonrefundable
deposit by charging considerably more rent for
the first month than for later months. (Granberry
v. Islay Investments, 9 Cal. 4th 738 (1995); People
v. Parkmerced Co., 198 Cal. App. 3d 683, 244 Cal.
Rptr. 22 (1988).) It is illegal to charge a fixed fee for
cleaning drapes or carpets or for painting, or to charge
administrative “move-in” fees. All such fees are legally
considered security deposits and must be refundable.
Finally, you cannot insist that a security deposit be
made in cash. (CC § 1947.3.)
TIP
Recoup your administrative costs in your rent,
not through move-in fees. It is not legal to charge your
tenants for your administrative costs. To cover these overhead
expenses, set the rent high enough.
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How Landlords May Use Deposits
State law controls how landlords may use security
deposits. (CC § 1950.5.) You can withhold all or part
of the deposit if the tenant skips out owing rent or
leaving the apartment filthy or damaged. The deposit
may be used by the landlord “in only those amounts
as may be reasonably necessary” to do the following
four things only:
1. To remedy defaults in payment of rent.
2. To repair damage to the premises caused by the
tenant (except for ”ordinary wear and tear”).
3. To clean the premises, if necessary, when the
tenant leaves. For tenancies that began on or
after January 1, 2003, the amount of cleaning
you may require cannot be more than will
“return the unit to the same level of cleanliness
it was in at the inception of the tenancy.” (CC
§ 1950.5(a)(3).) In other words, if you delivered
a merely broom-clean unit, you can’t require
your tenant to return it antiseptically spotless.
4. If the rental agreement allows it, to pay for the
tenant’s failure to restore or replace personal
property.
When a tenant moves out, you have three weeks
to either return the tenant’s entire deposit or provide
an itemized statement of deposit deductions (along
with invoices and receipts for work done or items
purchased) and refund the deposit balance, if any.
Chapter 20 provides detailed procedures for handling
security deposits when the tenant leaves, including
inspecting the premises, making proper deductions,
notifying the tenant, supplying receipts, and dealing
with small claims lawsuits.
Dollar Limits on Deposits
State law limits the amount you can collect as a
deposit. (CC § 1950.5 (c).)
Unfurnished property. The deposit (including last
month’s rent) can’t exceed two months’ rent.
Furnished property. The deposit (including last
month’s rent) can’t exceed three months’ rent. Property
is considered “furnished” if it contains at least essential
furniture, such as a bed in each bedroom, a couch or
chairs for the living area, an eating table with chairs,
and a refrigerator and stove.
There are two situations where other deposit limits
apply.
Cities with rent control or deposit restrictions. Many
cities with rent control ordinances, as well as Santa
Cruz and Watsonville (which aren’t rent-controlled),
place further restrictions on deposit amounts and
increases. Before attempting to set or raise a deposit in
a rent-controlled city, be sure to obtain a copy of the
rent control ordinance.
Waterbeds. If the tenant has a waterbed, the maxi-
mum allowed deposit increases by half a month’s
rent. So, if a tenant has a waterbed, you can charge a
total deposit (including last month’s rent) of up to 2.5
times the monthly rent for unfurnished property and
3.5 times the monthly rent for furnished property. (CC
§ 1940.5(h).)
exAmple 1: Mario charges $1,000 per month
rent for a two-bedroom apartment. Since Mario’s
apartment is unfurnished, the most he can charge
is two months’ rent, or $2,000 total deposit. It
makes no difference whether or not the deposit
is divided into last month’s rent, cleaning fee, and
so forth. In other words, if Mario charges a $400
cleaning deposit, a $600 security deposit, and
$1,000 last month’s rent (total $2,000), he is just
within the law. Remember, the rent Mario collects
for the first month doesn’t count for this purpose.
exAmple 2: Lenora rents out a three-bedroom
furnished house for $1,500 a month. Since total
deposits on furnished property can legally be
three times the monthly rent, Lenora can charge
up to $4,500 for last month’s rent and deposits.
This is in addition to the first month’s rent of
$1,500 that Lenora can (and should) insist on
before turning the property over to a tenant.
Realistically, Lenora might not find any takers if
she insists on receiving $4,500 in deposits plus
the first month’s rent, for a total of $6,000. In
the case of furnished property, the market often
keeps the practical limit on deposits lower than
the maximum allowed by law.
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How to Increase
Deposit Amounts
Since the maximum amount of a deposit is tied to the
rent, an increase in rent affects the allowable deposit.
You can normally change the amount of rent for a
month-to-month tenancy, as well as other terms of
the agreement, by giving the tenant a written 30-Day
Notice of Change of Terms of Tenancy. (See Chapter
14.) If you increase the rent with a 30-day notice (or
a 60-day notice for rent increases above 10% in one
year—see Chapter 14), you can also legally increase
the amount of the deposit.
exAmple: A landlord who rents an unfurnished
house or apartment to a tenant for $750 a month
can charge total deposits (including anything
called last month’s rent) of two times that amount,
or $1,500. If the deposit is for this amount,
and the landlord raises the rent to $1,000, the
maximum deposit the landlord is allowed to
charge goes up to $2,000. The required deposit
does not go up automatically. To raise the deposit
amount, the landlord must use a 30-day notice.
If you have a fixed-term lease, you may not raise the
security deposit during the term of the lease, unless
the lease allows it and specifies the increase.
$
RENT CONTROL
e ordinances of cities with rent control
typically define controlled rent so broadly as to include all
security deposits and last month’s rent paid by the tenant.
is means that if the city restricts your freedom to raise rents,
it probably restricts your right to raise deposits as well. Also,
since most cities that have special security deposit laws have
them as part of a rent control ordinance, any property that
is subject to that city’s rent control laws is also subject to the
city’s deposit law. In such cities, the ordinance may therefore
restrict the amount and manner in which you can raise a
tenant’s security deposit.
Last Month’s Rent
Don’t use the term “last month’s rent” unless you want
to be stuck with its literal meaning. If you accept an
up-front payment from a tenant and call it last month’s
rent, you are legally bound to use it for that purpose
only. There’s no advantage to using this term, since the
total deposit you can collect (two or three times the
monthly rent, depending on whether the property is
furnished) does not increase.
Here are two examples:
•You give your tenant a year’s lease, from
January 1 to December 31, and require an up-
front payment of last month’s rent. In this case,
the tenant has paid the rent for December in
advance.
•If you rent to your tenant from month to month,
the tenant’s last month’s rent will take care of the
rent for the last month, after the tenant gives a
30-day notice or you give the tenant a 30- or 60-
day notice.
In either case, you can’t use last month’s rent as a
security deposit for damage or cleaning charges.
If, instead, you require a security deposit and do not
mention last month’s rent, the tenant will have to pay
the last month’s rent when it comes due and then wait
until after moving out to get the security deposit back.
If the tenant damages the premises or fails to pay rent,
you can hold on to the appropriate amount of the
entire deposit.
exAmple 1: Fernando’s last tenant left his $900
per month apartment a mess when he moved
out. Fernando wanted to charge his next tenant a
nonrefundable cleaning fee, but couldn’t because
this is illegal. Instead, Fernando decided to collect
a total of $1,800, calling $900 a security deposit
and $900 last month’s rent. His next tenant, Liz,
applied this last month’s rent when she gave her
30-day notice to Fernando. This left Fernando
with the $900 security deposit. Unfortunately,
when Liz moved out, she left $1,000 worth of
damages, sticking Fernando with a $100 loss.
exAmple 2: Learning something from this
unhappy experience, Fernando charged his
next tenant a simple $1,800 security deposit, not
limiting any part of it to last month’s rent. This
time, when the tenant moved out, after paying his
last month’s rent as legally required, the whole
$1,800 was available to cover the cost of any
repairs or cleaning.
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Avoiding the term “last month’s rent” also keeps
things simpler if you raise the rent, but not the deposit,
before the tenant’s last month of occupancy. The
problem arises when rent for the tenant’s last month
becomes due. Has the tenant already paid in full,
or does the tenant owe more because the monthly
rent is now higher? Legally, there is no clear answer.
In practice, it’s a hassle you can easily avoid by not
labeling any part of the security deposit last month’s
rent.
exAmple: Artie has been renting to Rose for
three years. When Rose moved in, the rent was
$800 a month, and Artie collected this amount as
last month’s rent. Over the years he’s raised the
rent to $1,000, without collecting any more also
for last month’s rent. During the last month of
her tenancy, Rose applies the $800 last month’s
rent to the current $1,000 rent. Artie thinks that
Rose should have to pay the $200 difference.
Rose, however, thinks that, by having previously
accepted the $800 as last month’s rent, Artie
had implicitly agreed to accept the $800 as full
payment for that month. They end up in court
fighting over something that could have been
avoided.
Interest, Accounts, and Record
Keeping on Deposits
No state law requires landlords to pay interest on
security deposits. In most localities, you don’t have
to pay tenants interest on deposits, or put them in a
separate bank account—unless you require this in your
lease or rental agreement. (Korens v. R.W. Zukin Corp.,
212 Cal. App. 3d 1054, 261 Cal. Rptr. 137 (1989).) In
other words, you can simply put the money in your
pocket or bank account and use it, as long as you have
it available when the tenant moves out.
However, several cities require landlords to pay
or credit tenants with interest on security deposits. A
few cities require that the funds be kept in separate
interest-bearing accounts.
Here are a few things you should keep in mind
about local requirements for interest payments on
security deposits:
•All cities that require landlords to pay interest on
security deposits have rent control, except Santa
Cruz and Watsonville.
•All cities that require landlords to pay tenants
interest during the tenancy allow the landlord
to either pay it directly to the tenant or credit it
against the rent.
•For those cities that require landlords to put
deposits in separate, interest-bearing accounts:
■
Only one account is required for all the
landlord’s deposits. You don’t have to open
one for each tenant’s deposit.
■
All security deposits, including last month’s
rent, if collected, must be placed in the
separate account.
•Several ordinances require landlords to not only
pay interest, but to place the deposits in a bank
insured by the FSLIC (Federal Savings & Loan
Insurance Corporation) or the FDIC (Federal
Deposit Insurance Corporation). If the interest-
bearing accounts at these institutions pay less
interest than that required by the ordinance,
you do not have to abide by the ordinance—
you need only pay the interest that the bank
is paying. (Action Apartment Association v.
Santa Monica Rent Control Board, 94 Cal. App.
4th 587 (2002).) However, at least one city—
San Francisco—does not require landlords to
place deposits in an account insured by these
corporations. Because these landlords can
theoretically invest the deposits in higher-yield
ways, they must pay the rate of interest mandated
by their ordinance, even if it is higher than the
rate offered by money-market accounts that are
insured by the FDIC or the FLSIC. (Small Property
Owners of San Francisco, et al. v. City and County
of San Francisco, 141 Cal. App. 4th 1388 (2006).)
The chart below summarizes the features of all
California cities’ deposit laws. If you own property in
a rent control city (other than San Francisco) and your
property is exempt from rent control, these provisions
obviously do not apply. (See “Exceptions” for each city
in the Rent Control Chart in Appendix A.)
Some landlords have found that it is good public
relations to pay tenants interest on their deposits, even
if there is no local law requiring it. This, of course, is
up to you.
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Cities Requiring Interest or Separate Accounts for Security Deposits
City Ordinance
Interest-
Bearing Acct Payments During Tenancy Notes
Berkeley Municipal Code
§ 13.76.070
Not required. Landlord must pay interest equal to the
12-month average of six-month certificates
of deposit, as determined by the Rent Board
each November, with interest to be paid
or credited each December. (Rent Board
website shows ongoing 12-month interest-
rate average applicable in other months, for
tenant move-outs.) If interest not credited
by January 10, tenant may, after notice to the
landlord, compute the interest at 10% and
deduct this from the next rent payment.
www.ci.berkeley.ca/rent
Hayward Ordinance 83-023,
§ 13
Not required. Landlord must pay interest on deposits held
over a year, with payments made within 20
days of tenant’s move-in “anniversary date”
each year, and when deposit refunded at
end of tenancy. Rate is set annually by city.
Violation can subject
landlord to liability for
three times the amount of
unpaid interest owed.
Los Angeles Municipal Code
§ 151.06.02
Not required. Landlord must pay interest on deposits
once a year and when deposit is refunded
at end of tenancy, either directly or through
rent credit. Rate is set annually by Rent
Adjustment Commission.
San
Francisco
Administrative
Code, §§ 49.1–49.5
(Not part of city’s
rent control law.)
Not required. Landlord must pay interest on deposits held
over a year, with payments made on tenant’s
move-in “anniversary date” each year, and
when deposit refunded at end of tenancy.
Rate is set annually by Rent Board.
Ordinance does not apply
to government-subsidized
housing but may apply
in other situations, even
though property not
subject to rent control.
Santa Cruz Municipal Code
§§ 21.02.010–
21.02.100
Not required. Landlord must pay interest as set by
resolution of the city council on deposits
held over a year, with payments made on
tenant’s move-in “anniversary date” each
year, and when deposit refunded at end of
tenancy.
Santa Cruz has no rent
control law.
Santa
Monica
City Charter Article
XVIII, §1803(s)
Required.
Account must
be insured by
FSLIC or FDIC.
Landlord must pay interest produced on
deposits held for one year or more, each
year by October 1, either directly or through
rent credit.
Landlord cannot raise
deposit during tenancy,
even if rent is raised, unless
tenant agrees.
Watsonville Municipal Code
§§ 5.40.01–5.40.08
Not required. On deposits held over six months, landlord
must pay interest or credit against rent.
Payment or rent credit is due on January
1 and when deposit refunded at end of
tenancy. Rate is set annually by city.
Watsonville has no rent
control law.
West
Hollywood
Municipal Code
§ 17.32.020
Not required. Landlord must pay interest on deposits,
with payments made or credit against rent
in January or February of each year, and
when deposit refunded at end of tenancy.
Rate is set annually by city.
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Insurance as a Backup to Deposits
This isn’t a book on how to buy landlord’s insurance,
but because insurance can compensate you for some
damages caused by tenants, it is appropriate to
mention insurance here. After all, the legal limits as
to how much you can charge for deposits are so strict
(and tenants’ abilities to pay a judgment may be so
limited) that you may want to get all the additional
protection possible.
There are basically two broad types of policies that
will protect you from damage caused by your tenant:
•Property insurance that you buy, which protects
you from:
■
losses from fire and water damage, possibly
including lost rents while the property is being
rebuilt or repaired, and
■
personal liability for injury to a tenant or
someone else and illegal acts by you and your
employees.
You will need property insurance for many reasons
(discussed in Chapter 12). You may also wish to
include earthquake coverage in such a policy.
•Renters’ insurance, purchased by your tenant,
often called a “Tenant’s Package Policy,” which
covers:
■
the tenant’s liability to third parties—for
example, injuries to guests that result from the
tenant’s neglect, such as a wet and slippery
floor in the tenant’s kitchen
■
damage to the tenant’s own property caused
by fire and water damage, and
■
certain types of damage to your building
caused by the tenant’s acts.
Our lease and rental agreements (see Clause 19
in Chapter 2) recommend that the tenant purchase
renters’ insurance. Our move-in letter (Chapter 7)
highlights some of the risks tenants face unless they
purchase insurance.
One advantage of requiring your tenants to buy
renters’ insurance is that if there is a problem caused
by a tenant that is covered by the tenant’s policy, your
premium rate won’t be affected even though your
landlord’s policy also covers the damage.
How does a tenant’s policy help you if the place is
damaged? Well, if damage is caused by fire or water
(for example, the tenant leaves something burning on
the stove, causing a kitchen fire), the tenant’s policy,
not yours, will be responsible. But what if a tenant
simply moves out and destroys your property? In that
case, a tenant’s policy will not pay if it’s clear the
tenant committed the vandalism. Since it often isn’t
clear as to whether the tenant’s conduct was due to
deliberate vandalism, as opposed to carelessness and
neglect, tenant’s insurance companies often will pay at
least part of a claim disputed in this respect.
When Rental Property Is Sold
When rental property is sold, what should the landlord
do with the deposits already collected? After all, when
tenants move out, they want their deposit back. Who
owes them the money? The responsibility can be
shifted to the new owner, if the seller either:
•refunds the deposits to the tenants, which will
enable the new owner to collect them himself, or
•transfers the deposits to the new owner. (CC
§ 1950.5(h).)
Seller Refunds the Deposit to Tenants
The first option is for the seller to refund the deposits
(including last month’s rent), less proper deductions, to
each tenant, with a detailed itemization of the reason
for and amount of each deduction as you would
with any security deposit. We don’t recommend this,
because you’re refunding the deposit before the tenant
moves out—and thus before you’re aware of any
necessary deductions for cleaning and damages. This
makes little sense, and requires the new owner to ask
tenants for new deposits in the middle of their tenancy.
(You could, of course, inspect the premises before
refunding the deposit, but this would be inconvenient
for both landlord and tenant.)
Seller Transfers Deposit to New Owner
We recommend this second option, which requires the
seller to:
•Transfer the deposit to the new owner (less any
lawful deductions for back rent owed and for
any necessary cleaning and damages in excess
of ordinary wear and tear that you know about
at the time of transfer), plus any interest in cities
that require payment of interest on deposits, and
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•Give the tenant a written notice of the change of
ownership, itemizing all deductions and giving
the new owner’s name, address, and phone
number. The notice should be sent by first-
class mail (preferably certified, return-receipt
requested) or personally delivered.
The way you should transfer money to the new
owner depends on whether you have established a
separate account for tenants’ deposits. If you have a
separate account, you can simply make the change at
the bank by transferring the account to the new buyer.
If you have mixed the deposit money with your own,
be sure to include a provision in the real property
sales contract that itemizes the deposits for all the
units and says the buyer acknowledges receipt of them
(perhaps through a credit against the sale price) and
that the buyer specifically agrees to take responsibility
for the repayment of all deposits.
FORM
You’ll find a downloadable copy of the Notice
of Sale of Real Property and of Transfer of Security Deposit
Balance on the Nolo website. See Appendix B for the link to
the forms in this book.
As we stated earlier, it’s likely that you’ll have no
idea whether cleaning or damage deductions should
be made. However, this type of notice can be used to
deduct any back rent the tenant owes at the time of
transfer. (Chapter 20 provides detailed instructions on
how to itemize deductions and figure out rent due.)
If you don’t properly transfer the deposit to the
new owner and notify the tenants as required, the
new owner will still be liable (along with you) to
the tenants for any untransferred portion of the
deposit. (One exception to this rule applies if the
new owner can convince a judge that after making
reasonable inquiry when buying the property, the
buyer erroneously concluded that the deposits were in
fact transferred, or that the seller refunded them to the
tenants before selling.)
The new owner can’t increase the tenants’ deposits
to make up for your failure to transfer the money. The
new owner, if stuck with this situation, will be able to
sue you for any unaccounted-for deposits caused by
your failure to transfer and notify. (CC § 1950.5(j).) It’s
wise to make sure that the security deposit arrange-
ment between you and the buyer is written into the
sales contract. At the end of this section, we suggest
two clauses that you can use, depending on the timing
of the transfer. Use the first clause if you and the buyer
have not yet transferred the funds; use the second
clause if the transfer has already occurred or is taking
place at the same time as the property sale itself.
When You’re Purchasing
Rental Property
When buying rental property, make sure the seller
follows one of the two legal options outlined above,
and that all tenants have been notified of the transfer.
(To double-check, you might want to ask the seller to
use the transfer forms and provide you with copies of
each proposed notice.)
It’s a good idea to make sure that the security
deposit transfer is written into the sales contract. Below
are two contract provisions you can use to suit the
method you and the seller have chosen. Use the first
clause if you and the seller have not yet transferred the
funds; use the second clause if the transfer has already
occurred or is taking place at the same time as the
property sale itself.
Some other key points when you’re buying rental
property:
•Make sure you know the total dollar amount of
security deposits. For a multiunit building, it could
be tens of thousands of dollars. If it is substantial,
and the seller is not transferring security deposit
funds to you, you may want to negotiate an
appropriate reduction in the sales price.
•You may not require the tenant to pay you an
additional security deposit to replace any amount
the seller failed to transfer, except for a legitimate
deduction the seller made and of which the
tenant has been notified. For example, if the
seller deducted $125 for unpaid back rent, you
can require the tenant to pay you an additional
deposit of this amount.
•If you want to change the rental agreement or
lease, you must use a 30- or 60-day notice (for
month-to-month rental agreements, 60 days’ for
all rent increases over 10%) or wait until the end
of the lease term. (See Chapter 14 for raising
rents and changing other terms of tenancy.)
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Notice of Sale of Real Property and of Transfer of Security Deposit Balance
Civil Code Section 1950.5(h)(1)
To: ,
Name
Tenant(s) in possession of the premises at
street address), City of ,
County of , California.
e real property described above was sold on , 20 to
(name of new landlord) ,
(Street Address), whose telephone number is .
Your security deposit, less any deductions shown below, has been transferred to the new landlord, who is now solely responsible
to you for it.
Deposit Amount:
$
Deductions:
Unpaid Back Rent : $
Other Deductions: $
$
$
$
$
$
Total Deductions: $
Net Deposit Transferred to New Landlord:
$
Please contact the new landlord, whose address and phone number are listed above, if you have any ques tions.
Landlord or Manager Date
Robert Fisher
123 Main Street
El Dorado
Jake Brummer
456 Gold Street, Placerville, California
916-555-1234
500.00
for month of June 20xx 125.00
-0-
125.00
375.00
Laurel Meyer June 15, 20xx
June 1, xx
Placerville
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Sample contract provision transferring tenants’deposits
1. Where Tenants’ Deposits to Be Transferred to Buyer at Later Date
As part of the consideration for the sale of the property described herein, Seller shall transfer to Buyer all security, as
that term is defined by Section 1950.5 of the Civil Code, deposited with Seller by tenants of the premises, after making
any lawful deductions from each tenant’s deposit, in accordance with Subdivision (h) of Section 1950.5. Seller shall notify
Buyer and each tenant of the amount of deposit remaining on account for each tenant, and shall notify each tenant of
the transfer to Buyer. ereafter, Buyer shall assume liability to each tenant for the amount transferred after such lawful
deductions.
2. Where Tenants’ Deposits Already Transferred to Buyer
As part of the consideration for the sale of the property described herein, Buyer acknowledges transfer from Seller of all
security, as that term is defined by Section 1950.5 of the Civil Code, deposited with Seller by tenants of the premises, after
making any lawful deductions from each tenant’s deposit, in accordance with Subdivision (h) of Section 1950.5. Seller
shall notify Buyer and each tenant of the amount of deposit remaining on account for each tenant, and shall notify each
tenant of the transfer to Buyer. ereafter, Buyer shall assume liability to each tenant for the amount transferred after
such lawful deductions.
l
CHAPTER
6Property Managers
Hiring Your Own Manager ................................................................................................................................100
Selecting the Right Manager ........................................................................................................................100
Setting the Manager’s Duties .......................................................................................................................100
Licensing Requirements ..................................................................................................................................100
Avoiding Legal Problems ....................................................................................................................................101
Separate Employment From the Manager’s Rental Agreement ...............................................101
Meet Your Obligations as an Employer ..................................................................................................102
Management Companies ................................................................................................................................... 111
An Owner’s Liability for a Manager’s Acts ............................................................................................... 112
Notifying Tenants of the Manager ................................................................................................................113
Firing a Manager ......................................................................................................................................................114
Evicting a Manager ................................................................................................................................................. 114
Separate Management and Rental Agreements ...............................................................................115
Single Management/Rental Agreement.................................................................................................115
Eviction Lawsuits ................................................................................................................................................ 115
FORMS IN THIS CHAPTER
Chapter 6 includes instructions for and a sample of the Residential Rental
Property Management Memorandum. e Nolo website includes a downloadable copy
of this form. See Appendix B for the link to the forms in this book. Chapter 6 also includes
sample instructions you can use as a template when preparing your own instructions for new
managers, clarifying basic legal guidelines for property management.
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I
f you’ve had enough of fielding tenants’ repair
requests, collecting rent, and looking after all
the other day-to-day details of running a rental
property business, you’ve probably thought about
hiring a property manager.
You may not have a choice: State law requires that a
manager reside on the premises of any apartment com-
plex with 16 or more units. (Cal. Code of Regulations,
Title 25, § 42.) But you may want to hire a resident
manager even if you have a smaller number of units. If
you own several apartment complexes (large or small),
you may want to use a property management firm.
This chapter reviews the nuts and bolts of hiring
and working with a manager or property management
firm, including:
•how to select a manager or management
company and delegate responsibilities
•whether your manager needs to be licensed
•contracts with managers
•your legal obligations as an employer
•how to protect yourself from liability for a
manager’s illegal acts, and
•how to fire or evict a manager.
Hiring Your Own Manager
Many owners of small (less than 16-unit) apartment
complexes do much of the management work
themselves, hiring their own resident managers as
needed. When a small landlord does hire a manager,
it’s typically a tenant who lives in a multiunit building.
The tenant-manager collects rents, relays complaints,
and keeps the building and yard clean. Or, the
landlord collects the rent directly, leaving the manager
mostly in charge of low-level maintenance and overall
supervision of the tenants and premises.
The tenant-manager may get a reduced rent in
exchange for performing these duties. Or, the tenant-
manager may pay full rent and receive a separate
salary.
Selecting the Right Manager
The person you hire to manage your property should
be honest and responsible and have a good credit
history. Careful screening is crucial. Follow the system
we recommend for choosing tenants in Chapter
1. Look for a manager who communicates well—
both with you and other tenants. The manager will
receive legal documents and papers on your behalf,
so make sure you can trust that person to notify you
immediately.
If you select a manager from current tenants, pick
one who pays rent on time and who you think will
be meticulous about keeping records, particularly if
collecting rent will be part of the job.
Avoid anyone who harbors biases based on race,
national origin, religion, sex, sexual preference, or
other group characteristics. This is especially important
if the manager will be showing apartments, taking
rental applications, or selecting tenants. And you’ll
need someone with a backbone—a manager who
will be collecting overdue rents and serving three-day
notices to pay rent or quit should not be fearful of
minor confrontations with tenants.
If you want to delegate routine maintenance, make
sure the person you choose knows how to do minor
repairs, such as unclogging toilets, unsticking garbage
disposals, and replacing light switches.
Finally, you should of course refrain from wrongful
employment discrimination when hiring managers.
Given that employment discrimination is prohibited in
much the same ways as is housing discrimination, refer
to Chapter 9 on antidiscrimination laws.
Setting the Manager’s Duties
The manager’s duties will depend largely on the
number of units to be managed, your own needs, and
the manager’s abilities. Delegate more responsibilities if
you live far away from the property or don’t want to be
involved in day-to-day details such as showing vacant
units, collecting rents, and keeping the premises clean.
The Residential Rental Property Manager Memorandum
(explained below) includes a list of duties you may
want to delegate.
Licensing Requirements
Owners of rental property can perform all leasing
activities for their property without needing a real
estate broker’s license. Similarly, if you hire a manager
who lives on the property, that person need not be
licensed. (B&P §§ 10131, 10131.01.) However, your
tenant-manager can manage only the property the
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101
manager lives on. If you want this person’s services at
your complex across town, the manager will need to
take and pass the licensing exam administered by the
California Department of Real Estate (or be supervised
by a broker, as explained below).
The rules are somewhat tricky for managers who
do not live on the property. For example, suppose
you want to pay a resident manager to also manage
your second property, or you want to hire your retired
brother-in-law, who lives in his own home, to manage
your apartment complex. Unless each obtains a real
estate license, they cannot take the job unless they will
be supervised by a licensed broker or real estate sales
person. Even then, they will be able to assume only
the following duties, and only at a single location:
•show rental units to prospective tenants
•provide preprinted rental applications and
respond to applicants’ inquiries about the
application
•accept deposits, fees for credit checks and other
administrative duties, security deposits, and rent
•provide information about rental rates and other
terms and conditions of the rental, as set out in a
schedule provided by the owner, and
•accept signed leases and rental agreements.
As you can see, a nonlicensed, nonresident manager
is limited to performing rather routine tasks that don’t
call for initiative or decision making. For instance, this
manager would not be qualified to negotiate a lease,
deal with late rents or other violations of the rental
agreement or lease, or appear in court on your behalf.
The rules boil down to this: Unless you manage your
property yourself, or hire someone who will also live
on each property, you’ll have to deal with a licensed
broker. You can hire one to manage the whole show
or, if you want to use a nonlicensed manager at each
property, you can look for a broker to supervise each
nonlicensed manager. You may have a hard time finding
a broker willing to take on supervisory duties—most
brokers with property management experience will
prefer to do the job themselves.
Avoiding Legal Problems
To avoid legal trouble down the road, follow the
guidelines in this section when you hire a resident
manager.
Most Tenant-Managers Are Employees,
Not Independent Contractors
If you hire a tenant-manager, that person will usually
be considered an employee by the IRS and other
government agencies, even if you call the person an
independent contractor. Employees are guaranteed a
number of workplace rights that are not guaranteed
to people who work as independent contractors. To
be considered an independent contractor, a person
must offer services to the public at large and work
under an arrangement in which the worker controls
both the outcome of the project and the means and
method of accomplishing it. Most tenant-managers
are legally considered to be employees because the
property owner who hires them sets the hours and
responsibilities and determines the particulars of
thejob.
Separate Employment From the
Manager’s Rental Agreement
When you decide to hire a tenant as a manager, you
and the manager should sign two separate documents:
•a memorandum explaining the job and that the
job can be terminated at any time for any reason
by either party, and
•a month-to-month rental agreement that can be
terminated by either party on 30 days’ written
notice (60 days’ if the tenant occupies the
premises for a year or more).
A single agreement covering employment and
the tenancy is appropriate when you have a special
manager’s unit set up as both an office and residence.
(See “Evicting a Manager,” below.)
If you have separate employment and rental
agreements with a tenant-manager, the manager will
pay the full rent and receive a separate salary. And if
you fire a tenant-manager, there will be no question
that your ex-manager is still obligated to pay the full
rent, as has been required all along. Because your
obligations as an employer are the same whether
you compensate the manager with reduced rent or
a paycheck (you must still pay Social Security and
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
payroll taxes, for example), the paperwork is no more
difficult than using the rent-reduction method.
exAmple: Louise uses two agreements with her
new tenant-manager Sydney: a month-to-month
rental agreement under which Sydney pays $800
rent each month, and a management agreement
under which Louise pays Sydney $200 each week
and which can be terminated without reason at
any time by either party.
On January 1, Sydney pays his $800 rent to
Louise. On January 7, Louise pays Sydney his
weekly $200 and gives him a written notice
saying his services as a manager are no longer
required, but that he may stay on as a tenant.
Louise no longer pays Sydney his weekly $200,
and Sydney knows that in February he’ll have to
pay the regular rent of $800.
Why Not Use an Oral Agreement?
Landlords and resident managers often agree orally on
the manager’s responsibilities and compensation, never
signing a written agreement.
Even though oral agreements are usually legal and
binding, they are not advisable. Memories fade, and
the parties may have different recollections of what
they agreed to. If a dispute arises between you and
the manager, the exact terms of an oral agreement are
difficult or impossible to prove if you end up arguing
about them in court. It is a far better business practice to
put your understanding in writing.
Giving a resident manager reduced rent in exchange
for management services, on the other hand, isn’t a
good idea. If the manager doesn’t properly perform his
duties and you terminate the employment, you may
run into problems when you insist that the ex-manager
go back to paying the full rent.
If the ex-manager refuses to pay the full rent, your
only alternative is to initiate an eviction lawsuit. The
lawsuit is almost sure to be complicated by the fact
that the amount of rent due depends on whether the
manager’s employment was properly terminated and
whether he owes any extra rent as a result of not
performing his duties.
exAmple: Boris and Thomas sign an agreement
under which Thomas collects rents and handles
routine repairs in exchange for $200 off the
monthly rent of $1,000. When Thomas turns out
to be an incompetent repairperson, Boris fires
him as of the end of the month, and the next
month demands the full $1,000 rent (not the $900
Thomas has been paying). Thomas refuses to pay
more than $900, claiming he was fired unjustly.
Although Boris is willing to keep Thomas as a
regular tenant, he wants him to pay the rent.
When Thomas won’t pay it all, Boris serves him
with a three-day notice demanding the $200.
Thomas still refuses to pay, so Boris files an
eviction lawsuit.
Boris could have avoided all this by having
a separate employment agreement with Thomas
covering management responsibilities (collecting
rent and handling routine repairs), compensation
($200 per month), and termination policy (termin-
a tion of management duties at any time with or
without cause).
Below is an example of a sound written agreement
that spells out the manager’s responsibilities, hourly
wage or salary, hours, and payment schedule.
FORM
You’ll find a downloadable copy of the
Residential Rental Property Manager Memorandum on the
Nolo website. See Appendix B for the link to the forms in this
book.
To protect yourself from liability for your manager’s
illegal activities in carrying out his responsibilities, also
prepare a more detailed set of instructions clarifying
duties and basic legal guidelines. See the sample
Instructions to Manager, below.
Meet Your Obligations as an Employer
Whether you compensate a tenant-manager with
reduced rent or a regular salary, you have specific legal
obligations as an employer. You are also responsible
for a certain amount of paperwork and record keeping.
If you don’t pay Social Security and meet your other
legal obligations as an employer, you may face
substantial financial penalties.
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103
Residential Rental Property Manager Memorandum
1. Parties
is Agreement is between ,
Landlord of residential real property at
, and
,
Manager of the property. Manager will be renting unit of the property under a separate written
rental agreement that is in no way contingent upon or related to this Agreement.
2. Beginning Date
Manager will begin work on .
3. Responsibilities
Manager’s duties are set forth below:
Renting Units
answer phone inquiries about vacancies
show vacant units
accept rental applications
select tenants
accept initial rents and deposits
other (specify)
Vacant Apartments
inspect unit when tenant moves in
inspect unit when tenant moves out
clean unit after tenant moves out, including:
fl oors, carpets, and rugs
walls, baseboards, ceilings, lights, and built-in shelves
kitchen cabinets, countertops, sinks, stove, oven, and refrigerator
bathtubs, showers, toilets, and plumbing fi xtures
doors, windows, window coverings, and miniblinds
other (specify)
Jacqueline La Mancusa
1704 Donner Ave., Bakersfield, California
Bradley Marsh
April 10, 20xx
X
X
X
X
X
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Rent Collection
collect rents when due
sign rent receipts
maintain rent collection records
collect late rents and charges
inform Landlord of late rents
prepare late rent notices
serve late rent notices on tenants
serve rent increase and tenancy termination notices
deposit rent collections in bank
other (specify)
Maintenance
vacuum
and clean hallways and entryways
replace lightbulbs in common areas
drain water heaters
clean stairs, decks, patios, facade, and sidewalks
clean garage oils on pavement
mow lawns
rake leaves
trim bushes
clean up garbage and debris on grounds
other (specify)
Repairs
accept tenant complaints and repair requests
inform Landlord of maintenance and repair needs
maintain written log of tenant complaints
handle routine maintenance and repairs, including:
plumbing stoppages
garbage disposal stoppages/repairs
faucet leaks/washer replacement
toilet tank repairs
toilet seat replacement
stove burner repair/replacement
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
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105
stove hinges/knobs replacement
dishwasher repair
light switch and outlet repair/replacement
heater thermostat repair
window repair/replacement
painting (interior)
painting (exterior)
replacement of keys
other (specify)
Other Responsibilities
4. Hours and Schedule
Manager will be available to tenants during the following days and times:
. If the hours required to carry out any duties may reasonably be expected to exceed
hours in any week, Manager shall notify Landlord and obtain Landlord’s consent before working such extra
hours, except in the event of an emergency. Extra hours worked due to an emergency must be reported to Landlord within
24 hours.
5. Payment Terms
a. Manager will be paid:
$ per hour
$ per week
$ per month
Other:
b. Manager will be paid on the specifi ed intervals and dates:
Once a week on every
Twice a month on
Once a month on
Other:
6. Ending the Manager’s Employment
Landlord may terminate Manager’s employment at any time, for any reason that is not unlawful, with or without notice.
Manager may quit at any time, for any reason, with or without notice.
X
X
X
X
Monday through Friday; 3 p.m. - 6 p.m.
12
X 600
X
the first of the month
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
7. Additional Agreements and Amendments
a. Landlord and Manager additionally agree that:
.
b. All agreements between Landlord and Manager relating to the work specifi ed in this Agreement are incorporated in this
Agreement. Any modifi cation to the Agreement must be in writing and signed by both parties.
8. Place of Execution
Signed at ,
City State
Landlord Date
Manager
Date
Fresno California
Jacun L Mncs April 3, 20xx
Bradley Marsh April 3, 20xx
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107
Especially if you’re figuring out taxes for your
employee (rather than having the work done by an
accountant or tax preparer), you must keep good
records. IRS Publication 334 (Tax Guide for Small
Businesses) provides details about the records you must
keep. Contact the IRS at 800-TAX-FORM to obtain a free
copy of the publication. Or go online to www.irs.gov/
Forms-&-Pubs and search for Form 334.
Help With Paperwork
If you hate paperwork, your accountant can probably
handle it for you. Or, payroll services can handle virtually
all the details of employing a manager—for example,
withholding Social Security and unemployment taxes—
for a relatively small fee. To get cost quotes, check
online (or in the yellow pages) under Payroll Service or
Bookkeeping Service.
Income taxes. The IRS considers the manager’s
compensation—whether in the form of payments or
reduced rent—as taxable income to the manager. For
that reason, your manager must fill out a federal W-4
form (Employee Withholding Allowance Certificate)
when hired. You must deduct state and federal taxes
from each paycheck, turn over withheld funds each
quarter to the IRS and the California Franchise Tax
Board, and give the manager a W-2 form (Wage and
Tax Statement) at the end of the year.
For details on reporting and deduction requirements,
contact the IRS (800-TAX-FORM), or browse their
website at www.irs.gov. You can reach the California
Franchise Tax Board at 800-852-5711, or look for
information on their website at www.ftb.ca.gov.
Employer Identification Number. As an employer, you
need a federal identification number that distinguishes
you from other employers. If you are a sole proprietor,
you can use your Social Security number. Otherwise,
you can get an Employer Identification Number by
completing Form SS-4 (Application for Employer
Identification Number). Form SS-4 is available for
free by calling the IRS at 800-TAX-FORM, or you can
download the form from the IRS website at www.irs.
gov/Forms-&-Pubs (type SS-4 into the search box).
You can get an EIN online immediately at www.irs.
gov/Businesses/Small-Businesses-&-Self-Employed/
Apply-for-an-Employer-Identification-Number-(EIN)-
Online.
Social Security and Medicare Taxes (“FICA”). Every
employer must pay to the IRS a “payroll tax,” currently
equal to 7.65% of the employee’s gross paycheck
amount (before deductions) compensation. You must
also deduct an additional 7.65% from the employee’s
wages and turn it over (with the payroll tax) to the IRS
quarterly. These FICA (Federal Insurance Contributions
Act) taxes go toward the employee’s future Social
Security and Medicare benefits.
If you compensate your manager with reduced rent,
in most cases you must still pay the FICA payroll tax.
For example, an apartment owner who compensates
a manager with a rent-free $500 per month apartment
must pay 7.65% of $500, or $38.25, in payroll taxes
each month. The manager is responsible for paying
another 7.65% ($38.25) to the IRS.
You do not have to pay FICA taxes on the value of
the reduced rent if the following conditions are met:
•the manager’s unit is on your rental premises
•you provide the unit for your convenience or to
comply with state law, as will be the case if your
property has 16 or more units
•your manager actually works as a manager, and
•your manager has accepted the unit as a condition
of employment—in other words, you’ve said that
the manager must live in the unit in order to be
your resident manager.
For more information, see IRS Publication 15-B,
Employer’s Tax Guide to Fringe Benefits.
Contact the IRS at 800-TAX-FORM or their website
noted above for deduction and reporting requirements
and forms; payroll taxes have been in flux, so be sure
to check with the IRS for the current rate.
Minimum wage and overtime. No matter how you pay
your manager—by the hour or with a regular salary—
you should monitor the number of hours worked to
make sure you’re complying with state and federal
minimum wage laws. Overtime is calculated by the
day, not by the week. If your manager works more
than eight hours in any one day, that extra time is
overtime, which you must compensate at one-and-one-
half the rate of pay (on the other hand, if the manager
works a few hours on a nonwork day, those hours
are compensated at the regular rate of pay). You must
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
pay your manager only for the actual hours worked,
even if you require the manager to be “on call” on the
property. (Isner v. Falkenberg, 160 Cal. App. 4th 1393
(2008).)
If the total number of hours a manager works,
multiplied by the minimum hourly wage, exceeds
the rent reduction or other fixed rate of pay, you are
in violation of minimum wage laws. For example, a
manager who works four 20-hour weeks during the
month must receive at least $8 per hour as of January
1, 2008. A landlord who pays less—even if it’s in
the form of a rent reduction—will run afoul of the
minimum wage laws. California minimum wage laws
also require employers to pay time-and-a-half if an
employee works more than eight hours a day.
CAUTION
Check to see if your city has its own minimum
wage or “living wage.” San Francisco, for example, provides for
a higher minimum than the state figure. Some local minimum
wages are restricted to certain types of businesses, or to
employers with more than a threshold number of employees.
If your business fits within the law, you must comply and
use your local minimum wage when figuring out whether
the number of hours your manager works (times the local
minimum wage amount) exceeds the rent reduction.
Rent reductions. If you compensate your manager
by a rent reduction, you can count only up to two-
thirds of the “fair market rental value” of the apartment
for the purpose of complying with minimum wage
laws, and in no event more than $381.20 for a single
employee or $563.90 for a couple. (Labor Code
§ 1182.8 and Industrial Welfare Commission Minimum
Wage Order at Calif. Code of Regulations § 11000.)
For example, if the rent is normally $500, and you
charge the tenant-manager only $100 per month, only
$333 of the $400 rent reduction may be counted for
minimum wage purposes. This is another reason why
compensation by rent reduction is not a good idea.
To make sure you comply with minimum wage
laws, the agreement with your manager should limit
the total number of hours worked each month, or
provide for additional payment if the manager works
more hours than anticipated.
For information on minimum wage laws, con tact
a local office of the State Department of Industrial
Relations, Department of the State Labor Commissioner.
You’ll find this information and more at the Depart-
ment’s website at www.dir.ca.gov.
Disability and workers’ compensation insurance. As an
employer, you must provide workers’ compensation
insurance and disability insurance, either through
the state or a private party. This coverage provides
replacement income and pays medical expenses for
employees who are injured or become ill as a result of
their job. It’s a no-fault system—an injured employee
is entitled to receive benefits whether or not you
provided a safe workplace, and whether or not the
manager’s own carelessness contributed to the injury.
(You are, of course, required by federal and state laws
to provide a reasonably safe workplace.) You, too,
receive some protection, because the manager, in most
cases, cannot sue you for damages over the injury.
If you don’t provide workers’ comp and disability
and a manager is injured on the job—for example, by
falling down the stairs while performing maintenance,
or even by a violent tenant—you could face serious
legal problems. You could be sued by the State
Department of Industrial Relations and possibly by the
injured manager. If you lose such a lawsuit, the court
judgment will not be covered by any other kind of
insurance you might have.
Contact the local office of the State Employment
Development for information about disability
insurance, or visit their website at www.edd.ca.gov,
where you’ll find lots of information. Call your
insurance agent regarding workers’ compensation
insurance.
Unemployment taxes. A manager who is laid off,
quits for good reason, or is fired for anything less
than gross incompetence or dishonesty is entitled to
unemployment benefits. These benefits are financed by
state payroll taxes paid by employers. The California
Employment Development Department (EDD) may
impose tax and penalty assessments (without first filing
a lawsuit) against employers who don’t pay required
payroll taxes. Contact the local office of the EDD for
the appropriate instructions and forms.
Annual W-2 form. You must provide employees with
a W-2 form (Wage and Tax Statement) for the previous
year’s earnings by January 31. The W-2 form lists the
employee’s gross wages and provides a breakdown of
any taxes that you withheld.
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109
Sample Instructions to Manager
November 6, 20xx
Dear New Manager:
Welcome to your new position as resident manager. In performing your duties under our management
agreement, please keep the following in mind:
1. Discrimination in rental housing on the basis of race, religion, sex, sexual preference, marital or familial
status, age, national or ethnic origin, source of income, and any other unreasonable or arbitrary basis is
illegal—whether you are accepting rental applications for vacant apartments or dealing with current
residents. Your duties, in the event of a vacancy, are to advertise and accept rental applications in a
nondiscriminatory manner. is includes allowing all individuals to f ill out applications and off ering the
unit on the same terms to all applicants. After you have collected all applications, please notify me at the
phone number listed below. I will arrange to sort through the applications and make the fi nal decision as
to who occupies units.
2. Do not issue any rent increase or termination notices without my prior approval, unless a tenant’s rent
is more than fi ve days past due and he or she is not withholding rent because of dissatisfaction with the
apartment—for example, the tenant has made no complaints in the previous six months. In that case, you
may, without prior approval from me, serve the tenant a ree-Day Notice to Pay Rent or Quit, using the
blank forms I have given you. However, if you have any reason to think that the tenant may assert that the
failure to pay rent is based on any defects in the rental unit, please contact me immediately. Do this even
if you are convinced that the tenant’s complaints are unfounded.
3. Treat all tenants who complain about defects, even trivial defects or ones you believe to be nonexistent,
with respect. Enter all tenant complaints into the log book I have supplied to you. Respond to tenant
complaints about the building or apartment units immediately in emergencies, and within 24 hours
in nonemergencies. If you cannot correct or arrange to correct any problem or defect yourself, please
telephone me immediately.
4. Except in serious life- or property-threatening emergencies, never enter (or allow anyone else to enter)
a tenant’s apartment without consent or, in his or her absence, unless you have given the proper notice.
Proper notice is presumed to be 24 hours’ notice, preferably in writing (48 hours’ notice is required prior
to conducting the initial move-out inspection requested by the tenant). You may enter in the tenant’s
absence during ordinary business hours to do repairs or maintenance work, provided you have given the
tenant a 24-hour notice in writing and delivered personally, but posted on the door if necessary, and the
tenant hasn’t objected. Please call me if you have any problems gaining access to a tenant’s apartment for
maintenance or repairs.
5. When a tenant moves in, and again when he or she moves out, inspect the unit. Within a few days (at
most) of the tenant giving or receiving a 30-day (or 60-day) notice of termination of tenancy, fi ll out and
provide the tenant with a copy of the Move-Out Letter, which explains the procedure for the return
of security deposits. Conduct a move-out inspection with the tenant during the last two weeks of the
tenancy, if the tenant requests it (try to arrange for one even if no request is made). Use the Landlord/
Tenant Checklist to record damage and excessive wear and tear. After the tenant has moved, inspect again
using the Landlord/Tenant Checklist to note unremedied (or new) damage or uncleanliness. Take a series
of Polaroid or digital camera pictures at both inspections.
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6. If you think a tenant has moved out and abandoned the apartment, do not enter it. Telephone me fi rst.
7. Once a tenant has vacated an apartment and given you the key, itemize all cleaning costs and costs necessary
to repair damages in excess of ordinary wear and tear. Give me a copy of this itemization, along with a notation
of the amount of any back rent, the before and after Landlord/Tenant Checklist forms, and the departing
tenant’s forwarding address. Please make sure I see this material within a week after the tenant moves out,
preferably sooner. I will mail the itemization and any remaining security deposit balance to the tenant
within the required three-week period.
8. If you have any other problems or questions, please do not hesitate to call me. Leave a message on my
answering machine if I am not at home.
Sincerely,
Try Hrnd
Owner
111 Maiden Lane, Fresno, CA
Address
559-555-1234
Phone
I have received a copy of this memorandum and have read and understood it.
Barbara Louis Nov. 7, 20xx
Manager Date
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New Hire Reporting Form. Within a short time after
you hire someone—20 days or less—you must file
a New Hire Reporting Form with a designated state
agency. The information on the form becomes part of
the National Directory of New Hires, used primarily
to locate parents who have not complied with child
support orders. Government agencies also use
the data to prevent improper payment of workers’
compensation and unemployment benefits or public
assistance benefits. The form is available at the EDD’s
website, www.edd.ca.gov.
Immigration Law
e Immigration and Nationality Act (INA), Title 8 of
the U.S. Code, is a federal law that restricts the flow of
foreign workers into American workplaces. e INA
covers almost all employees hired since November 6,
1986.
Under the INA, it is illegal for an employer to:
• hire a worker whom the employer knows has not
been granted permission by the U.S. Citizenship
and Immigration Services (or USCIS, formerly the
INS) to be employed in the United States (through
a green card, visa, or Employment Authorization
Document)
• hire any worker who has not completed Form I-9,
the Employment Eligibility Verification form, or
• continue to employ an unauthorized worker—
often called an illegal or undocumented worker—
hired after November 6, 1986.
If your manager will also be your tenant, you must
handle the issue of his right to work carefully. Under
state law (CC § 1940.3), a landlord may not ask actual or
prospective tenants about their immigration status. To
stay within state and federal law, have a tenant whom
you’ve just decided to hire fill out and return the IRS
Form I-9.
For more information, including forms, contact the
U.S. Citizenship and Immigration Services at 800-375-
5283 or go to the USCIS website at www.uscis.gov.
Management Companies
Property management companies generally take
care of renting units, collecting rent, taking tenant
complaints, arranging repairs and maintenance, and
evicting troublesome tenants. Property management
companies are useful for owners of large apartment
complexes and absentee owners too far away from the
property to be directly involved in everyday details.
A management company acts as an independent
contractor, not an employee. Typically, you sign a
contract spelling out the management company’s duties
and fees. Most companies charge a fixed percentage—
typically 5% to 10%—of the total rent collected. This
gives the company a good incentive to keep the
building filled with rent-paying tenants. (Think twice
about companies that charge a fixed percentage of the
rental value of your property, regardless of whether
you have a lot of vacancies or turnover.)
Questions to Ask When You Hire
a Management Company
• Who are its clients: owners of single-family houses,
small apartments, or large apartment complexes? Look
for a company with experience handling property like
yours. Also ask for client references, so you can see if
they are satisfied with the management company.
• What services will the company provide?
• What are the costs?
• Will the management company take tenant calls 24
hours a day, seven days a week?
• Is the company located fairly close to your property?
• Are employees trained in landlord/tenant law? Can
they consult an attorney qualified in landlord/tenant
matters?
• If your property is under rent control, are company
personnel familiar with the rent control law?
• Can you terminate the management agreement
without cause on reasonable notice?
Hiring a management company has a number
of advantages. Compared to a tenant-manager,
management company personnel generally develop
a more professional, less emotional relationship with
tenants, and are also usually better informed about
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the law. Another advantage is that you eliminate much
of the paperwork associated with being an employer.
Because you contract with a property management
firm as an independent contractor, and it hires the
people who actually do the work, you don’t have
to worry about Social Security, unemployment, or
workers’ compensation.
The primary disadvantage of hiring a management
company is the expense. For example, 10% of the
$1,000 rent collected each month from tenants in a
20-unit complex amounts to $2,000 a month, or
$24,000 per year.
If you hire a management company to manage your
property, you still must have an onsite manager if your
building has more than 16 units. If your rental property
has only a few units, or you own a number of small
buildings spread over a good-sized geographical area,
the management company probably won’t hire resident
managers, but will simply respond to tenant requests
and complaints from its central office.
Management companies have their own contracts,
which you should read thoroughly and understand
before signing. Be sure you understand how the
company is paid and its specific responsibilities.
An Owner’s Liability for
a Manager’s Acts
A landlord is legally responsible for the acts of a
manager or management company, who is considered
the landlord’s “agent.” For example, you could be sued
and found liable if your manager:
•refuses to rent to a qualified tenant who is a
member of a minority group or has children, or
otherwise violates antidiscrimination laws (see
Chapter 9)
•makes illegal deductions from the security
deposit of a tenant who has moved out, or does
not return the departing tenant’s deposit within
the three weeks allowed by law (see Chapters 5
and 20)
•ignores a dangerous condition, such as
substandard wiring that results in an electrical
fire causing injury or damage to a tenant, or a
security problem that results in a criminal assault
on a tenant (see Chapter 12)
•steals from or assaults a tenant (see Chapter 12),
or
•invades a tenant’s privacy by flagrant and
damaging gossip, trespass, or harassment (see
Chapter 13).
In short, a landlord who knows the law but has
a manager (or management company) who doesn’t,
could wind up in a lawsuit brought by prospective
or former tenants. Some insurance policies do not
cover any loss or defense costs when caused by a
manager’s intentional misconduct, such as purposeful
discrimination or retaliation against a tenant.
Here’s how to minimize your liability for your
manager’s mistakes or illegal acts:
•Thoroughly check the background of all
prospective managers. (See Chapter 12 for
advice.)
•Limit the authority you delegate to your manager.
If you specify the manager’s responsibilities in
writing, you reduce (but do not eliminate) your
liability for manager misconduct that exceeds
the authority you delegated. For example, a
landlord who instructs a manager in writing only
to accept rental applications, with the landlord
actually selecting the tenant, is less likely to be
held liable for a manager who, without authority,
rents an apartment in a discriminatory fashion.
•Make sure your manager is familiar with the
basics of landlord/tenant law. If you delegate
more duties to your manager, such as authority to
select tenants or serve three-day, 30-day, 60-day,
or 90-day notices, provide some legal guidelines.
You might also give your manager this book to
read and refer to. Written guidelines not only
help the manager avoid legal trouble, but also
demonstrate that you acted in good faith, which
could be very useful should a tenant sue you
based on your manager’s misconduct. Your
guidelines should dovetail with the manager’s
responsibilities laid out in the Residential Rental
Property Manager Memorandum.
Above is a sample set of instructions for a manager
with fairly broad authority. Obviously, if your manager
is given more limited authority, your instructions
should also be more limited.
Antidiscrimination training. You may wish to have
your manager attend antidiscrimination training
ChApter 6|PROPERTY MANAGERS
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113
sessions given by local fair housing groups or landlord
associations. This will help the manager avoid illegal
discrimination and shows that you are making efforts
to comply with antidiscrimination laws.
•Make sure your liability insurance covers illegal
acts of your employees. No matter how thorough
your precautions, you may still be liable for your
manager’s illegal acts—even if your manager
commits an illegal act in direct violation of your
instructions.
•Keep an eye on your manager and listen to your
tenants’ concerns and complaints. If you suspect
problems—for example, poor maintenance of
the building or sexual harassment—do your own
investigating. Try to resolve problems and get rid
of a bad manager before problems accelerate and
you end up with an expensive tenants’ lawsuit.
The High Cost of a Bad Manager:
Sexual Harassment in Housing
If tenants complain about illegal acts by a manager,
pay attention. e owners of a Fairfield, California,
apartment complex learned this lesson the hard way—
by paying more than a million dollars to settle a tenants’
lawsuit.
e tenants, mostly single mothers, were tormented
by an apartment manager who spied on them, opened
their mail, and sexually harassed them. ey were afraid
to complain, for fear of eviction. When the tenants did
complain to the building’s owners, the owners refused
to take any action—and the manager stepped up his
harassment in retaliation.
Finally, tenants banded together and sued, and the
details of the manager’s outrageous and illegal conduct
were exposed. e owners settled the case before trial
for $1.6 million.
Notifying Tenants of the Manager
You are legally required to give tenants the manager’s
name, address, and phone number, since the manager
is someone who is authorized to accept rent from
tenants and legal documents for you. (CC §§ 1961–
1962.7.) If rent is accepted in person, you must also
state the days and hours when the manager will accept
it. This information must be in writing, whether the
tenant has a written lease or rental agreement or an
oral rental agreement. It is included in our lease and
rental agreements in Clause 23.
If you hire a manager after the lease is signed,
you’ll need to notify your tenants that the manager is
authorized to receive legal papers from tenants, such
as termination of tenancy notices or court documents
in an eviction lawsuit. Two sample disclosure notices
are shown below.
Notice: Address of Manager of Premises
Muhammad Azziz, 1234 Market Street, Apartment
1, San Jose, CA, phone 408-555-6789, is authorized to
accept rent and manage the residential premises at 1234
Market Street, San Jose, CA. Rent is accepted at this
address Monday through Friday, 9 a.m. to 5 p.m. If you
have any complaints about the condition of your unit
or common areas, please notify Mr. Azziz immediately.
He is authorized to act for and on behalf of the owner of
the premises for the purpose of receiving all notices and
demands from you, including legal papers (process).
Notice: Address of Owner of Premises
Rebecca Epstein, 12345 Embarcadero Road, Palo Alto, CA,
phone 650-555-0123, is the owner of the premises at 1234
Market St., San Jose, CA. If you have any complaints about
the condition of the unit or common areas, please notify
Ms. Epstein immediately.
If you don’t provide your address and phone
number (or someone else’s who’s authorized to receive
legal documents on your behalf), your manager will
be the only person deemed to be your agent for the
purpose of service of legal notices—whether you
like it or not. Also, the tenant will be legally able to
serve legal notices by certified mail (no return receipt
required) rather than by personally delivering them
to the manager. This means that a current or former
tenant can serve lawsuit papers on you simply by
mailing them, by certified mail, to your manager.
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In addition, if you don’t give tenants the name,
address, and phone number of the person who is
authorized to accept rent and legal documents for
you, you will be unable to evict any tenant based on
nonpayment of any rents that accrued while you were
not in compliance with this notice requirement. (CC §
1962(c).)
exAmple: Three of your tenants have written
rental agreements that don’t give your name,
phone number, and address or name anyone to
receive legal notices on your behalf. Three other
tenants have oral agreements with your manager,
Mike, who refused to disclose your name and
address, which is not posted on the premises.
The tenants sue you over housing code
violations, including defective heaters and a
leaking roof that Mike never told you about.
They serve the lawsuit papers (summons and
complaint) on Mike, who is your agent for service
of process because you didn’t comply with the
disclosure law. Mike throws the papers away
without telling you about them, and neither you
nor he appears in court. All the tenants win by
default because you were properly served—
through your agent—and didn’t appear in court.
Firing a Manager
Unless you have made a commitment (oral or written
contract) to employ a manager for a specific period of
time, you have the right to terminate the employment
at any time. But you cannot do it for an illegal reason,
such as:
•race, age, ethnic, gender, or other illegal
discrimination, or
•retaliation against the manager for calling your
illegal acts to the attention of authorities.
exAmple: You order your manager to dump 20
gallons of fuel oil at the back of your property.
Instead, the manager complains to a local
environmental regulatory agency, which fines
you. If you now fire the manager, you will be
vulnerable to a lawsuit for illegal termination.
To head off the possibility of a wrongful termination
lawsuit, be prepared to show a good reason for the
firing. It’s almost essential to back up a firing with
written records documenting your reasons. Reasons
that may support a firing include:
•performing poorly on the job—for example, not
depositing rent checks promptly, or continually
failing to respond to tenant complaints
•refusing to follow instructions—for example,
allowing tenants to pay rent late, despite your
instructions to the contrary
•possessing a weapon at work
•being dishonest or stealing money or property
from you or your tenants
•endangering the health or safety of tenants
•engaging in criminal activity, such as drug
dealing
•arguing or fighting with tenants
•behaving violently at work, or
•unlawfully discriminating or harassing
prospective or current tenants.
Ideally, a firing shouldn’t come suddenly or as a
surprise. Give your manager ongoing feedback about
job performance and impose progressive discipline,
such as an oral or written warning, before termination.
Do a six-month performance review (and more often,
if necessary), and keep copies. Solicit comments
from tenants a few times a year and if comments are
negative, keep copies.
RESOURCE
For more information on how to handle
problem employees—including how to avoid hiring them in
the first place—see Nolo’s Dealing With Problem Employees, by
Amy DelPo and Lisa Guerin (Nolo).
Evicting a Manager
If you fire a manager, you may also want that person
to move out of your property, particularly if the
manager occupies a special manager’s unit or the firing
has generated (or resulted from) ill will. How easy it
will be to get the fired manager out depends primarily
on whether you have separate management and rental
agreements.
ChApter 6|PROPERTY MANAGERS
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115
Separate Management and
Rental Agreements
If you and the tenant-manager signed separate manage-
ment and rental agreements (the manager doesn’t have
a lease), firing the manager will not affect the tenancy.
The ex-manager will have to keep paying rent but will
no longer work as manager.
To evict the former manager, you will have to give
a normal 30-day or 60-day written termination notice,
subject to any just-cause eviction requirements in rent
control cities. (See Chapter 18.) All rent control cities
do allow eviction of fired managers, though some
cities impose restrictions on it. If the tenant has a
separate fixed-term lease, you cannot terminate the
tenancy until the lease expires.
Single Management/Rental Agreement
What happens to the tenancy when you fire a manager
depends on the kind of agreement you and the
manager had.
If the Manager Occupied a
Special Manager’s Unit
If you fire a manager who occupies a specially con-
structed manager’s unit (such as one with a reception
area or built-in desk) that must be used by the manager,
your ability to evict the ex-manager depends on:
•the terms of the management/rental agreement,
and
•local rent control provisions.
If the agreement says nothing about the tenancy
continuing if the manager quits or is fired, termination
of the employment also terminates the tenancy.
That means you can evict the ex-manager without a
separate tenancy-termination notice. In that case, no
written notice is required to terminate the tenancy,
unless one is required under the agreement. (See CCP
§ 1161(1).)
The just-cause eviction provisions of any applicable
rent control law, however, may still require a separate
notice or otherwise restrict your ability to evict a fired
manager.
If the Manager Didn’t Occupy a Manager’s Unit
If the manager was simply compensated by a rent
reduction, and there is no separate employment
agreement, there may be confusion as to whether the
rent can be “increased” after the manager is fired.
(This is one reason we recommend against this kind of
arrangement.)
If an ex-manager refuses to pay the full rent, you
will have to serve a Three-Day Notice to Pay Rent or
Quit, demanding the unpaid rent. (See Chapter 16.) If
that doesn’t get results, you’ll have to follow up with
an eviction (unlawful detainer) lawsuit.
Eviction Lawsuits
If you want to evict a former manager, we recommend
that the eviction lawsuit be handled by an attorney
who specializes in landlord/tenant law.
Eviction lawsuits against former managers can
be extremely complicated. This is especially true if
the management agreement requires good cause for
termination of employment or a certain period of
notice. (Our form agreement requires neither.) Such
lawsuits can also be complicated where a single
combined management/rental agreement is used or if
local rent control laws impose special requirements.
Handling Requests for References
If another landlord asks you for a reference for someone
you employed but later fired as manager, just follow this
bit of folk wisdom: If you can’t say something good, don’t
say anything at all. In light of the potential for being
named in a slander suit, it’s best to simply decline to give
any information about a former manager (or tenant)
rather than say anything negative. Besides, if you politely
say, “I would rather not discuss Mr. Jones,” the caller will
get the idea.
l
CHAPTER
7Getting the Tenant Moved In
Inspect and Photograph the Unit ................................................................................................................. 118
Filling Out the Landlord/Tenant Checklist ...........................................................................................118
Photograph the Rental Unit ......................................................................................................................... 125
Send New Tenants a Move-In Letter ...........................................................................................................125
First Month’s Rent and Security Deposit Checks ................................................................................129
FORMS IN THIS CHAPTER
Chapter 7 includes instructions for and samples of the Landlord/Tenant
Checklist and Key and Pass Receipt and Agreement. e Nolo website includes
downloadable copies of these forms. See Appendix B for the link to the forms in this book.
Chapter 7 also includes a sample move-in letter you can use as a template in preparing your
own move-in letter for new tenants, clarifying day-to-day issues, such as how to report repair
problems.
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L
egal disputes between landlords and tenants
have gained a reputation for being almost
as strained and emotional as divorce court
battles. Many disputes are unnecessary and could
be avoided if—right from the very beginning—both
landlord and tenant understood their legal rights
and responsibilities. A clearly written lease or rental
agreement, signed by all adult occupants, is the key to
starting a tenancy. (See Chapter 2.) But there’s more to
getting new tenants moved in. You should also:
•Inspect the property, fill out a Landlord/Tenant
Checklist, and take pictures of the unit.
•Prepare a move-in letter highlighting important
terms of the tenancy.
•Collect rent and security deposit checks.
Inspect and Photograph the Unit
It is absolutely essential for you and prospective
tenants (together, if at all possible) to check the place
over for damage and obvious wear and tear, by filling
out a Landlord/Tenant Checklist form and taking
photographs of the rental unit.
Filling Out the Landlord/
Tenant Checklist
A Landlord/Tenant Checklist, inventorying the
condition of the rental property, is an excellent
device to protect both you and your tenant when
the tenant moves out and wants the security deposit
returned. Without some record as to the condition of
the unit, you and the tenant are all too likely to get
into arguments about things like whether the kitchen
linoleum was already stained or the bedroom mirror
was already cracked at the time the tenant moved in.
The checklist will also be useful when you perform
the initial move-out inspection, if requested by the
tenant (which will give the tenant a chance to clean
or repair, and avoid deductions). And, coupled with a
system to regularly keep track of the rental property’s
condition, the checklist can also be useful if tenants
withhold rent, claiming the unit needs substantial
repairs. (See Chapter 11 for instructions and forms to
periodically update the safety and maintenance of your
rental properties.) A sample Landlord/Tenant Checklist
is shown below.
FORM
You’ll find a downloadable copy of the Landlord/
Tenant Checklist on the Nolo website. See Appendix B for
the link to the forms in this book.
When you look at the checklist we’ve prepared
for you, you’ll see that we have filled out the first
column with rooms and elements in these rooms.
If you happen to be renting a one-bedroom, one-
bath unit, our preprinted form will work just fine.
However, chances are that your rental has additional
(or fewer) rooms; or you may want to note and follow
the condition of one aspect of a rental (say, the loft or
the hot tub) that is not on our form. No problem! If
you use the electronic version available on the Nolo
website, you can change the entries in the first column
of the checklist, and you can add rows. For example,
you may want to add a row for a third bathroom (and
list the toilet, sink, and shower), another bedroom,
a service porch, and so on; or you may want to add
room elements, such as a trash compactor, fireplace, or
dishwasher. Consult your word processing program for
instructions on how to add a row to a table.
How to Fill Out the Checklist
You and the tenant should fill out the checklist
together. If you can’t do this together, complete the
form and then give it to the tenant to review. The
tenant should make any changes and return it to you.
The checklist is in two parts. The first side covers
the general condition of each room. The second side
covers the condition of any furnishings provided, such
as a living room lamp or bathroom shower curtain.
If your rental property has rooms or furnishings not
listed on the form, you can note this in “Other Areas,”
or cross out something that you don’t have and write it
in. If you are renting out a large house or apartment or
providing many furnishings, you may want to attach a
separate sheet.
If your rental unit does not have a particular item
listed, such as a dishwasher or kitchen broiler pan, put
“N/A” (not applicable) in the “Condition on Arrival”
column.
Mark “OK” in the space next to items that are in
satisfactory condition.
Make a note—as specific as possible—on items that
are not working or are in bad condition. For example,
CHAPTER 7|GETTING THE TENANT MOVED IN
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119
Landlord/Tenant Checklist
General Condition of Rental Unit and Premises
Street Address Unit Number City
Condition on Arrival
Condition on Initial
Move-Out Inspection Condition on Departure
Actual or Estimated Cost of
Cleaning, Repair/Replacement
Living Room
Floors & Floor Coverings
OK
Drapes & Window Coverings
OK
Walls & Ceilings
OK
Light Fixtures
OK
Windows, Screens, & Doors
back door
scratched
Front Door & Locks
OK
Smoke Detector
OK
Fireplace
N/A
Other
Kitchen
Floors & Floor Coverings
Cigarette burn
hole (1)
Walls & Ceilings
OK
Light Fixtures
OK
Cabinets
OK
Counters
discolored
Stove/Oven
OK
Refrigerator
OK
Dishwasher
OK
Garbage Disposal
N/A
Sink & Plumbing
OK
Smoke Detector
OK
Other
1234 Fell Street Apt. 5 San Francisco
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
Condition on Arrival
Condition on Initial
Move-Out Inspection Condition on Departure
Actual or Estimated Cost of
Cleaning, Repair/Replacement
Dining Room
Floors & Floor Coverings
OK
Walls & Ceilings
OK
Light Fixtures
crack in ceiling
Windows, Screens, & Doors
OK
Smoke Detector
OK
Other
Bathroom
Floors & Floor Coverings
OK
Walls & Ceilings
OK
Windows, Screens, & Doors
OK
Light Fixtures
OK
Bathtub/Shower
tub chipped
Sinks & Counters
OK
Toilet
OK
Other
Other
Bedroom
Floors & Floor Coverings
OK
Windows, Screens, & Doors
OK
Walls & Ceilings
OK
Light Fixtures
dented
Smoke Detector
OK
Other
Other
Other
CHAPTER 7|GETTING THE TENANT MOVED IN
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121
Condition on Arrival
Condition on Initial
Move-Out Inspection Condition on Departure
Actual or Estimated Cost of
Cleaning, Repair/Replacement
Other Areas
Heating System
OK
Air Conditioning
N/A
Lawn/Garden
N/A
Stairs & Hallway
N/A
Patio,Terrace, Deck, etc.
N/A
Basement
OK
Parking Area
OK
Other
Other
Other
Other
Other
■ Tenants acknowledge that all smoke detectors and fi re extinguishers were tested in their presence and found to be in working
order, and that the testing procedure was explained to them. Tenants agree to test all detectors at least once a month and to
report any problems to Landlord/Manager in writing. Tenants agree to replace all smoke detector batteries as necessary.
Notes:
X
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Furnished Property
Condition on Arrival
Condition on Initial
Move-Out Inspection Condition on Departure
Actual or Estimated Cost of
Cleaning, Repair/Replacement
Living Room
Coff ee Table
two scratches on top
End Tables
N/A
Lamps
OK
Chairs
OK
Sofa
OK
Other
Other
Kitchen
Broiler Pan
N/A
Ice Trays
OK
Other
Other
Dining Area
Chairs
OK
Stools
N/A
Table
leg bent slightly
Other
Other
Bathroom
Mirrors
OK
Shower Curtain
OK
Hamper
N/A
Other
CHAPTER 7|GETTING THE TENANT MOVED IN
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123
Condition on Arrival
Condition on Initial
Move-Out Inspection Condition on Departure
Actual or Estimated Cost of
Cleaning, Repair/Replacement
Bedroom
Beds (single)
Beds (double)
Chairs
Chests
Dressing Tables
Lamps
Mirrors
Night Tables
Other
Other
Other Area
Bookcases
Desks
Pictures
Other
Other
Use this space to provide any additional explanation:
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Landlord/Tenant Checklist completed on moving in on , 20 .
and
Landlord/Manager Tenant
Tenant
Tenant
Landlord/Tenant Checklist completed at Initial Move-Out Inspection on
, 20 .
and
Landlord/Manager Tenant
Tenant
Tenant
Landlord/Tenant Checklist completed on moving out on
, 20 .
and
Landlord/Manager Tenant
Tenant
Tenant
May 1 xx
Ira Eppler Chloe Gustafson
ChApter 7|GETTING THE TENANT MOVED IN
|
125
don’t just write “needs fixing” if a bathroom sink is
clogged. It’s just as easy to write “clogged drain,” so
that later the tenant can’t claim to have told you about
a leaky faucet that supposedly was there from the start.
The second column, “Condition at Initial Move-
Out Inspection,” is where you’ll note any damage or
needed cleaning when you go through the unit, at the
tenant’s request, prior to moving out. If you like, you
can also record the expected deductions that you’ll
make if the tenant doesn’t remedy the noted problems.
The last two columns—“Condition on Departure”
and “Actual or Estimated Cost of Cleaning, Repair/
Replacement”—are for use when the tenant moves out
and you need to make deductions from the security
deposit for items that need to be repaired, cleaned, or
replaced. (See Chapter 20 for details on record keeping
and security deposits.)
After you and the tenants agree on all of the
particulars, you all should sign and date the form
on both sides, as well as any attachments. Keep the
original for yourself and attach a copy to the tenant’s
lease or rental agreement. (See Clause 11 of our form
agreements.)
Be sure the tenant also checks the box on the
bottom of the first page of the checklist stating that
the smoke detector was tested in the tenant’s presence
and shown to be in working order (required for new
occupancies by state law). This section on the checklist
also requires the tenant to test the smoke detector
monthly and to replace the battery when necessary.
By doing this, you’ll limit your liability if the smoke
detector fails and results in fire damage or injury. (See
Chapter 11 for details on the landlord’s responsibility
to provide smoke detectors and maintain the property,
and Chapter 12 for a discussion of the landlord’s
liability for injuries to tenants.)
Be sure to keep the checklist up to date if you
repair, replace, add, or remove items or furnishings
after the tenant moves in. Both you and the tenant
should initial and date any changes.
Photograph the Rental Unit
Taking photos or videos of the unit before the tenant
moves in is another excellent way to avoid disputes
over a tenant’s responsibility for damage and dirt.
When the tenant leaves, you’ll be able to compare
“before” and “after” pictures. This will help if a tenant
sues you for not returning the full security deposit.
Nothing is better in the defense of a tenant’s security
deposit lawsuit than a landlord’s pictures showing that
the unit was immaculate when the tenant moved in
and a mess at move-out. Photos/videos can also help if
you have to sue a former tenant for cleaning and repair
costs above the deposit amount.
Whether you take a photo with your phone or use
a separate camera, print out two sets of the photos as
soon as possible. Give one set to your tenant. Each of
you should date and sign both sets of photos. If you
make a video, clearly state the date and time when the
video was made.
You should repeat this process with “after” pictures,
to be signed or initialed by the tenant as part of
your established move-out procedure (described in
Chapter 20).
Send New Tenants a
Move-In Letter
A move-in letter should dovetail with the lease or
rental agreement (see Chapter 2) but cover day-to-day
issues, such as how and where to report maintenance
problems (covered in detail in Chapter 11). It should
also spell out the role of the manager, if any. A
move-in letter can be changed from time to time as
necessary. A sample is shown below. You should tailor
this letter to your particular needs (for example, alter it
if your property is subject to local rent control or you
don’t employ a resident manager).
Along with your move-in letter, you may want
to document the keys and passes that you’re giving
the new tenant. Our form, Key and Pass Receipt
and Agreement, lists the common keys and passes
landlords distribute, and gives you a place to add
others. The form also advises the tenant not to copy
or share these items, that you’ll charge a lockout fee
if you have to help tenants who have lost their keys,
and that you will charge a reasonable fee for replacing
lost or damaged keys or passes. Be reasonable when
setting lockout and replacement fees (don’t think of
these as profit-generating moments).
Sample Move-In Letter
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April 29, 20xx
Dear Mr. O’Hara:
Welcome to Happy Hill Apartments. We hope you will enjoy living here.
It is our job to provide you with a clean, undamaged, pleasant place to live. We take our job seriously.
is letter is to explain what you can expect from the Management and what we’ll be looking for from
you.
1. Rental Agreement: Your signed copy is attached. Please let us know if you have any questions. A few
things we’d like to highlight here:
• ere is no grace period for the payment of rent (see Clause 6 for details, including late charges).
Also, we don’t accept postdated checks.
• If you want someone to move in as a roommate, please contact us. If your rental unit is big
enough, we will arrange for the new person to f ill out a rental application and, if it’s approved,
for all of you to sign a new rental agreement.
• (for a month-to-month rental): To terminate your month-to-month tenancy, you must give at
least 30 days’ written notice to Management. Management may also terminate the tenancy, or
change its terms, on 30 days’ written notice.
• (for a f ixed-term lease): You occupy the premises under a f ixed-term lease. You are responsible
for all rent payments through the lease term, even if you move out before the lease expires.
During the lease term, your rent cannot be increased, nor can other terms of your tenancy be
changed.
• Your security deposit is only to be applied, by the owner, to costs of cleaning, damages, or
unpaid rent after you move out. You may not apply any part of the deposit, during your tenancy,
toward any part of your rent in the last month of your tenancy. (See Clause 8 of your agreement.)
2. Manager: Sophie Beauchamp (Apartment #15, phone 555-1234) is your resident manager. You
should pay your rent to her at that address and promptly let her know of any maintenance or repair
problems (see #4, below) and any other questions or problems. She’s in her offi ce every day from 8
a.m. to 10 a.m. and from 4 p.m. to 6 p.m. and can be reached by phone other times. Rent may be
paid on such dates and time. Ms. Beauchamp is authorized by me to receive all notices, and as an
agent for service of process.
3. Landlord/Tenant Checklist: By now, Sophie Beauchamp should have taken you on a walk-through
of your apartment to check the condition of all walls, drapes, carpets, appliances, etc. ese are all
listed on the Landlord/Tenant Checklist, which you should have carefully gone over and signed.
When you move out, we will ask you to check each item against its original condition as indicated on
the Checklist.
4. Maintenance/Repair Problems: You have a right to expect repairs to be made promptly. To help
us accomplish this, the Management will give you Maintenance/Repair Request forms to report to
the manager any problems in your apartment or the building or grounds, such as a broken garbage
disposal. Keep several forms handy. (Extra copies are available from the manager.)
Sample Move-In Letter (continued)
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127
Except in an emergency, all requests for repairs should be made on this form during normal business
hours. In case of emergency, or when it’s not convenient to use this form, call the manager at 555-1234.
5. Semiannual Safety and Maintenance Update: It’s our goal to keep your unit and the common areas in
excellent condition. To help us do this, we’ll ask you to f ill out a form every six months, to report any
potential safety hazards or maintenance problems that otherwise might be overlooked. Please take
the time to f ill this out and send it back with your rent check.
6. Annual Safety Inspection: Once a year, we will inspect the condition and furnishings of your rental
unit and update the Landlord/Tenant Checklist.
7. Insurance: We highly recommend that you purchase insurance, because tenants face many of the
same risks that homeowners do:
• You could lose valuable property through theft or f ire.
• You could be sued if someone is injured on the premises you rent.
• If you damage the building itself (say you start a f ire in the kitchen and it spreads), you could be
responsible for large repair bills.
Contact your insurance agent for more information on renters’ insurance.
8. Moving Out: It’s a little early to bring up moving out, but please be aware we have a list of items
that should be cleaned before we conduct a move-out inspection. If you decide to move out, please
ask the manager for a copy of our Move-Out Letter, explaining what is required and describing our
procedures.
9. Telephone Number Changes: Please notify us if your home or work phone number changes, so we
can reach you promptly in case of an emergency.
Please let us know if you have any questions.
Sincerely,
Tony Giuliano
Tony Giuliano, Owner
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Key and Pass Receipt and Agreement
is acknowledgment of receipt and agreement is made between
Landlord, and
and ,
Tenant(s). Tenant(s) rented the premises at
by signing a lease/rental agreement dated .
Landlord gives to Tenant(s), and Tenant(s) acknowledge receipt of, the following keys, passes, and other equipment that will
enable Tenant(s) to use and enjoy the rented premises:
■ Key to rental unit front door lock (handle)
■ Key to rental unit front door (deadbolt lock)
■ Key to apartment building front door
■ Mailbox key
■ Garage key/pass
■ Laundry room key
■ Pool gate key
■ Master key for storage room
■ Key for tenant’s storage locker/closet
■ Other keys/passes/equipment:
Lockout charge. If Landlord needs to give Tenant(s) access to the rental property because Tenant(s) has lost keys or passes,
Tenant(s) will pay Landlord a lockout fee of $ when Landlord responds Monday through Friday (nonholidays),
between 9 a.m. and 5 p.m.; and $ when Landlord responds at any other day or time.
Replacement fee. Tenant(s) acknowledge that if, during their tenancy, they lose or damage any item such that it must be
replaced, Landlord may charge a reasonable fee for such replacement, including an amount that refl ects the value of Landlord’s
time needed to make or buy the replacement.
Tenant(s) will not copy or share keys or passes. Tenant(s) agree not to copy or share any of the keys or passes provided by Landlord.
At the end of the tenancy, Tenant(s) will return all items noted here and agree that, with the exception of keys to the individual
rental unit, Landlord may deduct from the security deposit a reasonable and actual amount necessary to replace any missing items.
Landlord or Manager
Date
Tenant
Date
Tenant
Date
Tenant
Date
Ira Eppler
Chloe Gustafson
1234 Fell Street, Apt. 5, San Francisco, CA
May 1, 20xx
3
3
3
3
3
15
25
Ira Epler May 1, 20xx
Chloe Gustafson May 1, 20xx
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129
FORM
You’ll find a downloadable copy of the Key
and Pass Receipt and Agreement on the Nolo website. See
Appendix B for the link to the forms in this book.
In the move-in letter, be sure to include a paragraph
(such as the second paragraph in the sample shown
above) explaining where, when, and to whom rent
should be paid, and whether that person is authorized
to receive notices, including legal notices, on your
behalf. This is additional compliance with CC § 1962,
to protect your right to evict for nonpayment of rent.
(See the discussion of Clauses 5 and 23 in Chapter
2 for more details on why you need to provide this
information to tenants.)
First Month’s Rent and
Security Deposit Checks
You don’t want to get stuck with a tenant who’s going
to bounce checks to you. And if the new tenant’s
first rent or deposit check bounces, you might have
to undertake time-consuming and expensive legal
proceedings to evict a tenant who’s paid you nothing.
To avoid this, never sign a rental agreement, let a
tenant move furniture into your property, or give the
tenant a key until you have the first month’s rent and
security deposit. It’s a good practice to cash a tenant’s
check at the bank before the move-in date. (While
you have the tenant’s first check, photocopy it for
your records; the information on it can be helpful if
you ever need to bring legal action.) Remember, you
cannot insist on a cash payment of either the security
deposit or the first month’s rent (but you can ask for a
money order, or cashier’s check, and if a tenant wants
to pay in cash, you may accept it).
Responsible tenants who plan ahead will pay the
rent and sign the lease at least several days before
the move-in date. You can give the tenant a copy of
the lease and the keys when the check clears or you
receive cash or certified funds.
Clause 5 of our Lease and Rental Agreement forms
requires tenants to pay rent on the same day of each
month, with rent to be prorated between a move-in
date (if it’s other than the first) and the end of that
month. For example, with a monthly rent of $900 due
on the first of the month, a tenant who moves in on
June 21 should pay ten days’ prorated rent of $300 at
move-in, before the full $900 July rent is due.
As a general rule, if the prorated rent for that first
partial month is less than half a month’s rent, you
should request a more substantial amount up front. The
reason for this is simple: A few tenants might impress
you in person and look good on their applications,
but yet are unable to come up with all the rent when
due. Such individuals often look for rentals that require
only a few hundred dollars up front; they don’t worry
about how they’ll pay the rent later, hoping to find
roommates by the time the rent comes due. You stand
to lose heavily if you allow a person like this to move
in on $300 prorated rent for the last ten days of the
month and hope he’ll come up with the regular $900
monthly rent on the first of the following month. If he
doesn’t come up with the full rent, and it takes you up
to a month to evict him, you’re out a month’s rent plus
eviction costs, a sum larger than any security deposit—
which should be used to compensate you for the
damage and mess this tenant may leave behind.
Insisting on a substantial up-front payment helps
ferret out such individuals. There are a few ways to do
this:
•Require the prorated rent of less than half a
month plus the next month’s entire rent, plus
the security deposit. (The deposit can be either
two or three times the monthly rent amount,
depending on whether the rental unit is furnished
or unfurnished; see Chapter 5.) For example, your
tenant who moves in on June 21 and pays $300
for the rent through June 30 should also be asked
to pay in advance the $900 rent for July and the
security deposit.
•Insist on an entire month’s rent up front and
then prorate the second month. For example, the
tenant who moves in on June 21 would first pay
the full $900 rent for July. Then, come July 1, the
$300 rent for June 21 through June 30 is due.
•Simply require rent payments on the day of the
month that the tenant moved in, so that a tenant
who moves in on the 21st will always pay rent
on the 21st.
We recommend the first way—accepting the prorated
rent if it is more than half a month’s rent or, if it is
less than that, the prorated amount plus another
month’s rent. It’s easier and keeps the rent due on the
convenient and customary first of the month.
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Organize Your Tenant Records and Files
If you haven’t done so already, be sure to establish a
good system to keep track of all relevant documents for
each tenant, such as rental applications, signed leases
and rental agreements, Landlord/Tenant Checklists, and
anything else relevant to the specific tenancy. After a
tenant moves in, add documents to the individual’s file,
such as your written requests for entry, rent increase
notices, and any other important information.
While you’re at it, be sure you have a good system
for organizing income and expenses for Schedule E
(assuming you file IRS Form 1040 to pay your taxes).
For detailed information on completing Schedule E and
valuable tax advice for landlords, see Every Landlord’s
Tax Deduction Guide, by Stephen Fishman (Nolo).
l
CHAPTER
8
Lawyers, Legal Research, Eviction
Services, and Mediation
Legal Research Tools .............................................................................................................................................132
Local Ordinances ................................................................................................................................................ 132
State Laws ...............................................................................................................................................................132
State Regulations ................................................................................................................................................ 133
Federal Statutes and Regulations ..............................................................................................................133
Court Decisions ...................................................................................................................................................133
Mediating Disputes With Tenants ................................................................................................................ 135
Nonlawyer Eviction Services ............................................................................................................................136
Finding a Lawyer ...................................................................................................................................................... 137
Paying a Lawyer ........................................................................................................................................................138
Large Landlord With Regular Legal Needs ...........................................................................................138
Small Landlord With Occasional Legal Needs ....................................................................................139
Resolving Problems With Your Lawyer ......................................................................................................139
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
G
enerally, California landlords can deal with
most routine legal questions and problems
without a lawyer. Just the same, there are
times when good advice from a specialist in landlord/
tenant law will be helpful, if not essential—for example,
in complicated evictions or lawsuits by tenants alleging
that dangerous conditions or wrongful acts caused
injury.
This chapter recommends a strategy to most
efficiently and effectively use legal services:
•First, keep up to date on landlord/tenant law
so that you can anticipate and avoid many legal
problems. Check this book’s companion page on
the Nolo website at www.nolo.com for important
updates on California landlord/tenant law.
Appendix B includes a link to this companion
page.
•Second, use mediation services to settle disputes
and head off lawsuits.
•Third, consider unlawful detainer assistants as an
alternative to lawyers in standard eviction cases.
•Fourth, know the best way to go about hiring a
lawyer and negotiating fees.
RELATED TOPIC
To avoid legal problems in the first place, read
these chapters and follow these guidelines:
• Screen tenant applicants carefully: Chapter 1
• Use a clear, unambiguous written rental agreement or
lease: Chapter 2
• Make sure your manager knows landlord/tenant law:
Chapter 6
• Clarify tenants’ responsibilities and grievance/repair
procedures with a move-in letter: Chapter7
• Establish a system for reporting and handling repairs:
Chapter 11.
Legal Research Tools
Using this book is a good way to educate yourself
about the laws that affect your business—but one
book is not enough by itself. At one time or another,
you’ll need to do some further research in the law
library or online.
Local Ordinances
If you are a landlord in a city with a rent control
ordinance, you need a copy of the ordinance, as well
as all rules issued by the rent board covering rent
increases and hearings. The Rent Control Chart in
Appendix A lists website addresses for those cities that
have posted their ordinances online.
Even if your rental property is not in a rent-
controlled area, you should be aware of any local
ordinances that affect your business—such as, your
city’s health and safety standards. You’ll find local
ordinances online on the site maintained by the
Institute of Governmental Studies in Berkeley, at www.
igs.berkeley.edu/node/11317.
State Laws
It’s essential that you also have access to current
versions of the California statutes that regulate the
landlord/tenant relationship. They are collected in
volumes called codes.
The California Civil Code (CC) contains most of
California’s substantive landlord/tenant law, primarily
in Sections 1940 through 1991. It includes laws govern-
ing minimum building standards, payment of rent,
change and termination of tenancy, privacy, security
deposits, and abandoned property, to name a few.
The California Code of Civil Procedure (CCP) is
a set of laws explaining how people enforce legal
rights in civil lawsuits. Eviction lawsuit procedures are
contained in Sections 1161 through 1179 of the Code
of Civil Procedure. Also of interest are the small claims
court procedures, covered in Sections 116.110 through
116.950.
To read the statutes themselves (and to check
pending legislation), see the website maintained by
the Legislative Council at www.leginfo.ca.gov. For
advice on finding a law, statute, code section, or case,
see the Laws and Legal Research section on the Nolo
site, www.nolo.com/legal-research. You may also find
it useful to go to the reference desk at your public
library for help; many have good law collections. If
your county maintains a law library that’s open to the
public (often in a courthouse, state-funded law school,
or a state capital building), you can get help there, too,
from law librarians.
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Remember that you’ll need to consult a new volume
every year—the state legislature tinkers with landlord/
tenant laws every season. Never rely on an old set of
statutes.
State Regulations
Many rules that California landlords must comply with
are in the California Code of Regulations. These rules
are made by various state agencies charged by the
legislature to give specificity to laws that the legislature
has passed (and the governor has signed). For
example, state law requires landlords to provide hot
water, but the specifics of that obligation (how hot?)
are in the Code of Regulations.
The Code of Regulations is in every law library, but
it’s far easier to look at it online. Go to http://ccr.oal.
ca.gov and use the table of contents to find Title 25,
Housing and Community Development. By looking
through the various subheadings, you’ll find rules
that apply to housing and rental housing in particular.
For example, the rule regarding hot water (it must
be at least 110 degrees Fahrenheit) is in Section 32 in
Division 1, Chapter 1, Subchapter 1, Article 5. Other
rules, such as plumbing and mechanical codes, are
also in the Code of Regulations.
Federal Statutes and Regulations
Congress has enacted laws, and federal agencies
such as the U.S. Department of Housing and Urban
Development (HUD) have adopted regulations that
amplify those laws, covering discrimination, wage
and hour laws affecting employment of managers, and
landlord responsibilities to disclose environmental
health hazards. We refer to relevant federal agencies
throughout this book and suggest you contact them
for publications that explain federal laws affecting
landlords, or copies of the federal statutes and
regulations themselves.
We include citations for many of the federal laws
affecting landlords throughout this book. The U.S.
Code is the starting place for most federal statutory
research. It consists of 50 separate numbered titles.
Each title covers a specific subject matter.
Most federal regulations are published in the Code
of Federal Regulations (C.F.R.), organized by subject
into 50 separate titles.
You can access the United States Code and the
Code of Federal Regulations at the U.S. House of
Representatives Internet Law Library, at http://uscode.
house.gov.
See the Laws and Legal Research section on www.
nolo.com for advice on finding and reading federal law.
Court Decisions
Sometimes it isn’t enough to read a statute—you also
need to read the decisions of appeals courts, which
explain what the statute means. These decisions
are written by higher courts that hear appeals of
decisions in trial courts, and state why the appeals
court agrees or disagrees with the ruling of the trial
court. Sometimes these case decisions are extremely
important. For example, Civil Code Sections 1941
through 1942 set minimum housing standards. The
1974 case of Green v. Superior Court, 40 Cal. 3d 616
(1974), interpreted those statutes to allow tenants in
substandard housing to withhold rent—without paying
to make repairs themselves—even though no law
specifically provides for this type of rent withholding.
(See Chapter 11 for a discussion of this issue.)
The best way to learn of the existence of written
court decisions that interpret a particular law is to
first look in an “annotated code.” An annotated code
is a set of volumes of a particular code, such as the
Civil Code or Code of Civil Procedure, that contains
not only all the laws (as do the regular codes), but
also a brief summary of many of the court decisions
interpreting each law. These annotated codes can be
found in any county law library or law school library
in the state. Some public libraries also have them.
Unfortunately, you won’t find annotated codes for free
online—but it’s probably just a matter of time until
these helpful additions will be available.
These annotated codes have comprehensive indexes
by topic, and are kept up to date each year with
paperback supplements (“pocket parts”) stuck in a
pocket inside the back cover of each volume. To keep
up to date on new laws and court decisions, look at
these pocket parts each year (they’re published in
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THE CALIFORNIA LANDLORD’S LAW BOOK: RIGHTS & RESPONSIBILITIES
January and February) for Civil Code Sections 1940–
1991 and Code of Civil Procedure Sections 1161–1179.
If a case summarized in an annotated code looks
important, you may want to read the actual court
opinion. To find it, you’ll need the title of the case, the
year of the decision, and the “citation” following each
brief summary of the court decision. The citation is a
sort of shorthand identification for the set of books,
volume, and page where the case can be found.
One set of volumes, the Official Reports of the
California Courts of Appeal, shows decisions of the
lower appellate courts, which include the Courts of
Appeal (one for each of six districts in the state) and
the Superior Court Appellate Department (one for
each county). The Courts of Appeal hear appeals of
cases brought in Superior Court (involving more than
$25,000). Courts of Appeal decisions are abbreviated
“Cal. App.,” “Cal. App. 2d,” “Cal. App. 3d,” and “Cal.
App. 4th,” representing the first, second, third, and
fourth series of volumes. Superior Court Appellate
Departments hear appeals of cases brought in Superior
Court involving $25,000 or less, and those decisions
are listed in the “Supplement” of each volume of the
official reports. These cases are therefore abbreviated
“Cal. App. 2d Supp.,” “Cal. App. 3d Supp.,” and “Cal.
App. 4th Supp.”
A second set of volumes, the Official Reports of
the California Supreme Court, lists decisions of the
California Supreme Court, the state’s highest court,
which reviews selected cases of the Courts of Appeal.
Supreme Court decisions are abbreviated “Cal.,” “Cal.
2d,” “Cal. 3d,” or “Cal. 4th,” representing the first,
second, third, and fourth series of volumes.
California appellate and Supreme Court decisions
are also published by the West Publishing Company
in the California Reporter (abbreviated “Cal. Rptr.” and
“Cal. Rptr. 2d,” respectively, for the first and second
series) and Pacific Reporter (abbreviated “P.” or “P.2d”).
You can read California cases online, too. Appellate
and Supreme Court opinions are available free at
www.findlaw.com at “Cases and Codes.” Click on
California under State Resources. You’ll eventually
come to screens that allow you to enter search terms
(such as the case name or citation), which will lead
you to the opinion you’re looking for.
California’s Trial and Appellate Courts
Trial
Courts
Small Claims Court
For cases involving less than $10,000.
Small claims court is a division of superior
court. A defendant who loses in small
claims court can request a new trial in
superior court. (From there, no further
appeal is allowed, except at the Court of
Appeal’s discretion.) A plaintiff who loses
in small claims has no right of appeal.
Appeal by defendant
➡
Superior Court
Judge hears small claims trial anew. Also,
regular civil cases are filed here. Appellate
Division hears civil appeals involving less
than $25,000.
Appeal (for cases more
than $25,000 only)
➡
Appellate
Courts
California Court of Appeal
3-justice panels in each of 6 state districts
hear appeals from Superior Court
Further review at discretion
of Supreme Court
➡
California Supreme Court
7 justices hear selected cases from Courts
of Appeal
Legal Research Help
We don’t have space here to show you how to do your
own legal research in anything approaching a compre-
hensive fashion. For free information on the subject, see
the Laws and Legal Research section of www.nolo.com.
To go further, we recommend an excellent resource:
Legal Research: How to Find & Understand the Law, by
Stephen Elias and the Editors of Nolo (Nolo), which gives
easy-to-use, step-by-step instructions on how to find
legal information.
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Sample Case Citations
case name
volume number
3rd series of Official
Reports of the California
Supreme Court
page number
volume number
the case also appears
in Calif. Reporter, the
unofficial reports
page number
volume number
the case is also listed in 2nd
series of Pacific Reporter
page number
year of decision
Green v. Superior Court, 10 Cal. 3d 616, 11 Cal. Rptr. 704, 517 P.2d 1168 (1974)
case name
3rd series of Official
Reports of the California
Courts of Appeal, Volume
137, page 770
the case is also listed
in Calif. Reporter, the
unofficial reports, Volume
187, page 242
year of decision
Glaser v. Myers, 137 Cal. App. 3d 770, 187 Cal. Rptr. 242 (1982)
Mediating Disputes With Tenants
Mediation is a technique where a neutral third party
helps people settle differences themselves, without
going to court. Unlike a judge in court or an arbitrator
in a formal hearing, a mediator does not impose a
decision on the parties, but facilitates a compromise.
Generally, mediation works well in situations where
people want to settle their disputes so they can work
together in the future. In a landlord/tenant context,
mediation can be extremely helpful in areas such
as disputes about noise, the necessity for repairs, a
tenant’s decision to withhold rent because defects have
not been repaired, rent increases, privacy, and security
deposits. Many large landlords find that an established
mediation procedure is an invaluable way to head off
lawsuits.
At the mediation session, each side gets to state
his or her position, which often cools people off
considerably and frequently results in a compromise.
If the dispute is not resolved easily, however, the
mediator may suggest ways to resolve the problem,
or may even keep everyone talking long enough to
realize that the real problem goes deeper than the
one being mediated. For example, if a tenant has
threatened rent withholding because of a defect in
the premises, you may learn that the tenant’s real
grievance is that your manager is slow to make
repairs. This may lead to the further discovery that the
manager is angry at the tenant for letting his kids pull
up his tulips.
At any rate, mediation often works, and if it doesn’t,
you haven’t lost much. If mediation fails, you can still
fight it out in court. In fact, if you or the tenant have
already filed suit in small claims court, you may find
that the judge will insist that you try mediation before
presenting your case in court. Call your county’s small
claims court clerk to find out if this is the way your
court works.
Mediation is most effective when there’s an
established procedure tenants and landlords can use.
Here’s how to set one up.
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Step 1. Find a mediation group that handles landlord/
tenant disputes. There are many mediation programs
throughout the state, and almost all California cities
receive federal funds to arrange for mediators to
handle disputes between landlords and tenants. For
more information, call city hall or the rent board in
rent-controlled cities, and ask for the staff member
who handles “landlord/tenant mediation matters” or
“housing disputes.” That person should refer you to
the public office or private agency that attempts to
informally resolve landlord/tenant disputes before they
reach the court stage. Many mediation groups are city-
or county-funded and do not charge for their services.
You can also contact one of the respected mediation
organizations, such as the American Arbitration
Association, or a neighborhood dispute resolution
center, such as San Francisco’s Community Boards
program, and arrange for this group to mediate
landlord/tenant disputes.
If you and the tenant are involved in a discrimina-
tion dispute that has escalated to the point where the
tenant has filed a complaint with the state’s Depart-
ment of Fair Employment and Housing, you can take
advantage of their free and very successful mediation
service. For more information, see their website at
www.dfehmp.ca.gov.
Step 2. Explain procedures for lodging complaints to
every tenant. A move-in letter (see Chapter 7) would
be a good place to do this. Make sure tenants know
they can request mediation for disputes which escalate
to the point where normal face-to-face compromise
techniques prove to be of no avail, whether over
privacy, rent withholding because of allegedly defective
conditions, or whatever. Emphasize the fairness of the
mediation process.
Step 3. If possible, split the cost (if any) of a mediation. (If
this isn’t acceptable to the tenant, and you pay the total
mediation cost, make sure your tenant realizes that the
mediator has no power to impose a decision.)
For more information on mediation, see Mediate,
Don’t Litigate, by Peter Lovenheim and Lisa Guerin
(Nolo), available as a downloadable electronic
book from www.nolo.com. This book explains the
mediation process from start to finish, including how
to prepare for mediation and draft a legally enforceable
agreement.
Nonlawyer Eviction Services
Filing and following through with an eviction lawsuit
involves filling out a number of legal forms. And once
the forms are filed with the court, they must be served
on the tenant—a task that isn’t always easy. You can
do it yourself, using The California Landlord’s Law
Book: Evictions, or you can hire a lawyer. There is
also a third route: getting help with the paperwork,
filing, and service from an eviction service run by
nonlawyers, known as “unlawful detainer assistants,”
who must be registered with the county clerk. They
exist in most metropolitan areas.
For a flat fee that is usually much lower than what
lawyers charge, and often at a faster pace, eviction
services take the basic information from you, prepare
most of the initial paperwork, file the necessary
papers in court, and have the tenant served with the
Summons and Complaint.
Unlawful detainer assistants aren’t lawyers. They
can’t give legal advice about the requirements of your
specific case and can’t represent you in court—only
you or your lawyers can present your case in court.
You must decide what steps to take in your case
and the information to put in the needed forms. A
nonlawyer eviction service can, however:
•provide written instructions and legal inform-
ation you need to handle your own case
•provide the appropriate eviction forms and fill
them out according to your instructions
•prepare your papers so they’ll be accepted by the
court, and
•arrange for filing the eviction forms in court
and serving them on the tenant. (In the case of
People v. Landlords’ Professional Services, 215
Cal. App. 3d 1599 (1989), the court ruled that an
eviction service whose nonlawyer employees
gave oral legal advice was unlawfully practicing
law. The court, however, said eviction services
could legally give customers forms and detailed
self-help legal manuals, fill out the forms as
directed by the customers, and file and serve the
papers.)
Most unlawful detainer assistants handle only
routine cases. If the tenant contests the eviction suit—
which happens less than one-fourth of the time—the
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eviction service won’t be able to help you in court. At
this point, you must represent yourself in court or hire
your own lawyer to take over. The unlawful detainer
assistant may refer you to a lawyer whom you can hire.
To find an unlawful detainer assistant, check with
a landlords’ association or look in the phone book
or online under “Unlawful Detainer Assistants” or
“Paralegals.”
Be sure the eviction service or typing service is
reputable and experienced, as well as reasonably
priced. (The cost should not exceed $100 for the
service, plus another $400 for court filing fees and
sheriff’s fees.) Ask for references and check them. As a
general matter, the longer a typing service has been in
business, the better.
Unlawful detainer assistants must be registered and
bonded as such. (B&P §§ 6400–6415.) If the service
isn’t registered, don’t use it. The court forms that an
eviction service prepares require you to state under
penalty of perjury whether an “unlawful detainer
assistant” helped you, and you must give the eviction
service’s name, address, and registration number.
Finding a Lawyer
Throughout this book, we point out specific instances
when an attorney’s advice or services may be useful,
including complicated eviction, discrimination, and
personal injury lawsuits.
Finding a good, reasonably priced lawyer is not
always an easy task. If you just pick a name out of the
telephone book or that you find online, you may find
someone who charges too much, or one not qualified
to deal with your particular problem. If you use the
attorney who drew up your family will, you may end
up with someone who knows nothing about landlord
law. This sorry result is not necessarily inevitable—
there are competent lawyers who charge fairly for their
services.
As a general rule, experience is most important.
You want a lawyer who specializes in landlord/tenant
law. The best way to find a suitable attorney is through
some trusted person who has had a satisfactory
experience with one. Your best referral sources are
other landlords in your area and your local landlords’
association.
How you pay your lawyer depends on the type of
legal services you need and the amount of legal work
you have. The lawyer may charge an hourly rate to
represent you in a contested eviction case, or a flat
fee to represent you in court for a routine eviction
for nonpayment of rent. In any case, always ask for a
written fee agreement, explaining all fees (including
work by legal assistants and court filing fees) and how
costs will be billed and paid. A written agreement will
help prevent disputes about legal fees and clarify the
relationship you expect to have with the attorney and
the services the lawyer will provide. Some agreements
state how each of you can end the agreement and
explain how you expect to work together, such as
any decisions the lawyer can make alone and which
require your approval.
How Not to Find a Lawyer
e worst referral sources are:
• Heavily advertised legal clinics, which are less
likely to offer competitive rates for competent
representation in this specialized area. While
they may offer low flat rates for routine services
such as drafting a will, it’s less common to see
legal clinics charge reasonable flat fees for other
specific services. It is not unusual for legal services
to advertise a very low basic price and then add to
it considerably, based on the assertion that your
particular problem costs more.
• Referral panels set up by local bar associations.
While they sometimes do minimal screening
before qualifying the expertise of lawyers in
landlord/tenant law, usually the emphasis is on
the word “minimal.” You may get a good referral
from these panels, but they sometimes refer
people to inexperienced practitioners who don’t
have enough clients and who use the panel as a
way of generating needed business.
RESOURCE
Find a lawyer at www.nolo.com/lawyers. To help
consumers choose the right attorney, Nolo’s Lawyer Directory
allows each advertiser to provide a detailed profile, with
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information about each lawyer’s expertise (such as landlord-
tenant law), education, and fees. Lawyers also indicate whether
they are willing to review documents or coach clients who are
doing their own legal work. You can also submit information
about your legal issue to several local attorneys who handle
landlord-tenant issues, and then pick the lawyer you’d like
to work with. For advice on hiring and working with lawyers,
including what to ask a prospective attorney, see www.nolo.
com/lawyers/tips.html.
Once you get a good referral, call the law offices
that have been recommended and state your problem.
Find out the cost of an initial visit. You should be able
to find an attorney willing to discuss your problems
for around $100 for a half-hour consultation. If you
feel the lawyer is sympathetic to your concerns
and qualified to handle your problem, make an
appointment to discuss your situation.
Beware of lawyers who advertise “free consultations.”
As your own business experience doubtless tells you,
the world provides little or nothing of value for free.
This is doubly true when it comes to buying legal
help. Lawyers who will see you for nothing have
every motive to think up some sort of legal action that
requires their services. If you insist on paying fairly
for an attorney’s time, you are far more likely to be
advised that no expensive legal action is needed.
Here are some things to look for in your first
meeting:
•Will the lawyer answer all your questions about
the lawyer’s fees and experience in landlord/
tenant matters and your specific legal problem?
Stay away from lawyers who make you feel
uncomfortable asking questions.
•Is the lawyer willing to assist you when you have
specific questions, billing you on an hourly basis
when you handle your own legal work—such as
evictions? Is the lawyer willing to answer your
questions over the phone and charge only for the
brief amount of time the conversation lasted? Or
will you have to make a more time-consuming
(and profitable) office appointment? If the lawyer
tries to dissuade you from representing yourself
in any situation, or won’t give any advice over
the phone despite your invitation to bill you for
it, find someone else. There are plenty of lawyers
who will be very happy to bill you hourly to help
you help yourself.
•If you want someone to represent you in an
eviction lawsuit, does the lawyer charge a flat
fee, or an hourly fee with a maximum? Most
evictions, especially for nonpayment of rent, are
routine and present little trouble, even when
contested by the tenant. Many attorneys charge
reasonable flat fixed rates, such as $500 to $750,
to handle eviction lawsuits. If the lawyer’s hourly
rate exceeds $200, with no upper limit, you can
do better elsewhere.
•If your property is in a rent-controlled city, does
the lawyer practice in or near that city and know
its rent control laws and practices?
•Does the lawyer represent tenants, too? Chances
are that a lawyer who represents both landlords
and tenants can advise you well on how to avoid
many legal pitfalls of being a landlord.
Paying a Lawyer
If you do need a lawyer, find one who does not object
to your doing as much legal work as you want and
who will charge a reasonable hourly rate for occasional
help and advice. While this isn’t impossible, it may be
difficult, because some lawyers may not want to accept
piecemeal work.
Most lawyers charge around $200 an hour. How you
pay your lawyer depends on how often you need legal
services.
Large Landlord With
Regular Legal Needs
If you own more than a dozen rental units and do not
wish to handle all your own evictions from start to
finish (even if uncontested), you will probably want
to work out a continuing relationship with the lawyer,
and you should have more than enough leverage to
set up a relatively economical arrangement. There are
several ways to go:
•Pay the attorney a modest monthly retainer to
work with you and represent you in court in
routine eviction cases as needed. (Other types of
cases, such as where a tenant sues for damages,
are so time-consuming that representation is not
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included in such retainer agreements.) You can
usually get a lot of service for a reasonable pre-
established rate.
•Negotiate a fee schedule for various kinds of
routine services, based on the lawyer handling
all your work. Since you will probably provide
a fair amount of business over the years, this
should be substantially below the lawyer’s
normal hourly rate.
•Do the initial legal work in evictions and
similar procedures yourself, but turn over to
a lawyer cases that become hotly contested
or complicated. If this is your plan, look for a
lawyer who doesn’t resent your doing some of
your own legal work and who won’t sock you
with a high hourly rate for picking up a case you
began.
Small Landlord With
Occasional Legal Needs
If you are a very small landlord, you expect (and
hope) that you will have little continuing need for a
lawyer. The drawback to needing only occasional legal
help is that a lawyer has little incentive to represent
you for a reasonable fee when you get into occasional
legal hot water. But it’s possible to find a lawyer who
specializes in landlord/tenant law who will charge
you the same prices larger landlords get. And who
knows, the lawyer may hope that you will expand
your business and become a more profitable client in
the future.
Note on attorney fees clause in lawsuits. If your lease
or written rental agreement has an attorney fees
provision (see Clause 22 of our forms), you are entitled
to recover your attorney fees if you win a lawsuit
concerning that lease or rental agreement, based on
the terms of that agreement. There’s no guarantee,
however, that a judge will award attorney fees equal to
your attorney’s actual bill, or that you will ultimately
be able to collect the money from the tenant or former
tenant. Also, as discussed in Chapter 2, an attorney
fees clause in your lease or rental agreement works
both ways. Even if the clause doesn’t say so, you’re
liable for the tenant’s attorney fees if you lose. (CC
§ 1717.) (Your landlord’s insurance policy will not cover
such liability where the lawsuit is unrelated to items
covered by the policy, such as eviction lawsuits by
the landlord and security deposit refund suits by the
tenant.)
TIP
Consider small claims court for security deposit
and other money-related disputes. Chapter 20 explains how
to prepare and present a case in small claims court.
Resolving Problems
With Your Lawyer
If you see a problem emerging with your lawyer, nip
it in the bud. Don’t just sit back and fume; call or
write your lawyer. Whatever it is that rankles, have an
honest discussion about your feelings. Maybe you’re
upset because your lawyer hasn’t kept you informed
about what’s going on in your lawsuit against your
tenant for property damage, or maybe your lawyer has
missed a promised deadline for reviewing your new
system for handling maintenance and repair problems.
Or maybe last month’s bill was shockingly high, or you
question the breakdown of how your lawyer’s time
was spent.
Here’s one way to test whether a lawyer-client
relationship is a good one—ask yourself if you feel
able to talk freely with your lawyer about your degree
of participation in any legal matter and your control
over how the lawyer carries out a legal assignment.
If you can’t frankly discuss these sometimes sensitive
matters with your lawyer, fire that lawyer and hire
another one. If you don’t, you’ll surely waste money
on unnecessary legal fees and risk having legal matters
turn out badly.
Remember that you’re always free to change
lawyers. If you do, be sure to fire your old lawyer
before you hire a new one. Otherwise, you could find
yourself being billed by both lawyers at the same time.
Also, be sure to get all important legal documents back
from a lawyer you no longer employ. Tell your new
lawyer what your old one has done to date, and pass
on the file.
But firing a lawyer may not be enough. Here are
some tips on resolving specific problems:
•If you have a dispute over fees, the local bar
association may be able to mediate it for you.
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•If a lawyer has violated legal ethics—for
example, conflict of interest, overbilling, or
not representing you zealously—the State Bar
of California may discipline or even disbar the
lawyer. Although lawyer oversight groups are
typically biased in favor of the legal profession,
they will often take action if your lawyer has
done something seriously wrong.
•When a lawyer has made a major mistake—for
example, missing the deadline for filing a case—
you can sue for malpractice. Many lawyers carry
malpractice insurance, and your dispute may be
settled out of court.
Your Rights as a Client
As a client, you have the following rights:
• courteous treatment by your lawyer and staff
members
• an itemized statement of services rendered and a
full advance explanation of billing practices
• charges for agreed-upon fees and no more
• prompt responses to phone calls and letters
• confidential legal conferences, free from
unwarranted interruptions
• up-to-date information on the status of your case
• diligent and competent legal representation, and
• clear answers to all questions.
l
CHAPTER
9Discrimination
Legal Reasons for Refusing to Rent to a Tenant ...................................................................................142
Credit Record and Income ........................................................................................................................... 143
Negative References From Previous Landlords .................................................................................. 143
Civil Lawsuits Involving a Tenant ...............................................................................................................144
Criminal History .................................................................................................................................................. 144
Immigration Status ............................................................................................................................................146
Incomplete or Inaccurate Rental Application ....................................................................................146
Inability to Meet Legal Terms of Lease or Rental Agreement ....................................................146
Pets ............................................................................................................................................................................. 146
Sources of Discrimination Laws .....................................................................................................................146
Forbidden Types of Discrimination..............................................................................................................147
Race or Religion ................................................................................................................................................... 148
Ethnic Background and National Origin ................................................................................................149
Disability ................................................................................................................................................................. 151
Familial Status ......................................................................................................................................................155
Marital Status .......................................................................................................................................................156
Age .............................................................................................................................................................................156
Sex...............................................................................................................................................................................157
Sexual Orientation ...........................................................................................................................................158
Gender Identity ................................................................................................................................................... 158
Smoking ...................................................................................................................................................................159
Public Assistance ................................................................................................................................................160
Personal Characteristics or Traits .............................................................................................................. 161
Waterbeds .............................................................................................................................................................. 161
Occupancy Limits....................................................................................................................................................161
Legal Penalties for Discrimination ................................................................................................................ 163
Owner-Occupied Premises and Occasional Rentals .........................................................................164
Rentals to Single Boarders in Single-Family Homes .........................................................................164
Occasional Rentals .............................................................................................................................................165
Managers and Discrimination ......................................................................................................................... 165
Insurance Coverage for Discrimination Claims .................................................................................... 165
Typical Liability Insurance Policy ...............................................................................................................166
Definition of “Bodily Injury” .........................................................................................................................166
Definition of “Occurrence” ...........................................................................................................................167
Definition of “Personal Injury” ....................................................................................................................167
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A
t one time, a landlord could refuse to rent to
someone, or evict a month-to-month tenant on
30 days’ notice, simply because he didn’t like
the tenant’s skin color, religion, or national origin. All
sorts of groups, including African-Americans, Asians,
Jews, Hispanics, unmarried couples, gays, families with
children, and the disabled, were routinely subjected to
discrimination.
Fortunately, the days of legal invidious discrimina-
tion are long gone. Several federal, state, and local laws
provide severe financial penalties for landlords who
discriminate on the basis of race, religion, sex, age,
and a number of other categories. And the categories
named in the various statutes are not the only groups
that are protected—the California Supreme Court
has prohibited discrimination based on “personal
characteristics” or “personal traits,” meaning a person’s
geographical origin, personal beliefs, or physical
attributes. (Harris v. Capital Growth Investors XIV, 52
Cal. 3d 1142, 278 Cal. Rptr. 614 (1991).)
This chapter reviews information you need to know
to avoid illegally discriminating:
•legal reasons to turn down prospective tenants,
such as a bad credit history or too many tenants
for the size of the premises
•illegal types of discrimination and major laws
and court cases, including recent developments
in the field such as expanded protection for
families with children
•tenants’ legal remedies, in state and federal
courts, for discrimination, and
•special rules applying to landlords who share
their premises with tenants.
Legal Reasons for Refusing
to Rent to a Tenant
The most important decision a landlord makes, save
possibly for deciding whether to purchase rental
property in the first place, is the choice of your tenants.
Chapter 1 recommends a system for carefully screening
potential tenants in order to select people who will
pay rent on time, maintain your property, and not
cause you any problems. Here we focus more closely
on making sure that your screening process does not
precipitate a costly charge of discrimination.
Remember that only certain kinds of discrimination
in rental housing are illegal, such as selecting tenants
on the basis of religion or race. You are legally free
to choose among prospective tenants as long as your
decisions are based on valid and objective business
criteria, such as an applicant’s ability to pay the rent
and properly maintain the property. For example, you
may legally refuse to rent to prospective tenants with
bad credit histories, unsteady employment histories,
or even low incomes that you reasonably regard as
insufficient to pay the rent. Why? Because these criteria
for tenant selection are reasonably related to your right
to run your business in a competent, profitable manner
(sometimes called your “legitimate or valid business
interests”). And if a person who fits one or more
obvious “bad tenant risk” profiles happens to be a
member of a minority group, you are still on safe legal
ground as long as:
•you are consistent in your screening and treat all
tenants more or less equally—for example, you
always require a credit report for prospective
tenants
•you are not applying a generalization about
people of a certain group to an individual, and
•you can document your legal reasons for not
renting to a prospective tenant.
But pay attention to the fact that judges, tenants’
lawyers, and government agencies that administer
and enforce fair housing laws know full well that
some landlords try to make up and document legal
reasons to discriminate, when the real reason is that
they just don’t like people with a particular racial,
ethnic, or religious background. So, if you refuse to
rent to a person who happens to be African-American,
has children, or speaks only Spanish, be sure you
document your legitimate business reason specific to
that individual (such as insufficient income or a history
of eviction for nonpayment of rent). Be prepared to
show that your tenant advertising, screening, and
selection processes have been based on objective
criteria and that a more qualified applicant has always
gotten the rental unit.
This section discusses some of the common legal
reasons you may choose or reject applicants based on
your business interests. A valid occupancy limitation
(such as overcrowding) can also be a legal basis for a
refusal, but since this issue is fairly complicated, we
have devoted a separate section to the subject.
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CAUTION
To protect yourself in advance, always docu-
ment your reasons for rejecting a tenant. A tenant whom
you properly reject may nevertheless file a discrimination
complaint with a fair housing agency. Recognizing this, you
want to be able to prove that you had a valid business reason
for refusing to rent to the particular person, such as negative
references from a previous landlord or poor credit history.
is means you need to routinely document your good
reasons for rejecting all potential tenants before anyone files a
discrimination claim. (We discuss how to document why you
chose—or rejected—a particular tenant in Chapter 1.)
Objective Criteria—What Do They Look Like?
“Objective criteria” are tenancy requirements that are
established before a prospective tenant even walks
in the door, and are unaffected by the personal value
judgments of the person asking the question. For
example, a requirement that an applicant must never
have been evicted for nonpayment of rent is “objective”
because it is a matter of history and can be satisfied
by a clear “yes” or “no.” “Subjective criteria,” on the
other hand, have no preestablished correct answers,
and the results of the questions will vary depending
on the landlord who poses the question—for example,
a requirement that the applicant present “a good
appearance” has no predetermined “right” answer and
will be answered differently by each landlord who asks
the question. Subjective criteria are always suspicious in
a housing context because their very looseness allows
them to mask deliberate illegal discrimination.
So much for theory. Here are a few examples of
allowable, objective criteria for choosing tenants:
• two positive references from previous landlords
• sufficient income to pay the rent, and
• a signed waiver allowing landlord to investigate
applicant’s credit history.
Credit Record and Income
You can legitimately refuse to rent to a prospective
tenant who has a history of nonpayment of rent or
whom you reasonably believe would be unable to pay
rent in the future.
Here’s some advice on how to avoid charges of
discrimination when choosing tenants on the basis of
income or credit history.
Do a credit check on every prospective tenant and base
your selection on the results of that credit check. Accepting
or rejecting tenants based on objective criteria tied to a
credit report is the best way to protect yourself against
an accusation that you’re using a bad credit history
as an excuse to illegally discriminate against certain
prospective tenants. For example, if you establish rules
saying you won’t rent to someone with bad credit or
who is evicted by a previous landlord for nonpayment
of rent (information commonly found in credit reports),
be sure you apply this policy to all applicants.
Avoid rigid point systems that rank prospective tenants
on the basis of financial stability and other factors. Some
landlords evaluate prospective tenants by giving each
one a certain number of points at the outset, with
deductions for bad credit and negative references and
additional points for extremely good ones. Points are
also awarded based on length of employment and
income. The person with the highest score gets the
nod. Point systems give the illusion of objectivity, but
because the weight you give each factor is, after all,
subjective, they can still leave you open to charges of
discrimination.
Don’t discriminate against married or unmarried couples
by counting only one spouse’s or partner’s income (typically
the man’s). Always consider the income of both persons
living together, married or unmarried, in order to avoid
the accusation of marital status or sex discrimination.
Don’t give too much weight to years spent at the same
job, which can arguably discriminate against certain occu-
pations. For example, software designers and program-
mers commonly move from one employer to another. If
you insist that an applicant have a minimum number of
years with the same employer, you may open yourself
up to a charge that you are discriminating against appli-
cants based on their “personal characteristics or traits,”
which is against the law.
Negative References From
Previous Landlords
You can legally refuse to rent to someone based on
what a previous landlord or manager has to say—for
example, that the tenant was consistently late paying
rent, broke the lease, or left the place a shambles.
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Civil Lawsuits Involving a Tenant
Background reports typically indicate whether the
applicant has been involved in civil lawsuits, such
as an eviction or breach of contract suit. For many
landlords, an eviction lawsuit is a red flag. Can you
reject a tenant on this basis? It depends.
If a former landlord has filed and won an eviction
lawsuit against an applicant, it may be reasonable to
reject on that basis. And because even tenants who
have won an eviction case are not a “protected class”
under the law, you could also, if you wish, reject a
tenant who prevailed (though it might be irrational to
do so). But keep in mind that your ability to learn of
a tenant’s involvement in an eviction lawsuit is limited
by law: As explained in Chapter 1, “Review Court
Records,” state law “masks,” or seals the court records
of eviction cases for the first 60 days after they’re
filed (with some exceptions). After that, the record
is unmasked unless the tenant was the prevailing
party within those first 60 days. (CCP § 1161.2.) The
reasoning behind this preforeclosure era rule was
simple: Most evictions proceed quickly (landlords want
them over as soon as possible), and will be decided
within 60 days; if the tenant wins, he should not be
penalized by having his screening report reflect the
lawsuit’s filing.
But times have changed. Here’s the problem
with postforeclosure evictions of tenants: Unlike
“normal” landlords, who want evictions done quickly,
banks either deliberately or unintentionally handled
postforeclosure evictions in ways that resulted in
resolutions after 60 days had elapsed, thus preventing
a victorious tenant from having the record permanently
sealed. In many instances, foreclosing banks filed
eviction lawsuits against tenants, but deliberately
delayed taking the cases to trial (waiting more than 60
days after the filing), waiting out the clock to pressure
tenants to give up their rights. These tenants lost the
60-day masking protection even if they won, because
the 60-day period had passed.
Sometimes the delay was unintentional. When
tenants contest a foreclosure-based eviction, the cases
rarely go to trial within 60 days, because proving a
valid sale requires personal attendance of faraway
witnesses, including the process server who served the
notice, and sometimes a realtor. Banks take a while to
get this together and usually try to win by summary
judgment (a pretrial proceeding), but this too typically
takes over 60 days after the date of filing. Again, a
resolution at a trial that occurs more than 60 days after
the case was filed is not amenable to masking—even if
the tenant wins.
The California legislature, concerned that many
such tenants were being denied housing when eviction
filings like these showed up on their screening reports,
passed a law that specifies, as of January 1, 2011,
that eviction lawsuits following a foreclosure can be
reported to credit and screening agencies only if the
new owner gets a judgment against all defendants,
after a trial, within 60 days of filing. (CCP. §1161.2.)
If you see an eviction filing that’s pre-2011 and
learn that it involved a foreclosure, you probably
shouldn’t attach much significance to it. We think that
if the prospective tenant’s credit and rental history
is otherwise good, those are the factors that should
weigh heavily in your decision whether to rent to this
applicant.
The background report may also indicate that the
applicant is now, or has been, involved in another type
of civil lawsuit—for example, a custody fight, a personal
injury claim, or a dispute with an auto repair shop. If
the legal matter has nothing to do with the applicant’s
rental history, ability to pay the rent, or satisfy your
other tenancy requirements, you are on shaky ground
if you base a rejection solely on that basis.
Criminal History
Understandably, many landlords wish to know about
an applicant’s prior criminal history. Can you reject an
applicant because of a conviction for drunk driving, or
murder, or drug use? What if there was an arrest but
no conviction?
Convictions
If an applicant has been convicted for criminal
offenses, you are probably, with one exception,
entitled to reject on that basis. After all, a conviction
indicates that the applicant was not, at least in that
instance, a law-abiding individual, which is a legitimate
criterion for prospective tenants. The exception,
however, involves convictions for past drug use: As
explained below, past drug addiction is considered a
disability under the Fair Housing Amendments Act,
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and you may not refuse to rent to someone on that
basis—even if the addiction resulted in a conviction.
(People with convictions for the sale or manufacture
of drugs, or current drug users, are not, however,
protected under the Fair Housing Act.)
Megan’s Law
Not surprisingly, most landlords do not want to rent
to tenants with convictions for violent sexual offenses
or any sexual offenses against children. Checking
a prospective tenant’s background by ordering an
investigative background report, as explained in
Chapter 1, is one way to find out about a person’s
criminal history. Self-reporting is another: Rental
applications, such as the one in this book, typically ask
applicants whether they have ever been convicted of a
crime and, if so, to provide the details.
“Megan’s Law” may be able to further assist you in
determining whether an applicant has a prior conviction
for any sexual offense against a minor or a violent
sexual offense against an adult. This law requires
certain convicted sexual offenders to register with local
law enforcement officials, who give the information
on their whereabouts to a database maintained by the
state. (Calif. Penal Code § 290.4.) Local law enforcement
officials have the discretion to notify people who live
near offenders who are “high risk” or “serious.”
The Department of Justice posts the database
on a website, www.meganslaw.ca.gov. (Penal Code
§ 290.46.) However, it is a crime to consult the website
database for any reason other than to “protect a
person at risk,” and to subsequently deny housing
to an applicant because of his placement on the list.
Violating this law could result in triple actual damages,
punitive damages, or a civil penalty of up to $25,000,
as well as attorneys’ fees.
Despite these strictures, many landlords routinely
check the Megan’s Law database. If you do, be aware
that it has promised far more than it actually delivers.
The law depends in large part on voluntary registration,
and the not-surprising result is that California has lost
track of nearly half of its sex offenders, according to
data released by the state. (“Officials Admit Megan’s Law
Database Is Missing Thousands,” San Francisco Daily
Journal, January 8, 2003, p. 3.) Hopefully, the other
methods we recommend that you use to learn about
prospective tenants will, taken together, give you a
complete and accurate picture.
Arrests
A more difficult problem is posed by the person who
has an arrest record but no conviction. For starters,
California law strictly forbids a consumer credit
reporting agency (the agency doing the background
check) from reporting an arrest unless there was a
resulting conviction. (CC § 1785.13(a)(6).) Moreover,
even convictions that are more than seven years old
cannot be reported at all. These restrictions apply
to all credit reporting agencies preparing reports for
use in California, even if the agency itself is based in
another state.
State law does not, however, limit the right of an
individual, as opposed to a credit reporting agency,
from asking the question or going to the courthouse
(or court websites) and checking public records. If you
do this and discover that an applicant has an arrest
record, what should you do with this information?
Remember, many arrests result in the charges
being dropped or reduced, and some defendants
are acquitted at trial. A person who was mistakenly
arrested or acquitted by a jury is not necessarily going
to be a bad tenant. Think carefully before you base
a rejection on an arrest record alone, especially if the
arrest is old or involves a crime unrelated to good-
tenant criteria. Be particularly careful if the applicant
is also a member of a racial, ethnic, or other group
that is protected by the fair housing laws. And keep
in mind that if the rest of your background check
(involving former landlords and employers) has been
thorough, chances are that you will come up with solid
information that you can use to reject an applicant
without fear of a fair housing claim.
exAmple: When the bank on Main Street was
robbed, the police broadcast a description of the
robber as a young white male with brown hair,
wearing jeans, and driving a tan Camaro. Andrew
was stopped because he and his car fit this
description, and he was arrested and eventually
stood trial. He was acquitted by the jury when his
attorney was able to show that the fingerprints
left by the robber did not match Andrew’s.
When Andrew applied for an apartment a few
years later, the landlord went to the local county
courthouse and asked to examine the criminal
records of the last several years. He read about
Andrew’s arrest, trial, and acquittal. Because
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Andrew was acquitted and had solid references
from prior landlords and employers, the landlord
disregarded the fact of the arrest and offered him
the apartment.
Immigration Status
Landlords may not legally inquire as to tenants’ or
applicants’ immigration status. (CC § 1940.3.) This is
true even if a local city or county ordinance seems to
require it, as such ordinances are now invalidated by
state law. As we said earlier in Chapter 1, the most you
can do in this regard is ask a tenant whom you hire as
a resident manager or other employee to fill out an IRS
Form I-9, verifying legal ability to work in this country.
Incomplete or Inaccurate
Rental Application
Your carefully designed application form will do its
job only if the applicant provides you with all the
necessary information. Obviously, if you can reject an
applicant on the basis of negative references or bad
credit history, you can reject them for failing to allow
you to check their background, or if you catch them in
a lie.
Inability to Meet Legal Terms of
Lease or Rental Agreement
It goes without saying that you may legally refuse to
rent to someone who can’t come up with the security
deposit or meet some other condition of the tenancy,
such as the length of the lease.
Pets
You can legally refuse to rent to people with pets, and
you can restrict the types of pets you accept. You can
also, strictly speaking, let some tenants keep a pet
and say no to others—because “pet owners,” unlike
members of a religion or race, are not as a group
protected by antidiscrimination laws. However, from a
practical point of view, an inconsistent pet policy is a
bad idea because it can only result in angry, resentful
tenants.
Keep in mind that you cannot refuse to rent to
someone with an animal if that animal is a properly
trained “service” dog for a physically or mentally
disabled person. (For a discussion of renting to pet
owners, see Clause 13 of our form lease and rental
agreements in Chapter 2. Also, see Chapter 12, which
covers landlord liability for injuries caused by tenants’
pets.)
Sources of Discrimination Laws
Now that we have discussed the permissible reasons to
reject an applicant or treat tenants differently, it is time
to turn to the impermissible reasons that constitute
fair housing violations. First, let’s set the stage by
explaining the sources of the antidiscrimination laws.
Landlords in California are subject to at least two,
and sometimes three or four, tiers of law dealing
with illegal discrimination. On the federal side, you
are bound by the federal Fair Housing Act (and its
1988 Amendments) and the Civil Rights Act of 1964
(specifically, Title VII of that Act). In addition, all
California landlords are subject to the Unruh Act and
the Fair Employment and Housing Act, plus provisions
in the Business and Professions Code that proscribe
unfair competition. (Although you might not think of it
this way, courts consider illegal discrimination to be an
illegal business practice, too.) Finally, some landlords
are subject to local ordinances (enacted by their county
or their city) that, either directly or indirectly, forbid
additional types of housing discrimination. The chart
entitled “Illegal Discrimination,” below, summarizes
these laws and the discriminatory practices they forbid.
Why is it important to understand that landlords
are subject to many laws regulating their relationship
with tenants? The obvious answer is that being subject
to the laws of several legislative bodies makes you
vulnerable to challenges from each of the agencies
charged with carrying out these laws. In other
words, an act of discrimination may expose you to
challenges from the federal government (via the federal
Department of Housing and Urban Development,
or HUD), the state government (via the California
Department of Fair Employment and Housing, or
DFEH), or your county or city government (via the
office charged with enforcing housing regulations).
Under the state’s unfair competition laws, you may
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even be sued by government officials or private
citizens who were not themselves the target of the
discriminatory incident. (B&P §§ 17200 and following.)
These statutes have been used by the attorney general,
district attorneys, nonprofit organizations, and even the
Consumers’ Union to file suit to stop discriminatory
practices, even though neither they nor their members
were directly affected by the discrimination.
Forbidden Types of
Discrimination
Essentially, any discrimination that is not rationally
related to a legitimate business reason is illegal under
California law. Courts and administrative agencies
can assess substantial financial penalties for unlawful
discrimination and can order a landlord to rent to a
person who was discriminated against.
Even an innocent owner whose agent or manager
discriminates without the owner’s knowledge can
be sued and found liable. (To protect yourself, make
sure your manager knows the law. See “Managers and
Discrimination,” below, and Chapter 6.) Even if you
unintentionally violate the federal Fair Housing Act or
the state Fair Employment and Housing Act, you can
be found liable. In other words, if your behavior has a
discriminatory impact on a protected class of persons,
your personal intentions are irrelevant.
You might be under the impression that antidis-
crimination laws apply only to your decision to accept
or reject a prospective tenant. The laws’ reach is much
broader, however, and affects almost every aspect of
your business. If a prospective tenant falls within one
of the protected categories described in this section,
antidiscrimination laws prohibit you from taking any of
the following actions:
•advertising or making any statement that
indicates a limitation or preference based on
race, religion, or any other protected category
•falsely stating that a rental unit is unavailable
•setting more restrictive standards for selecting
certain tenants
•refusing to negotiate for a rental agreement or
lease
•providing inferior housing conditions, privileges,
or services
•terminating a tenancy for a discriminatory reason
•providing or suggesting different housing
arrangements (commonly known as “steering”)
•refusing to allow a disabled person to make
“reasonable modifications” to his living space, or
•refusing to make “reasonable accommodations”
in rules or services for disabled persons.
exAmple 1: An owner, Osgood, rents apartments
in his six-unit apartment building without regard
to racial or other unlawful criteria. His tenants
include an African-American family and a single
Latin American woman with children. Osgood
sells his building to Leo, who immediately gives
only these two tenants 30-day notices. Unless
Leo can come up with a valid nondiscriminatory
reason for evicting these minority tenants, they
can successfully defend an eviction lawsuit Leo
brings on the basis of unlawful discrimination.
The tenants can also sue Leo for damages in state
or federal court.
Information on Fair Housing Laws
For more information on the rules and regulations of
the Fair Housing Act, contact HUD’s California office
at 450 Golden Gate Avenue, San Francisco, CA 94102.
Phone: 415-489-6400; to order publications, call 916-
478-7251 (TTY: 800-877-8339). Website: www.hud.gov.
For information on state fair housing laws, contact the
Department of Fair Employment and Housing at 2218
Kausen Drive, Suite 100, Elk Grove, CA 95758. Phone
800-884-1684, 916-478-7251; www.dfeh.ca.gov. You’ll
also find good online information at www.housing.org,
maintained by Project Sentinel, a Northern California
nonprofit organization with consumer education projects,
a free mediation service for landlords and tenants, and
authority to investigate reports of housing discrimination.
For information on local housing discrimination laws,
contact the headquarters of your local government, such
as your city hall or county courthouse.
exAmple 2: Now, let’s assume that Leo, having
lost both the eviction lawsuits and the tenants’
suits for damages against him, still tries to
discriminate by adopting a less blatant strategy—
adopting an inconsistent policy of responding
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to late rent payments. When Leo’s white tenants
without children are late with the rent, he doesn’t
give them a Three-Day Notice to Pay Rent or Quit
until after a five-day grace period, while nonwhite
tenants receive their three-day notices the day
after the rent is due. In addition, Leo is very slow
when nonwhite tenants request repairs. These
more subtle means of discrimination are also
illegal, and Leo’s tenants have grounds to sue him
for damages on account of emotional distress,
plus punitive damages of up to three times that
amount and attorney fees. Leo’s tenants also have
grounds to defend any eviction lawsuit Leo brings
against them.
How Fair Housing Groups
Uncover Discrimination
Landlords who turn away prospective tenants on
the basis of race, ethnic background, or other group
characteristics obviously never come out and admit
what they’re doing. Commonly, a landlord falsely tells
a person who’s a member of a racial minority that no
rentals are available, or that the prospective tenant’s
income and credit history aren’t good enough. From
a legal point of view, this can be a dangerous—and
potentially expensive—tactic. Here’s why: Both HUD
and fair housing groups that are active in many areas
are adept at uncovering this discriminatory practice
by having “testers” apply to landlords for vacant
housing. Typically, a tester who is African-American or
Hispanic will fill out a rental application, listing certain
occupational, income, and credit information. en,
a white tester will apply for the same housing, listing
information very similar—or sometimes not as good—as
that given by the minority applicant.
A landlord who offers to rent to a white tester, and
rejects—without valid reason—a minority applicant
who has the same (or better) qualifications, is very likely
to be found to be guilty of discrimination. Such incidents
have resulted in many hefty lawsuit settlements.
Fortunately, it’s possible to avoid the possibility of legal
liability based on discrimination by adopting tenant
screening policies that don’t discriminate and applying
them evenhandedly.
In the sections that follow, we’ll look at each of the
categories of illegal discrimination and explore their
obvious and not-so-obvious meaning. These are the
“hot buttons” that can get you into trouble with a fair
housing agency.
Race or Religion
Fortunately, the amount of overt racial and religious dis-
crimination has lessened over the last several decades.
This is not to say, however, that discrimination doesn’t
exist, especially in subtle forms. And unfortunately,
housing agencies and the courts may see “discrimina-
tion” where your intent was completely well intentioned.
Below, we’ll look at some of the common examples of
both intentional (but subtle) discrimination and of unin-
tended discrimination.
Intentional, Subtle Discrimination
It goes without saying that you should not overtly treat
tenants differently because of their race or religion—for
example, renting only to members of a certain religion
or race is obviously illegal. Deliberate discrimination
should not be cavalierly dismissed, however, as
something practiced by insensitive oafs. Unexpected
situations can test your willingness to comply with
antidiscrimination laws and can reveal subtle forms
of intentional discrimination that are just as illegal as
blatant discrimination. Consider the following scenario.
exAmple: Several tenants in Creekside Apartments
reserved the common room for a religious
occasion. Creekside management learned that the
tenants were members of a supremacist religion
that believes in the inferiority of all nonwhites
and non-Christians. Creekside was appalled at
the thought of these ideas being discussed on its
premises, and denied the group the use of the
common room. The tenants who were members
of this group filed a discrimination complaint with
HUD on the basis of freedom of religion. HUD
supported the religious group and forced Creekside
to make the common room available. Creekside
wisely sent all tenants a memo stating that making
the common room available reflects management’s
intent to comply with fair housing laws and not
their endorsement of the principles urged by any
group that uses the room.
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As the above example illustrates, religions that
are outside the mainstream are protected under the
discrimination laws.
CAUTION
Don’t make decisions on the basis of how
applicants sound over the phone. Academic studies show
that people can often identify a person’s ethnic background
based on short phone conversations. Researchers tested this
theory on unsuspecting landlords, some of whom rejected
large numbers of African-American applicants compared
to equally qualified white callers. Fair housing advocacy
groups, described in “How Fair Housing Groups Uncover
Discrimination,” above, can be expected to use this tactic as
a way to build a case against landlords whom they suspect of
regular, illegal discrimination.
Unintended Discrimination
Unintended discriminatory messages may be conveyed
when advertisements feature statements such as
“next to the Catholic church” or “Sunday quiet times
enforced.” (Both ads may be understood as suggesting
that only Catholics or Christians are welcome as
tenants.) The same considerations apply to your
dealings with your tenants after they have moved in.
Conscientious landlords should carefully review tenant
rules, signs, newsletters, and all communications to
make sure that they cannot be construed in any way
to benefit, support, or discriminate against any racial
or religious group. The examples and advice we give
below may seem “politically correct” in the extreme,
but take our word for it, they are based on actual fair
housing complaints, and deserve to be taken seriously.
•The apartment complex newsletter invites
everyone to a “Christmas party” held by the
management. Non-Christian tenants might feel
that this event is not intended for them and
therefore that they have been discriminated
against. A better approach: Call it a “Holiday
Party” and invite everyone.
•Management extends the use of the common
room to tenants for “birthday parties, anniver-
saries and Christmas and Easter parties.” A better
idea: Invite your tenants to use the common
room for special celebrations, rather than list
specific holidays.
•In an effort to accommodate your Spanish-
speaking tenants, you translate your move-in
letter and house rules into Spanish. Regarding
the use of alcohol in the common areas, the
Spanish version begins, “Unlike Mexico, where
drinking may be condoned in public places,
alcoholic beverages may not be consumed in
common areas.…” Because this phrase applies
a racial generalization, it may well become the
basis for a fair housing complaint.
•The metropolitan area where you own residential
rental property contains large numbers of both
Spanish-speaking and Cantonese-speaking
people. Advertising in only Spanish, or trans-
lating your lease into only Cantonese, will likely
constitute a fair housing violation because it
suggests that members of the other group are not
welcome.
Ethnic Background and National Origin
Like discrimination based on race or religion,
discrimination based on national origin is illegal,
whether it’s practiced openly and deliberately or
unintentionally. Though a landlord may not openly
state that he doesn’t like certain ethnic or national
groups and therefore will not rent to them, this is not
the end of the story. A landlord who is motivated by a
valid business concern, but who chooses tenants in a
way that singles out people of a particular nationality,
may be found to have acted in a discriminatory
way. Let’s see how a misguided attempt to choose
financially stable, long-term tenants can amount to
discrimination against a nationality.
You may legally reject a tenant who has a shadowy
financial background and has broken prior leases
by suddenly leaving the property. It is common
knowledge that many illegal aliens do not have
verifiable financial histories, and they can be picked
up and deported at any moment. In order to save
the cost of a reference check, can you simply ask a
Latino for his or her immigration papers or proof of
citizenship? The answer is “No,” because California
now prohibits all such questions. If you are worried
about an applicant’s stability, focus on rental history
and employment patterns.
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Illegal Discrimination
State law, and in some cases federal law, absolutely forbids discrimination on the following grounds, regardless of a landlord’s
claim of a legitimate business need.
Type of discrimination
Civil Rights
Act of 1964
1
Fair Housing Act
and Fair Housing
Amendments
Act
2
Unruh
Act (CA)
3
Fair
Employment
and Housing
Act (CA)
4
Court
Decisions
(see
footnotes)
Local
Ordinances
Race
3 3 3 3 3
Ethnic background
3 3 3
National origin
3 3 3
Religion
3 3 3 3
Sex
3 3 3 3
Gender identity
3
Marital status
3 3
5
3
Age and families with children
3 3
6
3
Disability
3 3 3
7
3
Sexual orientation
3 3
8
3
Receipt of public assistance
3
9
Personal characteristic or trait
3
10
1
42 U.S.C. § 1982.
2
42 U.S.C. §§ 3601–3619, 3631.
3
CC §§ 51–53, 54.1–54.8.
4
Government Code §§ 12926, 12955–12988. For specific
prohibition of discrimination on the grounds of marital
status, see Atkisson v. Kern County Housing Authority, 58
Cal. App. 3d 89 (1976); and Hess v. Fair Employment and
Housing Commission, 138 Cal. App. 3d 232 (1982).
5
Smith v. Fair Employment and Housing Commission, 12
Cal. 4th 1143, 51 Cal. Rptr. 2d 700 (1996); and Hess v. Fair
Employment and Housing Commission, 138 Cal. App. 3d
232 (1982).
6
Marina Point, Ltd. v. Wolfson, 30 Cal. 3d 721 (1982),
construes the Unruh Act to prohibit discrimination
against families on the sole basis that they have children.
7
Giebeler v. M & B Associates, 343 F.3d 1143 (2003). If a
prospective tenant is disabled and therefore unable to
work, but has a financially qualified cosigner who will
agree in writing to pay the rent, refusal to accept the
tenant, based on an inflexible policy against cosigners,
could constitute illegal discrimination based on disability.
8
Beaty v. Truck Insurance Exchange, 6 Cal. App. 4th 1455
(1992).
9
59 Ops. Cal. Atty. Gen. 223. However, a landlord may
legally refuse to rent to a tenant who fails to meet
minimum-income criteria, so long as the same test is
applied equally to all applicants regardless of their source
of income. Harris v. Capital Growth Investors XIV, 52 Cal.
3d 1142 (1991). But as to disabled prospective tenants who
don’t meet this criteria, see (7), above.
10
Harris v. Capitol Growth Investors XIV, 52 Cal. 3d 1142 (1991).
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Disability
The federal Fair Housing Act and the state’s Unruh
and Fair Employment and Housing Acts prohibit
discrimination against people who:
•have a physical or mental disability (including,
but not limited to, hearing, mobility and visual
impairments, chronic alcoholism or mental
illness, AIDS, AIDS-Related Complex, HIV-
positive status, and mental retardation) that
substantially limits one or more major life
activities
•have a history or record of such a disability, or
•are regarded by others as though they have such
a disability.
You may be shocked to see what is—and what is
not—considered a disability. Although it may seem
strange, an alcoholic is considered disabled. Does this
mean that you must rent to a drunk? What about past,
and current, drug addiction? Let’s look at each of these
issues.
Alcoholism
You may encounter an applicant, let’s call him Ted,
who passes all your criteria for selecting tenants but
whose personal history includes a disquieting note:
Employers and past landlords let you know they
suspect that Ted has a serious drinking problem that
is getting worse. However, as far as you can tell, Ted
has not lost a job or a place to live due to his drinking
problem. Can you refuse to rent to Ted for fear that he
will drink away the rent, exhibit loud or inappropriate
behavior, or damage your property? No, you cannot,
unless you can point to specific acts of misbehavior
or financial shakiness that would sink any applicant,
regardless of the underlying cause. Your fear alone
that this might happen (however well founded) will
not legally support your refusal to rent to Ted. In a
nutshell, you may not refuse to rent to an alcoholic
simply because of his status as an alcoholic—you must
be able to point to specific facts other than his status
as an alcoholic that render him unfit as a tenant.
exAmple: Patsy applied for an apartment one
morning and spoke with Carol, the manager.
Patsy said she would have to return that afternoon
to complete the application form because she was
due at an Alcoholics Anonymous meeting. Carol
decided on the spot that she did not want Patsy
for a tenant, and she told Patsy that the unit “had
just been rented,” which was a lie. (Patsy saw a
newspaper ad for the unit the next week.) Patsy
filed a complaint with HUD, alleging that she was
an alcoholic who had been discriminated against.
Because Carol could not point to any reason for
turning Patsy away other than her assumption
that Patsy, as an alcoholic, would be a bad tenant,
the judge awarded Patsy several thousand dollars
in damages.
The fact that alcoholism is classified as a disability
does not mean that you must rent (or continue to
rent) to every alcoholic. The law only prohibits you
from turning away (or evicting) an alcoholic solely
because he fits into this classification. If you do a
thorough background check and discover that the
applicant has shown an inability to pay the rent or a
tendency to damage property, you may refuse to rent
on those bases, just as you would refuse to rent to
a nonalcoholic who had the same history. Similarly,
if an alcoholic damages your property or interferes
with your other tenants’ ability to quietly enjoy their
property, this tenant is a candidate for eviction, just
as would be any tenant who exhibited this behavior.
Consider the following scenario, which is what Carol
should have done.
exAmple: Same facts as above, except that Carol
went ahead and took an application from Patsy
later that day and checked her references. Patsy’s
former landlord told Carol that Patsy had refused
to pay for damage from a fire she had negligently
caused; Patsy’s employment history showed
a pattern of short-lived jobs and decreasing
wages. Carol noted this information on Patsy’s
application form and, as she would have done for
any applicant with a similar background, Carol
rejected Patsy. Patsy filed a complaint with HUD,
again claiming discrimination on the basis of her
alcoholism. When the HUD investigator asked
to see Patsy’s application and questioned Carol
about her application criteria for all applicants,
he concluded that the rejection had been based
on legally sound business reasons and was not,
therefore, a fair housing violation.
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CAUTION
When dealing with suspected alcoholism,
mental problems, or drug use, recognize that rejecting on
these bases alone is illegal. Do a thorough investigation: If you
discover that the applicant has negative references or a poor
credit or employment history, use these factors as the basis for
your rejection.
Drug Use
Under the Fair Housing Act, a person who has a past
drug addiction is classed as someone who has a record
of a disability and, as such, is protected under the fair
housing law. You may not refuse to rent to someone
solely because he is an ex-addict, even if that person
has felony convictions for drug use. Put another way,
your fear that the person will resume his illegal drug
use is not sufficient grounds to reject the applicant. If
you do a thorough background check, however, and
discover a rental or employment history that would
defeat any applicant, you may reject the person as long
as it is clear that the rejection is based on these legal
reasons.
On the other hand, people who currently use illegal
drugs are breaking the law, and you may certainly
refuse to rent to them—particularly if you have good
reason to suspect that the applicant or tenant is
dealing drugs. (See Chapter 12 for a discussion of legal
problems you face by allowing current drug users to
live in your property.) Also, if the applicant has felony
convictions for dealing or manufacturing illegal drugs,
as distinct from convictions for possession of drugs for
personal use, you may use that history as a basis of
refusal.
Mental or Emotional Impairments
Like alcoholics or past drug users, applicants and
tenants who have (or appear to have) mental or
emotional impairments must be evaluated based on
their financial stability and histories as tenants, not
on their mental health status. Unless you can point to
specific instances of past behavior that would make
a prospective tenant dangerous to others, or unless
you have other valid business criteria for rejecting the
person, a refusal to rent could result in a fair housing
complaint.
Questions and Actions at May Be Considered
to Discriminate Against the Disabled
You may not ask a prospective tenant if she has a
disability or illness, or ask to see medical records. If it
is obvious that someone is disabled—for example, the
person is in a wheelchair or wears a hearing aid—it is
illegal to inquire about the severity of the disability.
Unfortunately, even the most innocuous, well-
meaning question or remark can get you into trouble,
especially if you decide not to rent to the person.
What you might consider polite conversation may be
taken as a probing question designed to discourage an
applicant.
exAmple: Sam, a Vietnam veteran, was the owner
of Belleview Apartments. Jim, who appeared
to be the same age as Sam and who used a
wheelchair, applied for an apartment. Thinking
that Jim might have been injured in the Vietnam
War, Sam questioned Jim about the circumstances
of his disability, intending only to pass the time
and put Jim at ease. During their conversation,
Sam learned that Jim had not been in Vietnam.
When Jim was not offered the apartment—he did
not meet the financial criteria that Sam applied to
all applicants—he filed a complaint with HUD,
alleging discrimination based on his disability.
Sam was unable to convince the HUD investigator
that his questions were not intended to be
discriminatory and, on the advice of his attorney,
Sam settled the case for several thousand dollars.
A manager’s or landlord’s well-intentioned actions,
as well as his words, can become the basis of a fair
housing complaint. For example, it is illegal to “steer”
applicants to units that you, however innocently, think
would be most appropriate. For example, if you have
two units for rent—one on the ground floor and one
three stories up—do not fail to show both units to
the applicant who is movement impaired, however
reasonable you think it would be for the person to
consider only the ground floor unit.
e Rights of Disabled Tenants
You must also concern yourself with the Fair Housing
Act after you have rented a home to a disabled person.
The Fair Housing Act requires that you:
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•accommodate the needs of a disabled tenant, at
your expense (42 U.S.C. § 3604(f)(B) (1988)), and
•allow disabled tenants to make reasonable
modifications of their living unit at their expense
if that is what is needed for the person to
comfortably and safely live in the unit. (42 U.S.C.
§ 3604(f)(3)(A) (1988).)
We’ll look briefly at each of these requirements.
Accommodation. Landlords and managers are
expected to adjust their rules, procedures, or services
in order to give a person with a disability an equal
opportunity to use and enjoy a dwelling unit or
a common space. Accommodations include such
things as:
•providing a close-in, spacious parking space for a
wheelchair-bound tenant
•allowing a guide dog or other “service animal” in
a residence that otherwise disallows pets
•allowing a special rent payment plan for a tenant
whose finances are managed by someone else or
by a government agency
•arranging to read all communications from
management to a blind tenant, and
•providing a tub and clothesline for a mentally ill
tenant whose anxiety about machines makes her
unable to use the washer and dryer.
Does your duty to accommodate disabled tenants
mean that you must bend every rule and change
every procedure at the tenant’s request? Generally
speaking, the answer is “No”: Landlords are expected
to accommodate “reasonable” requests, but they need
not undertake changes that would seriously impair
their ability to run their business.
Modification. Where your duty to accommodate
ends, your obligation to allow the tenant to modify
may begin. A disabled person has the right to modify
private living space to the extent necessary to make
the space safe and comfortable, as long as the
modifications will not make the unit unacceptable to
the next tenant or the disabled tenant agrees to undo
the modification when the tenancy is over, subject to
reasonable wear and tear. Examples of modifications
undertaken by a disabled tenant include:
•lowering counter tops for a wheelchair-bound
tenant
•installing special faucets or door handles for
persons with limited hand use
•modifying kitchen appliances to accommodate a
blind tenant, and
•installing a ramp to allow access to a wheelchair.
How to Respond to Unreasonable Requests
for Accommodations or Modifications
e law requires you to agree to “reasonable” requests
for accommodations or modifications. You don’t have
to go along with unreasonable ones, but you can’t
simply say “No” and shut the door. You must engage
in what HUD calls an “interactive process” with the
disabled person. In essence, this means you have to get
together and try to reach an acceptable compromise.
For example, suppose you require tenants to pay rent in
person at the manager’s office. A disabled tenant asks
that the manager collect the rent at her apartment.
Since this would leave the office unstaffed, you suggest
instead that the tenant mail the rent check. is is a
reasonable compromise.
You are not obliged to allow disabled tenants to
modify their unit at will, without your prior approval.
You are entitled to ask for a reasonable description of
the proposed modifications, proof that they will be
done in a workmanlike manner, and evidence that the
tenant is obtaining any necessary building permits.
Moreover, if a tenant proposes to modify the unit in
such a manner that will require restoration when the
tenant leaves (such as the repositioning of lowered
kitchen counters), you may require that the tenant pay
into an interest-bearing escrow account the amount
estimated for the restoration. (The interest belongs to
the tenant.)
Verification of Disabled Status
When a tenant or applicant asks for a modification or
accommodation, it may be obvious that the person
falls within the legal definition of a disabled person,
and that the request addresses that disability. In those
cases—think of a blind applicant who asks to keep
a seeing eye dog—it would be pointless for you to
demand proof that the person is disabled and needs
the accommodation. (Indeed, doing so might result
in a harassment lawsuit.) However, many times the
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claimed disability, and the appropriateness of the
request, are not so clear. You’re entitled to ask for
verification, but you must do so carefully.
For years, landlords asked for a doctor’s letter.
Now, according to a HUD and Department of Justice
guidance memo, you must be willing to listen to
less formal sources. (Reasonable Accommodations
Under the Fair Housing Act, Joint Statement of the
Department of Housing and Urban Development and
the Department of Justice, May 17, 2004.) Sources of
reliable information include:
•The individual himself. A person can prove
that he is disabled (and that a modification or
accommodation addresses that disability) by
giving you a “credible statement.” Unfortunately,
the guidance memo does not define this term.
•Documents. A person who is under 65 years of
age and receives Supplemental Security Income
or Social Security Disability Insurance benefits
is legally disabled. Someone could establish
disability by showing you relevant identification
cards. Likewise, license plates showing the
universal accessibility logo, or a driver’s license
reflecting the existence of a disability, are
sufficient proof.
•Doctors or other medical professionals, peer support
groups, nonmedical service agencies. Information
from these sources might come through letters,
phone calls, or personal visits.
•Reliable third parties. This wide-open source of
information could include friends, associates, and
roommates, though some fair housing experts
interpret this phrase as meaning any “third party
professional who is familiar with the disability.”
We don’t know whether this definition will
become the standard used by courts.
e Americans with Disabilities Act (ADA)
The federal Americans with Disabilities Act, commonly
known as the “ADA,” provides widespread protection
to disabled people in the realm of employment and
public and commercial accommodations. (42 U.S.C.
§§ 12101 and following.) Landlords who employ
workers are subject to its requirements, but the impact
of the ADA doesn’t stop here. The ADA applies to
two additional areas, even for landlords who are not
employers:
•Common areas and areas open to the public.
Areas of common use, such as the lobby and
passageways, including the rental office, must
comply with the ADA, whereas rental units
are subject to the federal Fair Housing Act, the
Unruh Act, and the state Fair Employment and
Housing Act.
•Telecommuters or persons with home business
offices. The ADA exempts facilities covered by
the federal Fair Housing Act, but the exemption
may not apply when the residence is also used as
a commercial site. Under federal law, even some-
thing as simple as a business call from a home
office to another state could constitute an act of
“commerce,” thus bringing the home office with-
in the purview of the ADA. The requirements of
the ADA apply only to new construction, or when
alterations are made in the existing building.
(Landlords are not required to “retrofit” existing
structures.) Of major importance to the landlord
is the interpretation by the U.S. Department of
Justice that the accessibility requirements extend
not only to the commercial site itself (the home
office), but to entryways, doorways, hallways,
and restrooms if these aspects of the building
are used by the telecommuter’s or home worker’s
business invitees.
The implications of the ADA’s requirements are
significant. Unlike the federal Fair Housing Act, there
is nothing in the ADA that requires the landlord to
allow modification of the structure at the tenant’s
expense. The ADA simply mandates that the structure
be in compliance; it is up to the landlord and the
tenant/home office worker to work things out between
themselves. Keep these considerations in mind if a
tenant proposes to set up a home office, especially one
that will host business invitees or the public at large.
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New Buildings and the Disabled
e Fair Housing Amendments Act (42 U.S.C. §§ 3604(f)
(3)(C) and 3604(f)(7)) imposes requirements on new
buildings of four or more units that were first occupied
after March 1991. All ground floor units and every unit
in an elevator building must be designed or constructed
so that:
• the main building is accessible and on an
accessible route
• the public and common areas are “readily
accessible to and usable by” the disabled,
including parking areas (a good rule of thumb is to
reserve 2% of the spaces)
• entryway doorways have 36" of free space plus
shoulder and elbow room; and interior doorways
are at least 32" wide
• interior living spaces have wheelchair-accessible
routes throughout, with changes in floor height of
no more than ¼"
• light switches, outlets, thermostats, and other
environmental controls are within the legal “reach
range” (15" to 48" from the ground)
• bathroom walls are sufficiently reinforced to allow
the safe installation of “grab bars,” and
• kitchens and bathrooms are large enough to allow
a wheelchair to maneuver within the room (40"
turning radius minimum) and have sinks and
appliances positioned to allow side or front use.
For more information, search “fair housing accessibility
guidelines” at www.hud.gov.
Familial Status
Discrimination on the basis of familial status includes
not only affirmatively refusing to rent to families with
children or to pregnant women, but also trying to
accomplish the same goal by setting overly restrictive
space requirements (limiting the maximum number
of people permitted to occupy a rental unit), thereby
preventing families with children from occupying
smaller units.
Below we discuss how to establish reasonable
occupancy standards. The fact that you can legally
adopt occupancy standards, however, doesn’t mean
you can use “overcrowding” as a euphemism for
refusing to rent to tenants with children, if you would
rent to the same number of adults. A few landlords
have adopted criteria that for all practical purposes
forbid children under the guise of preventing
overcrowding—for example, allowing only one person
per bedroom, with a couple counting as one person.
Under these criteria, a landlord would rent a two-
bedroom unit to a husband and wife and their one
child, but would not rent the same unit to a mother
with two children. This practice, which has the effect
of keeping all (or most) children out of a landlord’s
property, would surely be found illegal in court and
would result in monetary penalties.
It is also illegal to allow children only on ground
floors, or to designate certain apartments as separate
adult units and family units.
It is essential to maintain a consistent occupancy
policy. If you allow three adults to live in a two-
bedroom apartment, you had better let a couple with
a child (or a single mother with two children) live in
the same type of unit, or you leave yourself open to
charges that you are illegally discriminating.
exAmple: Jackson owned and managed two
one-bedroom units in a duplex, one of which he
rented out to three flight attendants who were
rarely there at the same time. When the other
unit became vacant, Jackson advertised it as a
one-bedroom, two-person apartment. Harry
and Sue Jones and their teenage daughter were
turned away because they exceeded Jackson’s
occupancy limit of two people. The Jones family
filed a complaint with HUD, whose investigator
questioned Jackson regarding the inconsistency
of his occupancy policy. Jackson was convinced
that he was in the wrong, and agreed to rent to
the Jones family and to compensate them for the
humiliation they had suffered as a result of being
refused.
You cannot legally refuse to rent on account of a
woman’s pregnancy (whether she is single, married,
or with an unmarried cohabitant). Doing so is illegal
discrimination based on sex. (Government Code
§ 12926(p).) When the birth of a child would result
in exceeding your uniformly applied and reasonable
occupancy standards, you should proceed with caution
and contact an attorney knowledgeable in this area.
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Finally, do not inquire as to the age and sex of any
children who will be sharing the same bedroom. This
is their parents’ business, not yours. (The General
Counsel for HUD wrote in a July 1995 memo that
consideration by a landlord of the age and sex of
tenant children was a violation of the Fair Housing Act
with respect to sex discrimination.)
Marital Status
Under California law, landlords may not discriminate
on the basis of marital status. This means that you
cannot refuse to rent to single renters because you’d
rather have married people in your building; nor may
you refuse to rent to married tenants because you want
a “singles only” environment.
But what about renting to people who appear to be
a couple but who aren’t married? Can a landlord who
believes that cohabitation is morally wrong refuse to
rent to unmarried couples? The answer is a firm “No.”
(Smith v. Fair Employment & Housing Commission, 12
Cal. 4th 1143, 51 Cal. Rptr. 2d 700 (1996).)
Age
The federal Fair Housing Act does not expressly use
the word “age,” but nevertheless discrimination on
the basis of age is definitely included within the ban
against discrimination on the basis of familial status.
The Unruh Act, on the other hand, explicitly forbids
discrimination on the basis of age. While the issue
of age discrimination usually arises in the context of
families with children, it is also present in the practice
of some landlords to rent to only “youthful” applicants,
or to set quotas of young versus elderly tenants
in order to preserve a certain “mix” of residents.
Sometimes called “reverse discrimination,” choices
made on the basis of advanced age are as illegal as
those based on youth. Housing reserved exclusively for
senior citizens, which must meet strict requirements, is
exempted. CC § 51.3 defines senior citizen housing as
that reserved for persons 62 years of age or older, or a
complex of 150 or more units (35 in nonmetropolitan
areas) for persons older than 55 years. The federal law
definition is almost identical. (42 U.S.C. § 3607.)
A charge of age discrimination could arise in
situations where the landlord’s intentions are well
meaning but the consequences are illegal. For
example, we are often reminded that ours is an aging
society, and that with the increase in the number of
older adults comes the need for appropriate housing.
Some older tenants may not, however, be able to live
completely independently—for example, they may
rely on the regular assistance of a nearby adult child
or friend. Can you, as the landlord, refuse to rent to
an older person solely because you fear that frailty or
a dimming memory will pose a threat to the health or
safety of the rest of your tenants?
The answer to this question is “No.” You may feel
that your worry about elderly tenants is well founded,
but unless you can point to an actual incident or to
facts that will substantiate your concern, you cannot
reject an elderly applicant on the basis of your fears
alone. For example, you could turn away an older
applicant if you learned from a prior landlord or
employer that the person regularly forgot to lock the
doors, failed to pay the rent on time, or demonstrated
an inability to undertake basic housekeeping chores.
In other words, if the applicant has demonstrated an
inability to live alone as a renter, your regular and
thorough background check should supply you with
those facts, which are legally defensible reasons to
refuse to rent. If you reject an applicant solely on your
“hunch” that the person will never be able to make it
alone, you are setting yourself up for a fair housing
complaint. As for your stylistic preference for youthful
tenants, this is age discrimination in its purest form,
and it will never survive a fair housing complaint.
exAmple 1: Nora’s 80-year-old mother, Ethel,
decided that it was time to find a smaller place
and move closer to her daughter. Ethel sold her
home and applied for a one-bedroom apartment
at Coral Shores. Ethel had impeccable references
from neighbors and employers and an outstanding
credit history. Nonetheless, Mike, the manager of
Coral Shores, was concerned about Ethel’s age.
Fearful that Ethel might forget to turn off the
stove, lose her key, or do any number of other
dangerous things, Mike decided on the spot not
to rent to her. Ethel filed a fair housing complaint,
which she won on the basis of age discrimination.
Learning from his experience with Ethel, Mike, the
manager at Coral Shores, became more conscientious
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in screening tenants. The following example shows
how he avoided another lawsuit on age discrimination.
exAmple 2: William was an elderly gentleman
who decided to sell the family home and rent
an apartment after his wife passed away. He
applied for an apartment at Coral Shores. Since
William had no “prior rental history,” Mike, the
manager, drove to William’s old neighborhood
and spoke with several of his former neighbors.
Mike also called William’s personal references.
From these sources, Mike learned that William
had been unable to take care of himself the last
few years, having been completely dependent
on his wife. Mike also learned that, since his
wife’s death, William had made several desperate
calls to neighbors and family when he had been
unable to extinguish a negligently started kitchen
fire, find his keys, and maintain basic levels
of cleanliness in his house. Mike noted these
findings on William’s application and declined to
rent to him on the basis of these specific facts.
You may also find yourself in the situation of having
rented to someone who has lived alone competently
for years but who, with advancing age, appears to
be gradually losing the ability to safely live alone.
Determining the point when the tenant should no
longer live alone is a judgment call that will vary with
every situation, and we cannot provide a checklist
of “failings” that will suffice for everyone. There is,
however, one universal ground rule that will, by now,
sound pretty familiar: You cannot evict merely on the
basis of the person’s elderly status, nor can you base
your actions solely on your fears of what that person
might do. You must be able to point to real, serious
violations of the criteria that apply to all tenants before
you can take action against an elderly violator.
CAUTION
Elderly tenants may also qualify as disabled
tenants, who are entitled to accommodation under the law.
An elderly tenant who, because of age, cannot meet one of
your policies may be entitled to special treatment because the
tenant also qualifies as someone disabled. (See the discussion
of discrimination on the basis of disability, below.) In other
words, you may not be able to use an elderly tenant’s inability
to abide by one of the terms of the tenancy as the basis of
an eviction—instead, you may be expected to adjust your
policy in order to accommodate the disability. For example,
an elderly tenant who is chronically late with the rent because
of sporadic disorientation might be entitled to a grace period
or a friendly reminder from the landlord or manager when the
rent is due; whereas a nondisabled tenant who is chronically
late with the rent may be a proper candidate for a three-day
notice.
Renting to Minors
You may wonder whether the prohibition against age
discrimination applies to minors (people under age 18).
If the minor applicant is “legally emancipated”—which
means that the young person must be legally married,
have a court order of emancipation, or be in the
military—the minor has the same status as an adult. is
means you will need to treat the applicant like any other
adult. In short, if the applicant satisfies the rental criteria
that you apply to everyone, a refusal to rent to this
minor could form the basis of a fair housing complaint.
On the other hand, if the applicant is not emancipated,
it’s probably not legal for the person to be on their own
in the first place; and in any event, chances are that the
applicant’s credit history or financial status will not meet
your requirements. e person could be rejected on that
basis.
Sex
Sex discrimination sometimes takes the form of
refusing to rent to single women with a certain
income, but renting to men with similar incomes,
though this is rare. It can also take the form of
refusing to rent to a pregnant woman, whether she is
single or with a cohabitant or spouse. (Government
Code § 12926(p); for more on this, see the discussion
on Familial Status discrimination above.) Sex
discrimination also sometimes takes the form of sexual
harassment—refusing to rent to a person who resists a
landlord’s or manager’s sexual advances, or making life
difficult for a tenant who has resisted such advances.
What is sexual harassment in a rental housing
context? Courts have defined it as:
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•a pattern of persistent, unwanted attention
of a sexual nature, including the making of
sexual remarks and physical advances, or a
single instance of highly egregious behavior. A
manager’s repeated requests for social contact
or constant remarks concerning a tenant’s
appearance or behavior could constitute sexual
harassment, as could a single extraordinarily
offensive remark, or
•a quid pro quo, in which a tenant’s rights are
conditioned upon the acceptance of the owner’s
or manager’s attentions. For example, the
manager who refuses to fix the plumbing until
the tenant agrees to a date is guilty of sexual
harassment. This type of harassment may be
established on the basis of only one incident.
exAmple: Oscar, the resident manager of
Northside Apartments, was attracted to Martha,
his tenant, and asked her repeatedly for a date.
Martha always turned Oscar down and asked
that he leave her alone. Oscar didn’t back off,
and began hanging around the pool whenever
Martha used it. Oscar watched Martha intently
and made suggestive remarks about her to the
other tenants. Martha stopped using the pool and
filed a sexual harassment complaint with HUD,
claiming that Oscar’s unwanted attentions made
it impossible for her to use and enjoy the pool.
Oscar refused to consider a settlement when the
HUD investigator spoke to him and Martha about
his actions. As a result, HUD pursued the case
in court, where a federal judge awarded several
thousand dollars in damages to Martha.
CAUTION
Sexual harassment awards under the Civil
Rights Act have no limits. Owners and managers who engage
in sexual harassment risk being found liable under Title VII
of the 1964 Civil Rights Act, which also prohibits sexual
discrimination. ere are no limits to the amount of punitive
damages that can be awarded in Title VII actions. Punitive
damages are generally not covered by insurance, and it is far
from clear whether even actual damages in a discrimination
case (that is, nonpunitive damages, such as pain and suffering)
will be covered, either. See below for a discussion of insurance
coverage in discrimination cases.
What’s It All About?
California law prohibits discrimination on the basis of
sex, sexual orientation, and gender identity. Are you
confused by these terms? You’re not alone. Here’s what
they mean:
• Sex. Landlords cannot refuse to rent to someone
(or set different policies) on the basis of that
person’s sex. For example, you can’t decide that
you’ll not have women living in the ground floor
units, nor can you turn down male applicants
because you think that men will cause more wear
and tear than women.
• Sexual orientation. You can’t discriminate against
people who are gay, lesbian, or bisexual, or whom
you think are gay, lesbian, or bisexual.
• Gender identity. You cannot discriminate against
people who have changed their gender, which
means that they have transitioned from the
gender they were assigned at birth to the opposite
gender. Transgendered individuals transition
to their new persona by dressing and acting
according to their chosen gender, and often by
taking hormones or having surgery.
Most savvy landlords will focus on an applicant’s
ability to pay the rent, credit history, and rental history. If
you do the same, the applicant’s manner and private life
won’t concern you.
Sexual Orientation
It is illegal to discriminate on the basis of someone’s
sexual orientation in California. “Sexual orientation”
includes heterosexuality, homosexuality, and bisexuality.
(Government Code §§ 12920 and following.)
Gender Identity
It is against state law to discriminate on the basis of a
person’s gender or gender identity. (Government Code
§ 12926.) This means that you may not refuse to rent
to someone who has changed, or is in the process
of changing, his or her gender, through hormone
treatment, surgery, or both. In practical terms, if an
applicant’s dress and mannerisms don’t match your
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expectation for that individual’s stated gender identity,
you cannot legally refuse to rent on that basis.
Smoking
Discrimination against smokers is not specifically
prohibited by any civil rights law, and no California
court has ruled that such discrimination is prohibited.
Because “smokers,” as a class, are not a specifically
protected group, would it be legal for a landlord
to turn away a smoker, or charge higher rent, or
designate certain apartments as “nonsmoking” only?
(Remember, each of these acts would be illegal
if systematically practiced against members of a
particular race, religion, ethnicity, or other protected
group.) Or, to look at it from another perspective,
would discrimination against smokers constitute
discrimination on the basis of a person’s “personal
characteristics” or “personal trait” (discussed in more
detail below), which is illegal under the Unruh Act?
There is no clear answer to this question, and we
can only suggest how a court might approach the
issue. Let’s start by remembering the point made many
times when discussing legal reasons to discriminate:
If a valid business reason underlies your housing
decision, and if you apply the criterion across the
board to every applicant and tenant, the mere fact
that a particular individual happens to belong to a
protected class will not turn your decision into an act
of illegal discrimination. When we apply this principle
to the question of smokers, a number of ideas come to
mind in defense of a “No Smokers” policy:
•Smoke = expense. Smoke damages carpets, drapes,
and paint. If this type of damage is considered
“normal wear and tear,” which you pay for, you
will end up with greater repair and replacement
costs by renting to a smoker. You could “build
in” the cost of smoke-damaged premises by
tacking it onto a security deposit, at least up
to the point of the maximum amount of the
deposit as limited by state law. (See Chapter 5.)
You could also make a strong argument that
smokers create added maintenance and repair
costs, which constitutes a valid business reason
to charge a higher rent, limit the number of
smokers’ units, or prohibit smoking in common
areas or altogether.
•Smoke = liability. The health dangers from
secondhand smoke are understood and
acknowledged. (California’s Air Resources Board
has added second-hand smoke to its list of
toxic air contaminants.) Indeed, California has
a statewide law forbidding smoking in most
workplaces and in restaurants (local restrictions
may be even stricter). (Labor Code § 6404.5.) It
would seem illogical to require a restaurant to
prohibit smoking, but not allow a landlord to
make the same rule. And if a pile of stinking
garbage constitutes a nuisance, over which the
landlord can be successfully sued, why not the
Medical Marijuana Smoking
We do not believe California or federal law requires
landlords to allow marijuana possession, use, or
cultivation on the premises, even where the tenant has
medical approval to use it. In 1996, California voters
enacted Proposition 215, known as the “Compassionate
Use Act,” which simply removed state (but not federal)
criminal penalties for the use, possession, and cultivation
of small amounts of marijuana for doctor-approved
medical purposes. is law, however, did not make
marijuana legal for such individuals under federal law.
For that reason, the federal Americans with Disabilities
Act (ADA) does not require this kind of accommodation.
Second, the California Supreme Court has ruled
that in the employment context, the California Fair
Employment and Housing Act—which also applies
to rental housing—does not forbid employment
discrimination on this basis. We therefore think that
landlords are not under any legal duty to accommodate
use, possession, or cultivation of even small amounts of
marijuana by a tenant who has a doctor’s approval to
doso.
In other words, it’s up to you if you want to allow
medical-marijuana smoking in your rental, but you don’t
have to. ink carefully before allowing the cultivation of
even small amounts of marijuana on your property. Keep
in mind that in a multiunit building, non-marijuana-
using tenants in the same building may complain about
the unwanted smoke—and unwanted marijuana “highs.”
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pervasive, unpleasant, and unhealthy stench from
stale smoke in the apartment lobby or laundry
room?
Remember, no court case has specifically upheld the
landlord’s right to limit his premises to nonsmokers,
or to otherwise apply different rental terms and
conditions to smokers. Whether such a practice
would pass the “legitimate business interest” test,
or whether it would run afoul of the prohibition
against discrimination on the basis of one’s “personal
characteristic,” is yet to be known.
Public Assistance
You may not refuse to rent to applicants simply
because they are receiving public assistance. You may,
however, refuse to rent to persons whose incomes
fall below a certain level, as long as you apply that
standard across the board. For example, if you require
all prospective tenants to have a $2,000 monthly
income before you will consider renting to them,
the fact that this excludes welfare recipients who
receive only $900 a month does not constitute illegal
discrimination under the Unruh Act. (In Harris v.
Capital Growth Investors XIV, 52 Cal. 3d 1142 (1991),
the California Supreme Court ruled that a landlord who
insisted a tenant’s monthly income equal three times
the rent did not unlawfully discriminate in violation of
the Unruh Act.) In addition, you cannot exclude any
welfare or other assistance payments an applicant may
receive when computing the applicant’s total income,
for purposes of your income-to-rent ratio. Using the
example above, if an applicant receives a subsidy of
$900 and has other income that, added to the subsidy,
meets or exceeds your income requirements, you
cannot disregard the subsidy.
Finally, you would be guilty of unlawful discrimi-
nation if you normally rented to tenants regardless
of income, but set an income requirement for public
assistance recipients; or if you refused to rent to a
person who qualified under your guidelines solely
because that applicant received welfare.
Note on Low-Income Tenants
Many tenants with low incomes may qualify for federally
subsidized housing assistance, the most common being
the Section 8 program of the federal Department of
Housing and Urban Development (HUD). (“Section 8”
refers to Section 8 of the United States Housing Act
of 1937, 42 U.S.C. § 1437(f).) at program subsidizes
tenants’ rents by paying part of the rent directly to the
landlord. e local housing authority, landlord, and
tenant enter into a one-year agreement, which includes
a written lease supplied by the county housing authority.
e tenant pays up to 30% of his monthly income to the
landlord, and the housing authority pays the landlord
the difference between the tenant’s contribution and
what it determines is the market rent each month.
Section 8 offers several advantages to the landlord:
• e larger part of the rent is paid on time every
month by the housing authority.
• If the tenant doesn’t pay the rent and you have
to evict him, the housing authority guarantees
the tenant’s unpaid portion, and also guarantees
payment for damages to the property by the
tenant, up to a certain limit.
Section 8’s disadvantages are that:
• e housing authority’s determination of what is
market rent is often low.
• e landlord is locked into a tenancy agreement
for one year, and can’t terminate the tenancy
except for nonpayment of rent or other serious
breach of the lease. Even then, 90 days’ notice
is required. (CC § 1954.535; Wasatch Property
Management v. DeGrate, 35 Cal. 4th 1111
(2005).) (Evictions based on grounds other than
nonpayment of rent are difficult.)
You have the right to decide not to participate
in the Section 8 program without violating any
antidiscrimination laws. Call the housing authority in
the county where your property is located if you wish
to participate in the Section 8 program. ey will refer
eligible applicants to you and will prepare the necessary
documents (including the lease) if you decide to rent to
an eligible applicant.
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Personal Characteristics or Traits
After reading the above list outlining the types of
discrimination forbidden by California and federal
law, you might be tempted to assume that it is legal to
discriminate for any reason not mentioned by name
in a state, federal, or local law. For example, because
none of the civil rights laws specifically prohibits
discrimination against men with beards or long
hair, you might conclude that such discrimination is
permissible. This is not true.
Even though California’s Unruh Civil Rights Act con-
tains only the words “sex, race, color, religion, ancestry,
or national origin” to describe types of discrimination
that are prohibited, illegal discrimination is not limited
to these categories. The California Supreme Court has
ruled that discrimination on the basis of an individual’s
“personal characteristic or trait” is also illegal. This
means that you may not discriminate on the basis of
a current or prospective tenant’s geographical origin,
physical attributes, or personal beliefs. (Harris v.
Capital Growth Investors XIV, 52 Cal. 3d 1142 (1991).)
What does this tell landlords who hate lawyers and
decide never to rent to one, or who don’t approve of
long-haired men? In a word, it ought to tell them that
discrimination on these grounds, since it is based on
the person’s appearance or occupation (which are
personal characteristics or traits), is against the law.
We come once again to the landlord’s guiding light
for housing decisions: Only valid business reasons,
applied uniformly to all tenants, will make it past a fair
housing complaint.
exAmple: Sara owns a small apartment complex
in a university town. She has had a recurring
problem renting to students, many of whom have
abandoned their leases, flaunted her policies
regarding unauthorized cotenants, and caused
inordinate wear and tear. Since many of the
student tenants come from out of state, suing
them successfully in small claims court has been
difficult. Deciding that renting to students is a
poor business practice, Sara adopts a “no out-of-
state students” policy.
Sara’s policy is an invitation to a fair housing
complaint. Prospective student tenants could argue
that her approach constitutes discrimination on the
basis of a personal characteristic (being a student) and
geographic origin (coming from out of state), both of
which are against the law under the Supreme Court’s
interpretation of the Unruh Act. But what about Sara’s
experience with student tenants? Is there a legal way
to protect her business?
The answer to Sara’s problems lies in tightening
up her procedures with respect to all applicants.
For example, if she requires everyone to provide
several references from prior landlords, she should
be able to weed out the applicants who are likely to
break the lease and leave. In order to be fair to those
students who have no rental history, Sara might accept
employer references or require the students’ parents
to cosign the lease. The lease should make it clear
that the presence of unauthorized, long-term guests is
grounds for eviction; it is up to Sara to be vigilant and
make sure that this rule is not ignored.
Waterbeds
State law forbids an owner of property built after
January 1973 from refusing to rent to tenants simply
because they have waterbeds. (CC § 1940.5.) However,
the landlord may insist on strict standards in leases
and rental agreements (discussed under Clause 20 in
Chapter 2).
Occupancy Limits
The fact that discrimination against families with
children is illegal does not mean you have to rent a
one-bedroom apartment to a family of five. You can
legally establish reasonable space-to-people ratios, but
you cannot use overcrowding as a pretext for refusing
to rent to tenants with children, if you would rent to
the same number of adults.
A few landlords have adopted criteria that for all
practical purposes forbid children under the guise of
preventing overcrowding—for example, allowing only
one person per bedroom, with a couple counting as
one person. Under these criteria, a landlord would
rent a two-bedroom unit to a husband and wife and
their one child, but would not rent the same unit to a
mother with two children. This practice has the effect
of keeping all (or most) children out of a landlord’s
property and for this reason is likely illegal. At the
least, it’s strong evidence of an intent to discriminate.
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One court has ruled against a landlord who did
not permit more than four persons to occupy three-
bedroom apartments. (Zakaria v. Lincoln Property
Co., 185 Cal. App. 3d 500, 229 Cal. Rptr. 669 (1986).)
In Smith v. Ring Brothers Management Corp., 183 Cal.
App. 3d 649, 228 Cal. Rptr. 525 (1986), another court
held that a rule precluding a two-child family from
occupying a two-bedroom apartment violated a local
ordinance similar to state law.
The state Fair Employment and Housing Commis-
sion has ruled that a Los Angeles apartment owner
who limited occupancy to one person per bedroom—
when state health and safety laws would have allowed
as many as ten people in a two-bedroom apartment
there—had clearly intended to exclude children.
The tenants who had been denied an apartment and
complained to the state were awarded $2,500 each.
Occupancy Limits and the Uniform Housing Code
e Uniform Housing Code (the UHC) is part of California’s
state housing law, and is intended to prevent the unhealthy
and dangerous results of overcrowding. (H&S § 17922(a)(1).)
e UHC addresses the question of occupancy in terms of
the size of the rental’s bedrooms. A room that the landlord
has “designed or intended” to be used as a bedroom (CC
§ 1941.2(a)(5)) must be at least 70 square feet for one
person, plus an additional 50 square feet for each additional
occupant:
• One person: 70 square feet
• Two people: 120 square feet, and
• ree people: 170 square feet (UHC § 503).
Cities are free to adopt their own occupancy
specifications, and some (notably San Francisco) have
allowed for more occupants per bedroom.
You may be wondering what happens when a rental bed-
room is too small, in terms of square feet, to permit applica-
tion of the “two-per-bedroom-plus-one” rule. For example, in
a city that has not adopted its own occupancy standards (and
is thus subject to the UHC rules), can the landlord prohibit
three people from occupying a one-bedroom apartment if
the bedroom is less than 170 square feet?
We are not aware of any California cases that have settled
this question—but we can offer some guidelines based on a
federal appellate court’s conclusions and our own common
sense. As long as the square-foot guidelines that you are
following were developed and are applied in order to
prevent overcrowding, and not as a means to weed out
families, it’s likely that a court would consider them
reasonable. And if a landlord applies square-foot guidelines
equally to all tenants (not to just families, for example), we
don’t see why he couldn’t vary the two-per-bedroom-plus-
one rule in appropriate situations. is was the conclusion
reached by a federal appellate court in Ohio (Fair Housing
Advocates Ass’n, Inc. v. City of Richmond Heights, Ohio, 209
F.3d 626 (6th Cir. 2000)).
is said, we urge you to apply a good dose of common
sense. Unless you are prepared for a time-consuming and
potentially expensive challenge by disappointed tenants
(who may find willing advocates in a fair housing advocacy
group), think long and hard before you refuse to rent a
smallish one-bedroom unit to a couple with one child,
or a two-bedroom unit to a family with three children,
even if each bedroom falls slightly below the 170 square
foot minimum for three people . It’s unlikely that you’ll
be challenged by the health and safety authorities if three
children occupy one somewhat too small room; it’s more
likely that you’ll face a fair housing complaint if you refuse
to rent to this family. In instances of severe overcrowding,
of course, you’ll need to follow the law, but again, be sure
that you don’t “draw the line” in a manner that consistently
excludes families but not groups of adults.
The Fair Employment and Housing Commission is
the enforcement arm of the California Department of
Fair Employment and Housing (DFEH). The DFEH
(one of the places a tenant can complain about
discrimination) will investigate a complaint for possible
filing with the Commission based on a “two-plus-one”
rule: If a landlord’s policy is more restrictive than two
persons per bedroom plus one additional occupant,
it is suspect. Thus, a landlord is asking for trouble
by insisting on no more than two people in a one-
bedroom unit, four in a two-bedroom unit, six in a
three-bedroom unit, and so on. However, a landlord
who draws the line by refusing to rent to more
than three people to a one-bedroom, five to a two-
bedroom, and seven to a three-bedroom unit will be
on safe ground.
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Are there any situations in which you can safely go
below the “two per bedroom plus one” rule? In a word,
rarely. You will have to be able to convincingly argue
that physical limitations of your infrastructure (such as
a limited plumbing system or an extraordinarily small
dwelling) justify an occupancy standard that is lower
than the state rule. Very few landlords have done so
successfully. (Pfaff v. U.S. Dept. of Housing and Urban
Development, 88 F.3d 739 (9th Cir. 1996).)
It is equally important to maintain a consistent
occupancy policy. If you allow three adults to live in
a two-bedroom apartment, you had better let a couple
with a child live in the same type of unit, or you
leave yourself open to charges that you are illegally
discriminating.
Children born to tenants. In a non-rent-controlled
city, you can evict tenants with month-to-month rental
agreements by giving a 30-day notice (60 days for
tenants having lived there a year or more), provided
you do not have an illegal discriminatory motive. Be
careful, though, if your reason for evicting is that a
tenant has given birth or adopted. You should not evict
for this reason unless the new arrival results in illegal
overcrowding based on the two-plus-one rule. You
also should realize that any tenants, particularly ones
who are expecting a child, are likely to be upset if you
ask them to move. They may scrutinize your rental
policies and practices toward families with children,
and may initiate a complaint with the Department of
Fair Employment and Housing or even file a lawsuit.
You may be within your rights to insist on a
reasonable rent increase after a child is born, provided:
•Your tenant has only a month-to-month rental
agreement rather than a lease fixing rent for a
specific period.
•Your property is not subject to rent control.
(Some cities, including San Francisco, rule out
childbirth as a rationale for a rent increase.)
•The rent increase is reasonable and truly based
on the number of occupants in the property.
Legal Penalties for Discrimination
A landlord who unlawfully discriminates against a
tenant or prospective tenant may end up in state
or federal court or before a state or federal housing
agency facing allegations of discrimination.
Showing you how to defend a housing discrimin-
ation lawsuit is beyond the scope of this book. With
the exception of a suit brought in small claims court,
you should see an attorney if a tenant sues you or
files an administrative complaint against you for
discrimination. Contact your insurance company
if a lawsuit or claim is filed against you. You may
be entitled to a defense (and perhaps coverage
for a settlement or verdict as well) under your
comprehensive general liability policy.
A tenant may complain about illegal discrimination
by filing a lawsuit in state or federal court, or by filing
an administrative complaint with the U.S. Department
of Housing and Urban Development (HUD) or the
California Department of Fair Employment and
Housing (DFEH). Commonly, the federal courts
require that the tenant first file a complaint with HUD.
Discrimination on grounds not prohibited by federal
law, such as marital status or sexual orientation,
can generally be taken only to the state court or to
California’s Department of Fair Employment and
Housing. Similarly, HUD usually, but not always,
requires that the tenant first file a complaint with the
state agency.
State and federal courts and housing agencies that
find that discrimination has taken place have the
power to:
•Order a landlord to rent a particular piece of
property to the person who was discriminated
against.
•Order the landlord to pay the tenant for “actual”
or “compensatory” damages, including any
higher rent the tenant had to pay as a result
of being turned down, and damages for
humiliation, emotional distress, or embarrass-
ment. The state Fair Employment and Housing
Commission cannot award actual damages
based on humiliation, emotional distress, and
so on; only state or federal courts can award
these types of damages. (Walnut Creek Manor v.
Fair Employment and Housing Commission, 54
Cal. 3d 245, 284 Cal. Rptr. 718 (1991).) Still, the
Commission can award damages based on higher
rent the tenant had to pay, and punitive damages
of up to $1,000 for each illegal act. This rule
does not bind federal agencies.
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•Make the landlord pay punitive damages (extra
money as damages for especially outrageous
discrimination) and the tenant’s attorney fees.
Under the federal Fair Housing Act, which covers
discrimination based on sex, race, religion, disability,
family status, and national or ethnic origin, punitive
damages may be as high as $16,000 for a first violation
and $65,000 for a third violation within seven years.
For racial discrimination, however, higher punitive
damages are allowed under the Civil Rights Act of
1964. (Morales v. Haines, 486 F.2d 880 (7th Cir. 1973);
Lee v. Southern Home Sites Corp., 429 F.2d 290 (5th
Cir. 1970).) The state’s Fair Employment and Housing
Commission’s power to award punitive damages is
limited to $1,000 per violation.
Under California’s Unruh Civil Rights Act, triple
actual damages may be awarded in a lawsuit for a
violation of discrimination laws, and at least $4,000
must be awarded when tenants go to court and win.
Small claims courts can award damages of up to their
maximum jurisdictional amounts of $10,000. For more
information on small claims courts, see Everybody’s
Guide to Small Claims Court in California, by Ralph
Warner (Nolo).
RESOURCE
If you wish to know more about complaint
procedures, contact HUD or the DFEH. See “Information on
Fair Housing Laws,” above.
Owner-Occupied Premises
and Occasional Rentals
Even small-scale landlords are subject to the fair
housing laws. Regularly renting out a single apartment
or house, or even half of an owner-occupied duplex,
constitutes the operation of a business to which the
Unruh Act applies. An owner-occupant of a duplex,
triplex, or larger complex is governed by civil rights
laws in the renting of the other unit(s) in the building,
even though the owner lives in one of the other units,
because the owner-occupant is renting out property
for use as a separate household, where kitchen or
bathroom facilities aren’t shared with the tenant.
(See Swann v. Burkett, 209 Cal. App. 2d 685 (1962),
and 58 Ops. Cal. Atty. Gen. 608 (1975).) The state
Fair Employment and Housing Act applies as well.
The federal Fair Housing Acts apply only to owner-
occupied properties of four or more units. (In practical
terms, however, this exemption for smaller owner-
occupied properties is somewhat irrelevant, since the
applicable state laws are more protective than their
federal counterparts).
But what about owners who rent to single boarders,
or who are one-time or occasional landlords? If you’re
in one of these categories, some fair housing require-
ments may not apply, provided you meet certain
requirements, as explained in the two sections below.
Rentals to Single Boarders in
Single-Family Homes
We have all seen advertisements like this, in
newspapers and newsletters and on supermarket
bulletin boards: “Widow seeks single, older Christian
lady to share her home as a boarder ….” Based on
what you know about illegal housing discrimination,
you might wonder how these advertisements escape
prosecution. Isn’t the ad above a perfect example of
marital, age, religious, and sexual discrimination?
The answer is “Yes.” But the reality of the situation
is that few spurned boarders, and certainly fewer
government agencies, are interested in suing one-
person landlords and forcing them to accept a house-
mate not of their choosing. And state housing law
(Government Code §§ 12955(c) & (d) and 12927(c))
does, in any event, make housing preferences perfectly
legal as long as there is:
•only one boarder, and
•no discriminatory advertising.
The ban against discriminatory advertising means
that the owner must not make any discriminatory
“notices, statements or advertisements.” As you might
expect, this requirement has proved to be quite
unworkable. How can the widow communicate her
preferences for her boarder without making any
“notices, statements or advertisements”?
Perhaps in response to this absurdity, the legislature
amended the state Fair Employment and Housing
Law to provide that advertisements for a boarder of
a certain sex will not be considered a discriminatory
act. (Government Code § 12927(2)(B).) Federal law
has a similar exception. In other words, the widow
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mentioned above would be on solid ground if she
mentions only her desire for a female roommate; but
her stated preferences for an elderly, single Christian
would still, theoretically, be a violation of the fair
housing laws.
Occasional Rentals
State fair housing laws also apply to owners who rent
out their homes on a one-time or even occasional basis.
What if you rent out your home while on a temporary
job assignment in another state, or while your family
takes an extended summer vacation? What if you’re
a teacher who rents out your home during every
sabbatical—an occasional but regular rental situation?
Unfortunately, the answers to these questions
are not very clear. On the one hand, the Unruh Act
applies only to “business establishments,” which would
seem to exclude the sporadic or one-time rental, but
possibly not the infrequent-but-regular rental. Before a
landlord quickly decides that he is not subject to Unruh,
however, it would be prudent to remember that the
California Supreme Court has been mandated to apply
Unruh “in the broadest sense reasonably possible.”
(Burks v. Poppy Construction Company, 57 Cal. 2d 463,
20 Cal. Rptr. 609 (1962).) Moreover, the Fair Employment
and Housing Act applies generally to “owners,” and is
not restricted to business establishments.
What should careful landlords conclude regarding
their fair housing duties? We recommend that you
comply with all of the fair housing laws, in your
advertisements, statements, and practices.
Managers and Discrimination
If you hire a manager, particularly one who selects
tenants, make certain that person fully understands
laws against housing discrimination. (See Chapter 6 on
landlord liability for a manager’s conduct and strategies
for avoiding problems in this area.)
You should always let your tenants know that you,
as well as your manager, intend to abide by the law,
and that you want to know about and will address any
fair housing problems that may arise. While this will
not shield you from liability if you are sued due to your
manager’s conduct, it might (if you are lucky) result in
the tenant’s initial complaint being made to you, not
a fair housing agency. If you hear about a manager’s
discriminatory act and can resolve a complaint before it
gets into “official channels,” you will have saved yourself
a lot of time, trouble, and money.
One way to alert your tenants and prospective
tenants to your commitment to the fair housing laws is
to include in all ads, applications, and other material
given to prospective tenants a section containing your
antidiscrimination stance. Prepare a written policy
statement as to the law and your intention to abide
by it. Post this statement in the manager’s office or
somewhere on the premises, and give a copy to all
prospective tenants.
Sample Statement on Equal
Opportunity in Housing
From: Shady Dell Apartments
To: All Tenants and Applicants
It is the policy of the owner and manager of Shady
Dell Apartments to rent our units without regard to
a tenant’s race, ethnic background, sex, age, religion,
marital or family status, physical disability, or sexual
orientation. As part of our commitment to provide
equal opportunity in housing, we comply with all
federal, state, and local laws prohibiting discrimination.
If you have any questions or complaints regarding our
rental policy, call the owner at (phone number).
If, despite your best efforts, you suspect that your
manager—whether on purpose or inadvertently—is
using unlawful discriminatory practices to select or deal
with tenants, you should immediately resume control
of tenant selection and property management yourself.
Alternatively, this may be the time to shield yourself
from potential liability and engage the services of an
independent property management company, who
theoretically will conduct themselves within the law.
Insurance Coverage for
Discrimination Claims
Despite your best efforts to avoid discriminating in
the selection and treatment of your tenants, you may
find yourself the subject of a fair housing claim. Will
your insurance policy cover the cost of defending the
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claim and, if you lose, the cost of the settlement or
judgment? The answers to these questions depend
entirely on two highly variable factors: the wording
of your insurance policy and the court decisions, if
there are any, about the meaning of the words. In
short, there are no answers that will apply to everyone,
but we can alert you to the issues that arise in every
situation. At the very least, knowing how insurance
companies are likely to approve or deny defense and
judgment costs should help you evaluate your own
policy.
In this section we’ll review the kinds of insurance
coverage that most owners are likely to carry. Next,
we’ll discuss the key insurance terms (“bodily injury,”
“occurrence,” and “personal injury”) that are called into
question when coverage for discrimination is involved.
It is beyond the scope of this book to conclusively
analyze every possible policy, but at the very least it
will be clear to every landlord that since insurance
coverage for discrimination claims is far from assured,
your need to prevent fair housing violations in your
business must be taken extremely seriously.
RELATED TOPIC
Chapter 12 discusses broad types of liability
insurance, coverage for managers and other employees, and
coverage for injuries suffered as a result of defective conditions
on the property.
Typical Liability Insurance Policy
Most owners of residential rental property carry
a comprehensive liability insurance policy, which
typically includes business liability coverage. With this
type of coverage, the insurance company agrees to pay
on your behalf all sums that you are legally obligated
to pay as damages “for bodily injury, property
damage or personal injury caused by an occurrence
to which this insurance applies.” The policy will
generally define the three key terms “bodily injury,”
“occurrence,” and “personal injury.” The meaning of
these terms in the context of a discrimination claim
will determine whether the insurance company will
cover any particular defense and the claim. Let’s look
at them more closely.
The Insurance Company’s Duty to Defend:
Broader Than the Duty to Cover
When you purchase liability insurance, you have bought
two things: the promise of the insurance company to
defend you if you are sued for an act that arguably falls
within the coverage of the policy, and their promise
to settle or pay the damage award if you lose. But
sometimes (as is the case in fair housing claims), it is
unclear whether, assuming you lose the case, your policy
covers the conduct that gave rise to the claim. When this
happens, your insurance company will usually defend
you, but they may reserve the right to argue about
whether they are obligated to pay the damages if the
case is lost.
Definition of “Bodily Injury”
Discrimination complaints rarely include a claim that
the victim suffered a physical injury at the hands of
the landlord or manager. It is far more likely that the
tenant or applicant will sue for the emotional distress
caused by the humiliation of the discriminatory act.
Is a claim for emotional distress covered under the
policy’s definition of “bodily injury”?
“Bodily injury” is typically defined as injury, disease,
or sickness. In a case alleging a violation of the federal
fair housing laws brought in federal court in California,
the owner and the insurance company argued about
whether the policy could cover the injury that the
plaintiff (the tenant) was claiming. The owner was able
to convince the court that the policy would apply to
the tenant’s claim of emotional distress because the
tenant had physical manifestations (dry throat and
stomach cramps) that accompanied the mental distress.
(State Farm Fire & Cas. Co. v. Westchester Investment
Co., 721 F.Supp. 1165 (C.D. Cal. 1989).) In short, the
court concluded that, if proved, the emotional distress
was an “injury” because there were more than mental
symptoms. Keep in mind, however, that this ruling
applies only to federal fair housing cases. California
state courts, which typically hear state claims (those
brought under the state Fair Employment and Housing
Act, Unruh, and others), are not bound by this federal
court ruling.
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Definition of “Occurrence”
Your insurance company will defend and pay out on
a claim if it is caused by an occurrence to which the
policy applies. An “occurrence” is typically defined as
an accident, the results of which are neither expected
nor intended from the standpoint of the insured (the
property owner). So, even if you make it past the
emotional-distress-isn’t-bodily-injury hurdle, your
insurance company may successfully deny coverage if
it can convince a judge that an act of discrimination is
not an “occurrence” under the policy.
An insurance company can easily argue that an
act of discrimination—like turning away a minority
applicant—cannot be considered an “occurrence,”
since it is by definition intentional, not accidental. In
California, courts have ruled that an intentional act is
not an “accident” that would bring the action within
the policy. (Commercial Union Insurance Company v.
Superior Court of Humboldt County, 196 Cal. App. 3d
1205, 242 Cal. Rptr. 454 (1987); see also Royal Globe
Insurance Company v. Whitaker, 181 Cal. App. 3d 532,
226 Cal. Rptr. 435 (1986).)
In one case, however, where it was the manager’s
act of discrimination that formed the basis of the
complaint, the owner was able to successfully argue
that the alleged negligent supervision of the manager
constituted the “accident” necessary to bring the
conduct within the scope of the policy. (State Farm
Fire & Cas. Co. v. Westchester Investment Co., 721
F.Supp. 1165 (C.D. Cal. 1989).) This theory wouldn’t
work if the owner herself were the one who allegedly
committed the fair housing violation.
Definition of “Personal Injury”
Now that we’ve explained how an insurance company
might deny coverage because the discrimination
complaint claims nonphysical, intentional injury, we
have some possibly better news. Insurance policies
also typically provide coverage for “personal injury,”
or an injury that arises out of the conduct of your
business. Personal injuries typically include false arrest,
libel, slander, and violation of privacy rights; they also
include “wrongful entry or eviction or other invasions
of the right of private occupancy.” As you can see
from this definition, personal injuries include things
that are neither bodily injuries nor accidental. And
the definition includes some offenses, like libel, that
seem somewhat similar to discrimination. Why, then,
wouldn’t a discrimination claim be covered under a
policy’s definition of “personal injury”?
The answer lies in the legal meaning of the phrase
“wrongful entry or eviction or other invasions of the
right of private occupancy,” which is part of the defini-
tion of “personal injury.” Does an act of discrimination
fit within this phrase? Very few courts have addressed
this question, but of those that have, the answers are
quite mixed. For example, coverage has been denied
on the grounds that “discrimination” is a specific
wrong and, had the insurance company intended
to cover discrimination, it would have specifically
mentioned it (as it did with the terms libel, eviction,
and the others). Coverage for discrimination claims by
applicants who have been turned away has, however,
been allowed by one federal court in California in a
case alleging a violation of the federal Fair Housing
Act. (State Farm Fire & Cas. Co. v. Westchester
Investment Co., 721 F.Supp. 1165 (C.D. Cal. 1989).)
In sum, there are at least three ways that insurance
companies can deny coverage, if not also the defense,
of a fair housing claim and award: They can claim that
the discriminatory act resulted in emotional distress,
which is not a type of bodily injury; they can argue
that an act of discrimination was intentional, and
thus not an accidental occurrence to which the policy
applies; and they can argue that discrimination is
not one of the personal injuries that are covered by
the policy. We suggest that you give the matter some
thought when choosing a broker and negotiating your
policy; but by far the best use of your energy is to
make sure that your business practices do not expose
you to these claims in the first place.
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Discrimination and Public Policy
An insurance company will occasionally argue that it
should not have to cover a landlord’s intentional acts of
discrimination because discrimination is an evil act that
someone should not be able to insure against. While this
argument has some persuasive aspects—discrimination
is, indeed, contrary to public policy—it falls apart when
you acknowledge that all sorts of other intentional
bad acts (like libel and slander) are perfectly insurable.
Courts have not been persuaded by the “public policy”
argument.
l
CHAPTER
10Cotenants, Subtenants, and Guests
Renting to More an One Tenant ..............................................................................................................170
Cotenants’ Responsibilities ...........................................................................................................................170
Disagreements Among Cotenants ............................................................................................................171
Subtenants and Sublets .......................................................................................................................................171
Subtenants’ Responsibilities .........................................................................................................................171
If a Tenant Wants to Sublet ..........................................................................................................................172
When a Tenant Brings in a Roommate ......................................................................................................173
Giving Permission for a New Roommate...............................................................................................173
Guests and New Occupants You Haven’t Approved ......................................................................174
If a Tenant Leaves and Assigns the Lease to Someone ..................................................................... 174
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C
onscientious landlords go to a lot of trouble
to screen prospective tenants. All those
sensible precautions, however, may do you
no good if unapproved tenants move in, in addition
to or in place of the people you chose. You may have
trouble getting the new tenants to pay rent or pay for
damage to the unit. And, if worse comes to worst, you
may have a tough time evicting them.
Fortunately, you can usually avoid these problems,
and others, by spelling out cotenants’ and subtenants’
rights and responsibilities in your lease or rental
agreement.
Common Definitions
Cotenants. Two or more tenants who rent the same
property under the same lease or rental agreement, both
being jointly liable for the rent and other terms of the
agreement. Roommates and couples who move in at the
same time are generally cotenants.
Subtenant. Someone who rents all or part of the
premises from a tenant (not the landlord). e tenant
continues to exercise some control over the rental
property, either by occupying part of the unit or
intending to retake possession at a later date.
Sublease. A written or oral agreement by which a
tenant rents to a subtenant.
Roommates. Two or more unrelated people living
under the same roof and sharing rent and expenses. A
roommate may be a cotenant or a subtenant.
Assignment. e transfer by a tenant of all the rights
of tenancy to another, who is the “assignee.”
RELATED TOPIC
Our form agreements (Chapter 2) spell out
these respective rights and responsibilities by:
•limiting the number of people who can live in the rental
property (Clause 3)
•allowing only the persons whose names appear on
the lease or rental agreement, along with their minor
children, to live in the property (Clauses 1 through 3)
•requiring the landlord’s written consent in advance for
any sublet, assignment of the lease or rental agreement,
or for any additional people to move in (Clause 10), and
•allowing tenants’ guests to stay no more than ten days
in a six-month period (Clause 3).
Renting to More an
One Tenant
When two or more people rent property together, and
all sign the same rental agreement or lease (or enter
into the same oral rental agreement when they move
in at the same time), they are cotenants. Each cotenant
shares the same rights and responsibilities under
the lease or rental agreement. Neither cotenant may
terminate the other’s tenancy.
Cotenants’ Responsibilities
In addition to having the same rights and responsi-
bilities, each cotenant is independently obligated to
abide by the terms of the agreement. All cotenants are
legally responsible to the landlord.
Paying Rent
Each cotenant, regardless of agreements they make
among themselves, is liable for the entire amount of
the rent.
exAmple: James and Helen sign a month-to-
month rental agreement for a $1,500 apartment.
They agree between themselves to each pay half
of the rent. After three months, James moves
out without notifying Helen or the owner, Laura.
As one of two cotenants, Helen is still legally
obligated to pay all the rent (although she might
be able to recover James’s share by suing him in
small claims court).
Laura has three options if Helen can’t pay the
rent:
•Laura can give Helen a Three-Day Notice
to Pay Rent or Quit, and follow through
with an unlawful detainer (eviction)
lawsuit if Helen fails to pay the rent or
move within the three days.
•If Helen offers to pay part of the rent,
Laura can legally accept it, but Helen is
still responsible for the entire rent. (It’s
common for roommate cotenants to offer
only “their portion” of the rent, when in
ChApter 10|COTENANTS, SUBTENANTS, AND GUESTS
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171
fact they’re all jointly liable for it all; see
Chapter 3 for a detailed discussion of
accepting partial rent payments.)
•If Helen wants to stay and find a new
cotenant, Laura can’t unreasonably with-
hold her approval. She should, however,
have the new cotenant sign a rental
agreement.
Violations of the Lease or Rental Agreement
In addition to paying rent, each tenant is responsible
for any cotenant’s action that violates any term of the
lease or rental agreement—for example, if one co-
tenant seriously damages the property, or moves in
an extra roommate or a pit bull, contrary to the lease
or rental agreement, all cotenants are responsible.
The landlord may terminate the entire tenancy with
the appropriate three-day notice, even if some of the
cotenants objected to the rule-breaking or weren’t
consulted by the prime offender.
If you have to evict a tenant for a breach other than
for nonpayment of rent (in which case you would evict
all the tenants), you must decide whether to evict only
the offending cotenant or all of them. Your decision
will depend on the circumstances. You obviously don’t
want to evict an innocent cotenant who has no control
over the troublemaker who just brought in a pit bull—
assuming the innocent one can still shoulder the rent
after the roommate is gone. On the other hand, you
may wish to evict all cotenants if they each share some
of the blame for the problem.
Disagreements Among Cotenants
Usually, cotenants orally agree among themselves
to split the rent and to occupy certain parts of the
property, such as separate bedrooms. Not infrequently,
this sort of arrangement goes awry. If the situation gets
bad enough, the tenants may start arguing about who
should leave, whether one cotenant can keep the other
out of the apartment, or who is responsible for what
part of the rent.
The best advice we can give landlords who face
serious disagreements between cotenants is not to
get involved, as a mediator or otherwise. If one or
more cotenants approach you about a dispute, explain
that they must resolve any disagreements among
themselves. Remind them that they are each legally
obligated to pay the entire rent, and that you are not
affected by any agreement they have made among
themselves.
If one tenant asks you to change the locks to keep
another cotenant out, tell the tenant that you cannot
legally do that. If the tenant fears violence from a co-
tenant, refer the tenant to the local superior court,
where the tenant can seek a restraining order. A
landlord may not lock out one tenant unless a court
has issued an order that the tenant stay out.
There is one kind of disagreement between co-
occupants that can affect you, however, to which you
might want to respond. If one occupant terminates a
lease and leaves because a co-occupant has committed
domestic violence, stalking, or sexual assault on her
or him, as is allowed under CC § 1946.7, you could
seek to evict the other occupant staying behind, using
a three-day notice, on the basis that he (or she) has
committed a legal nuisance. (See Chapter 19 for more
on domestic violence situations.)
Subtenants and Sublets
A subtenant is a person who rents all or part of the
property from a tenant and does not sign the rental
agreement or lease with the landlord. A subtenant is
someone who either:
•rents (sublets) an entire dwelling from a tenant
who moves out temporarily—for the summer, for
example, or
•rents one or more rooms from the tenant, who
continues to live in the unit.
If a tenant moves out permanently and transfers
all his rights under the lease or rental agreement to
someone else, that new tenant is not a subtenant; this
person is an “assignee.”
Subtenants’ Responsibilities
The tenant functions as the subtenant’s landlord. The
subtenant is responsible to the tenant for whatever rent
they’ve agreed on between themselves. The tenant,
in turn, is the one responsible to the landlord for the
rent. Even a tenant who has temporarily moved out
and sublet the property is liable to the landlord—this
is true even if the landlord, for convenience, accepts
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rent from the subtenant. Doing so does not make the
subtenant the landlord’s tenant.
A subtenant has an agreement only with the tenant.
This is true even if the subtenant is approved by the
landlord. Because the subtenant does not have a
separate agreement with the landlord, the subtenant
does not have the same legal rights and responsibilities
as a tenant.
The subtenant’s right to stay depends on the tenant’s
right to stay. So if you can legally evict the tenant,
then you can evict the subtenant. For example, if
the lease or rental agreement prohibited the tenant
from subleasing without the landlord’s consent,
and the tenant brought in a subtenant anyway, the
tenant would be in breach of the lease. The landlord
could evict the tenant for this breach, and since the
subtenant’s right to stay depends on the tenant’s right
to stay, the landlord could evict the subtenant, also.
If a Tenant Wants to Sublet
Our lease and rental agreements require the tenant
to obtain the landlord’s written consent in advance in
order to sublet or bring in additional people to live in
the unit. (See Chapter 2, Clause 10.) This will let you
control who lives in your property. (If you want to
collect damages against a tenant with a lease or rental
agreement who leaves early, you cannot unreasonably
withhold your consent to sublet. See Chapter 19 for a
discussion of this concept of the landlord’s obligation
to mitigate damages.)
Suppose you wish to accommodate a tenant who
wants to sublet for six months while out of the area,
and you approve the proposed subtenant. You may
want to insist on signing a written agreement with the
new person for the six-month period that the original
tenant plans to be away. That makes the new person
a regular tenant who is liable to you for the rent, not a
subtenant who is liable to someone else (the tenant).
You should also get the original tenant to sign
a document, such as the sample Termination of
Tenancy Agreement shown below, stating that the
original tenant agrees to terminate his tenancy. This
will terminate the tenancy so that you can rent the
property to the new tenant. Then, when the first tenant
returns and the second leaves, you can again rent to
the first, using a new agreement.
Termination of Tenancy Agreement
I,
name of tenant
,
agree that my tenancy at
address
,
entered into on
date of original agreement
, 20xx,
will terminate
eff ective date of termination
, 20xx.
Signature of tenant
Tenant
Date
If the original tenant is uneasy about you renting
to the subtenant directly, and asks you how he will
get the unit back if the new tenant is reluctant to
leave at the end of six months, as long as your lease
or rental agreement prohibits subletting, your answer
should be a polite version of, “That’s your problem.”
Think of it this way: By asking you the question, your
tenant admits that he doesn’t completely trust the new
tenant, even though he selected that person. You don’t
want to be in the middle of this type of situation. It’s
better that the original tenant bear the brunt of any
problem—if there is one—than you.
If, on the other hand, you want to hold the original
tenant’s place and allow him to come back after the
six months, you may decide to consent to the sublet.
Although the subtenant won’t be liable to you for the
rent, you can still evict the subtenant if the rent isn’t
paid. If the rent continues to be paid but the subtenant
won’t leave after the six months, it’s up to the tenant to
evict the subtenant.
CAUTION
House sitters are subtenants. Even if your tenant
doesn’t collect rent from a house sitter, that person is legally
still a subtenant. Treat a house sitter the way you’d treat any
proposed subtenant: Remind the tenant that your written
consent is required and, if you have any qualms about the
ability of the tenant to keep paying the rent, insist that the
house sitter become a regular tenant, as explained above.
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173
When a Tenant Brings
in a Roommate
Suppose love (or loneliness) strikes your tenant and he
wants to move in a roommate? Assuming your lease or
rental agreement restricts the number of people who
can occupy the unit (as ours does in Clause 3), the
tenant must get your written permission for additional
tenants.
San Francisco’s Master Tenants
A San Francisco ordinance has created the legal category
of “master tenant” in shared housing situations. A master
tenant (or tenants) is the person who signs the lease or
rental agreement with and is responsible to the landlord.
is master tenant then has the legal authority to rent
to others, unless, of course, the lease or rental agreement
(as ours do) prohibits subletting without the landlord’s
prior written consent.
Normally, landlords are well advised to make late-
arriving subtenants full-fledged cotenants, to remove
a layer of management and make every tenant equally
answerable to the landlord. But under San Francisco’s
rent control ordinance, landlords are prohibited from
raising the rent to market levels as long as an original
tenant—the master tenant—still remains. If the landlord
adds the new occupant as a cotenant, and the original
master tenant leaves before the new cotenant, the
landlord will not be able to raise the rent to market
levels. For this reason, it’s to the landlord’s advantage
to leave any new occupant in the position of being a
subtenant, because only then will the landlord preserve
his right to raise the rent to market rates if the original,
master tenant leaves before any later-arriving subtenant.
Giving Permission for a New Roommate
Obviously, your decision to allow a new cotenant
should be based on whether you believe the new
person will be a decent tenant. If your tenant proposes
to move in a new person who has a good credit record
and isn’t otherwise objectionable, and there is enough
space in the unit, you may want to allow the new
roommate. (See Chapter 9 for overcrowding standards
that you may lawfully impose.) If the new occupant is
a spouse or registered domestic partner and there’s no
problem with overcrowding, be careful before you say
no. Refusal to allow your tenant to live with a spouse
or registered domestic partner could be considered
illegal discrimination based on marital status.
Raising the Rent
When an additional tenant comes in, it is perfectly
reasonable for you to raise the rent (or the security
deposit), if it is allowed under local rent control laws.
To accomplish this, have both the original and new
occupants sign a new lease or rental agreement at the
higher rent, as cotenants. Failing that, if it’s a month-
to-month rental agreement, you could increase the rent
by a 30-day notice (60 days’ for a rent increase over
10%), provided you don’t care about the new occupant
being a subtenant who is not liable to you directly.
Obviously, more people living in a residence means
more wear and tear and higher maintenance costs in
the long run. Also, a rent increase when an additional
tenant moves in should cause little hardship to the
current occupants, who will now have someone else
to pay part of the rent. The new rent should be in line
with rents for comparable units occupied by the same
number of persons.
If the existing tenant has a fixed-term lease, you
will have to change the lease to raise the rent. As
long as the lease allows a set number of tenants and
requires your permission before the tenant moves in
new people, you can legally withhold your permission
until the lease is changed to provide a reasonable
rent increase. If the property is subject to rent control,
however, you may need to petition the local rent
control board for permission to increase the rent based
on an increased number of occupants. (For more on
rent control, see Chapter 4.)
Prepare a New Rental Agreement or Lease
If you allow a new person to move in, make sure the
newcomer becomes a full cotenant. You’ll need to
prepare a new lease or rental agreement for signature
by all tenants. Do this before the new person moves
in, to avoid the possibility of a legally confused
situation.
exAmple: Chung, the landlord, rents to Suzy. Olaf
moves in later without signing a rental agreement
or lease. Because Olaf has not entered into a
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contract with Chung, he starts with no legal rights
or obligations to Chung. His obligations to Suzy,
as her subtenant, depend on their agreement
regarding the rent and Olaf’s right to live in the
apartment. Suzy is completely liable for the rent
and for all damage to the premises, whether
caused by Olaf or herself, because she, not Olaf,
entered into a contract with Chung. Olaf would
only be liable for damage he negligently caused,
if Chung could prove that Olaf was the one who
caused the damage.
Guests and New Occupants
You Haven’t Approved
Our rental agreement and lease allow guests to stay
overnight up to ten days in any six-month period,
without your written permission. (See Chapter 2,
Clause 3 of the proposed agreement.) The value of
this clause is that a tenant who tries to move someone
in for a longer period has violated the lease or rental
agreement, which gives you grounds for termination
(discussed below).
If a tenant simply moves a roommate in on the sly—
despite the fact that your lease or rental agreement
prohibits it—or it appears that a “guest” has moved in
clothing and furniture and has begun to receive mail
at your property, take decisive action right away. If
you don’t take action, the roommate will turn into a
subtenant or a cotenant—one you haven’t screened or
approved of.
A subtenant, despite not having all the rights of
a tenant, is entitled to the same legal protection, to
which a tenant is entitled. Such an individual must be:
•served a separate Three-Day Notice to Pay Rent
or Quit
•named in an eviction lawsuit, and
•served with legal papers.
An unauthorized resident creates a lot more hassle
for you in the event of an eviction, and a tremendous
hassle if you never learn the resident’s name. (For
details on the eviction process, see Chapter 18 and The
California Landlord’s Law Book: Evictions.)
You may want to make the roommate or guest a
cotenant by preparing a new lease or rental agreement.
You may also increase the rent or the security deposit
unless that’s prohibited by any applicable rent control
ordinance. If you do not want to rent to the guest or
roommate and if that person remains on the premises,
or if that person refuses to sign a lease or rental
agreement (asking to be a “permanent guest”), make it
clear that you will evict all occupants based on breach
of the occupancy terms of the lease.
If your tenant has a month-to-month tenancy in an
area where there is no rent control, and the tenant
is not renting under a federal housing program, you
can always give the tenant a 30-day notice to leave,
without giving any reason. (We discuss terminations of
tenancy in Chapter 18.)
$
RENT CONTROL
If your property is in a rent-controlled area or
other city requiring just cause for eviction, see Chapters 4
and 18. Generally, moving in an illegal tenant should qualify
as just cause to get rid of the tenant under most rent control
ordinances, because it is a significant violation of the terms of
the tenancy. However, you can’t evict a tenant until you first
give notice of the problem (in this case, the additional person)
and a chance to cure it (get the new person to leave).
CAUTION
Don’t discriminate against guests. You cannot
legally object to a tenant’s frequent overnight guests based
on your religious or moral views. (See Chapter 9.) It is illegal
to discriminate against unmarried couples, including gay or
lesbian couples, in California.
If a Tenant Leaves and Assigns
the Lease to Someone
A lease or rental agreement gives a tenant certain
rights—the most important, obviously, is to live in
the premises. If the tenant permanently gives or
sells all these rights to someone else, it’s called an
“assignment,” because the tenant has legally assigned
all rights to someone else. For example, a tenant who
signs a year lease may leave after six months and
assign the rest of the term to a new tenant.
The lease and rental agreements at the back of
this book (Clause 10) forbid assignments without the
owner’s consent.
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175
Assignments aren’t quite as bad as sublets, however,
as far as a landlord is concerned. The new occupant
(assignee) is directly responsible to the landlord for
everything the original tenant was liable for—even
without an agreement between the assignee and the
landlord. (CC § 822.) The previous occupant (assignor)
remains liable to the landlord also, unless the landlord
agrees otherwise in writing.
Nevertheless, even if your lease or rental agreement
allows a tenant to assign his rights, it’s better to have
the new tenant sign a new lease or written rental
agreement. That will make your legal relationship with
the new tenant clear.
If you unreasonably withhold your consent for a
tenant to assign her rights—for example, six months
left under a year-long lease—you may lose your right
to recover the rest of the rent due under the lease.
A landlord is obligated to limit the original tenant’s
responsibility for the remaining rent by renting to
a suitable new tenant as soon as possible. (This is
discussed in detail in Chapter 19.) If you turn down
an acceptable prospect found by the tenant, you won’t
have a strong case if you want to sue the original
tenant for not paying the rent for the rest of the lease
term.
l
CHAPTER
11
e Landlord’s Duty to Repair
and Maintain the Property
State and Local Housing Standards .............................................................................................................179
Enforcement of Housing Standards .............................................................................................................180
Inspections by Local Agencies ..................................................................................................................... 180
Failure to Comply With Repair Orders ................................................................................................... 181
Maintenance of Appliances and Other Amenities .............................................................................183
e Tenant’s Responsibilities ...........................................................................................................................184
e Tenant’s Right to Repair and Deduct ................................................................................................185
e Tenant’s Right to Withhold Rent When the Premises Aren’t Habitable .....................186
What Justifies Rent Withholding ...............................................................................................................186
How Much Rent a Tenant Can Legally Withhold .............................................................................187
e Landlord’s Options If a Tenant Repairs and Deducts or Withholds Rent ...................188
Working Out a Compromise .......................................................................................................................188
Court Fights Over Rent Withholding ......................................................................................................189
e Tenant’s Right to Move Out .................................................................................................................... 191
Asking Tenants to Move So Repairs Can Be Made ..........................................................................191
e Tenant’s Right to Move Out of Untenantable Premises ...................................................... 191
Destruction of the Premises ......................................................................................................................... 192
e Tenant’s Right to Sue for Defective Conditions .......................................................................... 193
Lawsuits Authorized by Statute .................................................................................................................193
Lawsuits for Rent Refunds .............................................................................................................................194
Lawsuits for Emotional Distress .................................................................................................................194
Lawsuits for Maintaining a Nuisance ....................................................................................................... 195
Avoid Rent Withholding and Other Tenant Remedies by Adopting
a High-Quality Repair and Maintenance System ............................................................................196
Recommended Repair and Maintenance System ............................................................................. 196
Benefits of Establishing a Repair and Maintenance System ........................................................197
Resident’s Maintenance/Repair Request Form ..................................................................................197
Tracking Tenant Complaints ........................................................................................................................198
Responding to Tenant Complaints ........................................................................................................... 198
Tenant Updates and Landlord’s Regular Safety and Maintenance Inspections ...............202
Tenant’s Semiannual Safety and Maintenance Update .................................................................202
Landlord’s Annual Safety Inspection .......................................................................................................202
Tenants’ Alterations and Improvements .................................................................................................. 205
Improvements at Become Part of the Property ..........................................................................205
Responding to Improvement and Alteration Requests .................................................................206
Cable TV........................................................................................................................................................................209
Previously Unwired Buildings ......................................................................................................................209
Buildings With Existing Contracts ............................................................................................................209
Satellite Dishes and Other Antennas ..........................................................................................................209
Devices Covered by the FCC Rule .............................................................................................................210
Permissible Installation ....................................................................................................................................210
Restrictions on Installation Techniques .................................................................................................210
Placement and Orientation .......................................................................................................................... 211
How to Set a Reasonable Policy .................................................................................................................212
Supplying a Central Antenna for All Tenants......................................................................................212
How to Handle Disputes About the Use and Placement of
Satellite Dishes and Other Antennas .................................................................................................. 212
FORMS IN THIS CHAPTER
Chapter 11 includes instructions for and samples of the following forms:
• Resident’s Maintenance/Repair Request
• Time Estimate for Repair
• Semiannual Safety and Maintenance Update, and
• Agreement Regarding Tenant Alterations to Rental Unit.
e Nolo website includes downloadable copies of these forms. See Appendix B for the link
to the forms in this book. Chapter 11 also includes a sample letter suggesting a compromise
with a tenant on rent withholding, and a letter you can send a tenant who threatens to
withhold rent. You can use these sample letters as templates in preparing these types of
letters, if necessary.
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179
T
he tenant’s responsibility to pay rent depends
on the landlord’s fulfilling his legal duty to
maintain the property and keep it in good
repair. Obviously, then, keeping up rental property
should be something every landlord takes seriously.
This chapter describes the specific housing standards
and laws landlords must follow, and outlines strategies
for dealing with tenants who threaten to or do with-
hold rent because of the property’s condition. It also
provides practical advice on how to stay on top of your
repair and maintenance needs, and minimize financial
penalties and legal problems.
RELATED TOPIC
Issues regarding the landlord’s duty to repair
and maintain the property are also covered in other
chapters. See:
• Lease and rental agreement provisions on land lords’
and tenants’ responsibilities for repair and maintenance:
Chapter 2
• Delegating maintenance and repair responsibilities to a
manager: Chapter 6
• Highlighting repair and maintenance procedures in a
move-in letter and using a Landlord/Tenant Checklist to
keep track of the premises before and after the tenant
moves in: Chapter 7
• Landlord’s liability for a tenant’s injuries from defective
and dangerous housing conditions: Chapter 12
• How to avoid illegal retaliatory evictions after tenants
complain about housing conditions or withhold rent:
Chapter 15
• Conducting a final inspection of the rental unit for
cleaning and damage repair before the tenant moves
out: Chapter 20
• Evicting a tenant who damages the property: Chapter 18.
State and Local Housing
Standards
Several state and local laws set housing standards
for residential rental property. These laws require
landlords to put their rental apartments and houses in
good condition before renting them, and keep them
that way while people live there. Here is a list of the
laws you need to know about.
California’s State Housing Law. Also known as the
State Building Standards Code, this law lists property
owners’ general obligations to keep residential
property in livable condition. (H&S §§ 17900–17997.8,
including regulations contained in Title 25 of the
California Code of Regulations.) It refers, in turn,
to very specific housing standards contained in the
Uniform Housing Code enforced by local governments.
Industry codes. Several “industry codes” also set
habitability standards. Most cities and counties
have adopted and enforce the Uniform Housing
Code (UHC), which contains very specific housing
standards—for example, regarding the heating system.
The UHC is available in most libraries and may be
purchased from the International Code Council (ICC).
The Los Angeles District Office is at 5360 Workman
Mill Road, Whittier, CA 90601-2298, 888-ICC-SAFE.
The ICC website is at www.iccsafe.org. A few cities,
including Los Angeles, have enacted ordinances with
additional requirements. (Besides the UHC, there are
Uniform Building, Plumbing, and Mechanical Codes,
and a National Electrical Code.) Check with the
building inspector or health department of the city or
county where you own rental property to see which
local laws apply to your property.
Civil Code Sections 1941.1–.3. These state statutes list
the minimum legal requirements for a rental dwelling
to be “tenantable,” or legal to rent to tenants. If
your property doesn’t meet these requirements—for
example, if it has a leaking roof—a tenant may be
excused by a judge from paying all or part of the rent.
Many of the Section 1941.1–.3 requirements overlap
those set forth in the State Housing Law and local
ordinances. (For example, Civil Code § 1941.1 requires
only that “hot water” be available, while the UHC
requires that the water heater be able to heat the water
to 110° Fahrenheit.)
Civil Code Section 1941.4 and Public Utilities Code
Section 788. These statutes make residential landlords
responsible for installing a telephone jack in each of
their rental units and placing and maintaining inside
phone wiring.
Health and Safety Code Section 13113.7. This state
statute requires all units in multiunit buildings to have
smoke detectors. The details are in the California
Building Code (see below).
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Health and Safety Code Sections 17926 & 17926.1. A land-
lord must install a carbon monoxide detector, approved
and listed by the State Fire Marshal pursuant to Health
and Safety Code Section 13263, in each dwelling
unit having a fossil fuel burning heater or appliance,
fireplace, or an attached garage, on or before July 1,
2011, for single-family dwellings; and on or before
January 1, 2013, for all other dwellings. If a tenant
becomes aware that the device is not working and
notifies the landlord, the landlord must fix or replace it.
Health and Safety Code Section 13220. This state
statute requires landlords to provide information on
emergency procedures in case of fire to tenants in
multistory rental properties. The statute applies to
apartment buildings that are two or more stories high
and contain three or more rental units that open into
an interior hallway or lobby area. Landlords must post
emergency information on signs using international
symbols at every stairway area and in other specified
places throughout the building.
How Many Smoke Detectors Must I Install?
e California Building Code gives you the details on
where you must install smoke detectors. (Calif. Building
Code § 310.9.)
Install at least one smoke detector in every bedroom
and one outside in the hallway. Install one detector
on each level of the home, if you have a second floor
or basement. On floors without bedrooms, detectors
should be installed in or near living areas, such as dens,
living rooms, or family rooms. Do not install them in
the kitchen or close to the shower because steam may
trigger frequent false alarms.
You also need to think about where, exactly, to place
the device. Generally, install detectors on the ceiling at
least four inches out from the wall. If you must install
them on the wall, place them at least four inches down
from the ceiling but no lower than 12 inches from the
ceiling. (Keep them high because smoke rises.) Place
smoke detectors at the top of each stairwell and at the
end of each long hallway. Do not place them any closer
than within three feet of an air supply register that might
recirculate smoke resulting in a delayed alarm. Be sure to
keep the detector away from fireplaces and wood stoves
to avoid false alarms.
Enforcement of Housing
Standards
The State Housing Law and local housing codes are
enforced by the building department of the city (the
county, in unincorporated areas). Violations creating
immediate health hazards, such as rats or broken
toilets, are handled by the county health department.
Fire hazards, such as trash in the hallways, are dealt
with by the local fire department.
If you establish a system for tenants to regularly
report on maintenance and repair needs, and if you
respond quickly when complaints are made (we show
how below), you may never have to deal with these
local agencies.
Inspections by Local Agencies
A local building, health, or fire department usually
gets involved when a tenant complains. The agency
inspects the building and, if it finds problems, issues
a deficiency notice that requires the owner to remedy
all violations, including any the tenant didn’t complain
about. Owners of residential rental property in Los
Angeles County who have received certain deficiency
notices from local building or health department
officials must register their substandard property
with the county within ten days. A landlord who fails
to comply can face civil and criminal penalties—
including not being able to evict a tenant of the
substandard property for nonpayment of rent. (H&S
§§ 17997–17997.5.)
In some cases, a tenant’s complaint about a single
defect can snowball, with the result that several
agencies require the landlord to make needed repairs.
For example, say a tenant complains to the health
department about a lack of heat. During its inspection,
the health department observes an unsafe stove and an
unventilated bathroom. The health department notifies
the fire department about the stove and tells the
building department about the bathroom, which results
in inspections by both departments.
Some cities don’t wait for tenants to complain. As
discussed in Chapter 13, they routinely inspect rental
property for compliance with local law.
State and local agencies don’t enforce Civil Code
§ 1941.1, which requires a rental unit to be “tenantable.”
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It is enforced by the tenant through the withholding of
rent and other remedies, as described below.
Failure to Comply With Repair Orders
If you fail to make any repairs demanded by local
officials, the city or county may bring a lawsuit, or
even criminal charges, against you. Violations of the
State Housing Law are misdemeanors, punishable by
a fine of up to $1,000 ($5,000 for a second offense
within five years) or up to six months’ imprisonment,
or both. (H&S §§ 17995–17995.5.) For very serious
violations due to “habitual neglect of customary
maintenance” that endanger “the immediate health
and safety of residents or the public” within a five-year
period, the maximum penalty is a $5,000 fine and up
to a year in jail. (In 2000, a San Jose landlord who
repeatedly refused to attend to serious repair problems
was sentenced to live in her own apartment house. For
60 days, she lived in a roach-infested two-bedroom
with a broken oven, a stove with one working burner,
faulty electrical wiring, a broken window, leaky pipes,
and crumbling ceiling. It rented for $1,100 a month.
(San Francisco Chronicle, October 3, 2000).)
You may be required to pay “relocation benefits”
to tenants who must move in order for you to effect
repairs. (H&S § 17980.7.) (The tenant’s right to move
out is discussed below.) If the court finds that the
substandard conditions constitute a nuisance (a serious
threat to safety or morals), it may order the building
to be razed or removed. You may even be disallowed
from claiming state income tax write-offs associated
with the property, including interest, taxes, and
depreciation on the building. (California Revenue and
Taxation Code § 24436.5.)
In addition to penalties assessed by governmental
agencies, the tenant may sue you if you don’t make
necessary repairs. Tenants can ask the judge to order
the landlord to make repairs (and reduce rent until
repairs are completed), or even to appoint a receiver
who would be authorized to collect rents, manage
the property, and supervise the necessary repairs.
Even after the repairs are completed and the receiver
discharged, the court can order you to report to it
concerning the condition of the building for up to 18
months. (H&S § 17980.7.)
A tenant may also withhold rent if you fail to make
necessary repairs. In fact, if you haven’t made repairs
within 35 days after being ordered to by a government
agency, the tenant is automatically entitled to withhold
rent.
Under the Rent Escrow Account Program (REAP),
Los Angeles tenants may in some circumstances pay
rent directly into a city-managed escrow account if
the owner fails to make repairs ordered by the local
building or health department within 60 days after
receiving written notice to repair. Both the city and
county of Sacramento have similar ordinances, but
they are seldom used.
Delegating Repair and Maintenance
Responsibilities to Tenants
Any lease or written rental agreement provision by
which a tenant agrees to give up his rights to a habitable
home is illegal and unenforceable. (Green v. Superior
Court, 10 Cal. 3d 616 (1974).) Nor can a landlord escape
the duty to keep rented property in good repair and
properly maintained by trying to make it the tenant’s
responsibility.
But the tenant and landlord can agree that the tenant
is solely responsible for repairs and maintenance in
exchange for lower rent. (CC § 1942.1. Also see Knight
v. Hallsthammar, 29 Cal. 3d 46 (1981).) (See Clause 17
of our form lease and rental agreements in Chapter 2.)
Major maintenance and repair duties are rarely, however,
appropriate candidates for delegation, since these jobs
will generally involve a significant amount of money
and will require expertise that the average tenant is not
likely to possess. In any delegation situation, monitor
the situation to make sure that your tenant-repairperson
chooses proper materials and procedures.
See the text below for a discussion of a tenant’s rights
to withhold rent and sue when a landlord fails to keep
the rental property in a habitable condition. For a related
topic—setting repair and maintenance responsibilities
for a resident manager—see Chapter 6.
CAUTION
If you discover a meth lab (or the remnants of
one) in a tenant’s unit, be extremely careful and thorough in
your clean-up efforts. e chemicals used to make this illegal
drug are extremely dangerous and harmful to health. See
“Clean Meth Labs Carefully,” in Chapter 18.
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Housing Standards Under State Law
Rental housing standards established by Civil Code
§§ 1941.1–.3, the State Housing Law and its implementing
regulations, and the Uniform Housing Code (UHC) include:
• A structure that is weatherproof and waterproof;
there must be no holes or cracks through which
wind can blow, rain can leak in, or rodents can enter
(CC § 1941.1).
• A plumbing system in good working order (free
of rust and leaks), connected to both the local
water supply and sewage system or septic tank.
e landlord is not responsible for low pressure,
contamination, or other failures in the local water
supply—his obligation is only to connect a working
plumbing system to the water supply (CC § 1941.1).
• A hot water system capable of producing water of at
least 110 degrees Fahrenheit (CC § 1941.1 and UHC).
• A heating system that was legal when installed (CC
§ 1941.1), and which is maintained in good working
order and capable of heating every room to at least
70 degrees Fahrenheit (UHC).
• An electrical system that was legal when installed,
and which is in good working order and without
loose or exposed wiring (CC § 1941.1). ere must
be at least two outlets, or one outlet and one light
fixture, in every room but the bathroom (where only
one light fixture is required). Common stairs and
hallways must be lighted at all times (UHC).
• A lack of insect or rodent infestations, rubbish, or
garbage in all areas (CC § 1941.1). With respect to the
living areas, the landlord’s obligation to the tenant is
only to rent out units that are initially free of insects,
rodents, and garbage. If the tenant’s housekeeping
attracts pests, that’s not the landlord’s responsibility.
However, the landlord is obliged to keep all common
areas clean and free of rodents, insects, and garbage
at all times.
• Enough garbage and trash receptacles in clean
condition and good repair to contain tenants’ trash
and garbage without overflowing before the refuse
collectors remove it each week (CC § 1941.1).
• Floors, stairways, and railings kept in good repair (CC
§ 1941.1).
• e absence or containment of known lead paint
hazards (deteriorated lead-based paint, lead-
contaminated dust or soil, or lead-based paint
disturbed without containment (CC § 1941.1; H&S
§ 17920.10). See Chapter 12 for more information on
lead hazards.)
• Deadbolt locks on certain doors and windows,
effective July 1, 1998 (CC § 1941.3). Your duty to pro-
vide locks is explained in more detail in Chapter 12.
• Ground fault circuit interrupters for swimming pools
(effective July 1, 1998), and antisuction protections
on wading pools, excepting single-family residence
rentals (effective January 1, 1998 for new pools and
January 1, 2000 for existing pools) (H&S §§ 116049.1
and 116064).
Each rental dwelling must, under both the UHC and the
State Housing Law, have the following:
• A working toilet, wash basin, and bathtub or shower.
e toilet and bathtub or shower must be in a room
that is ventilated and allows for privacy.
• A kitchen with a sink, which cannot be made of an
absorbent material such as wood.
• Natural lighting in every room through windows
or skylights having an area of at least one-tenth of
the room’s floor area, with a minimum of 12 square
feet (three square feet for bathroom windows). e
windows in each room must be openable at least
halfway for ventilation, unless a fan provides for
ventilation.
• Safe fire or emergency exits leading to a street or
hallway. Stairs, hallways, and exits must be litter free.
Storage areas, garages, and basements must be free
of combustible materials.
• Every apartment building having 16 or more units
must have a resident manager (25 CCR § 42).
Civil Code § 1941.4 and Public Utilities Code § 788 make
residential landlords responsible for installing a telephone
jack in their rental units, and for placing and maintaining
inside phone wiring.
Health and Safety Code § 13113.7 requires smoke
detectors in all multiunit dwellings, from duplex on up.
Health and Safety Code §§17916 and 17926.1 require
carbon monoxide detectors in all dwelling units, and Health
and Safety Code §13220 requires landlords to provide
inform a tion on emergency procedures in all multistory
buildings.
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Maintenance of Appliances
and Other Amenities
State and local housing laws deal with basic living
conditions only—heat, water, and weatherproofing, for
example. They do not deal with “amenities”—other
facilities that are not essential but make living a little
easier. Examples are stoves, refrigerators, drapes,
washing machines, swimming pools, saunas, parking
places, intercoms, and dishwashers. The law does
not require the landlord to furnish these things, but a
landlord who does might be required to maintain or
repair them—not by state and local housing laws, but
by the landlord’s own promise to do so.
The promise might be express or implied. When the
lease or rental agreement says that the landlord will
repair or maintain certain items, such as appliances,
the promise is express. When the landlord (or a
manager or agent) says or does something that
seems to indicate the landlord would be responsible
for repairing or maintaining an item or facility, the
promise is implied. Here are some typical examples of
implied promises.
exAmple 1: Tina sees Joel’s ad for an apartment,
which says “heated swimming pool.” After Tina
moves in, Joel stops heating the pool regularly
because his utility costs have risen. Joel has
violated his implied promise to keep the pool
heated. (Joel should avoid ad language that
commits him to such things.)
exAmple 2: When Joel’s rental agent shows Tom
around the building, she goes out of her way to
show off the laundry room, saying, “Here’s the
laundry room—it’s for the use of all the tenants.”
Tom rents the apartment. Later the washing
machine in the laundry room breaks down, but
Joel won’t fix it. Joel has violated his implied
promise to maintain the laundry room appliances
in working order.
exAmple 3: Tina’s apartment has a built-in
dishwasher. When she rented the apartment,
neither the lease nor the landlord said anything
about who was to repair the dishwasher if it
broke. The dishwasher has broken down a few
times and whenever Tina asked Joel to fix it, he
did. By doing so, he has established a “usage” or
The Los Angeles Rent Escrow
Account Program (REAP)
If the repairs ordered by the local building or health
department aren’t completed on time, the Department
of Housing Preservation and Production requests the
owner to appear at an informal conference to explain
the delay. If the Department of Housing isn’t satisfied, a
REAP advisory committee, consisting of representatives
of the housing, building, and fire departments, can
recommend that the City Council impose a rent escrow.
A landlord can appeal this recommendation to a hearing
officer. If the hearing officer also recommends imposition
of the escrow, the matter then goes to the City Council
for the ultimate decision.
If the City Council orders it, tenants may pay their
rents into the city escrow program. As long as tenants
do so, they cannot be evicted for nonpayment of
rent. (Needless to say, a 30-day notice of termination
of tenancy (or even of a rent increase) would seem
retaliatory at this stage, and Los Angeles’s rent control
law requires a landlord to show just cause for eviction.)
Also, a landlord whose building has been put under
REAP is prohibited from passing on the costs of repairs
in the form of higher rents, as is normally allowed under
Los Angeles’s rent control ordinance.
With city authorization, repairs can be paid for by
the escrow program administrator out of the escrow.
However, taxes and mortgage payments cannot be made
out of the escrow. After all required repairs have been
made, any money left over is returned to the landlord,
minus an administrative fee.
Obviously, the best way to avoid REAP is to quickly
respond to repair orders by local authorities. Failing
that, be cooperative and conciliatory at the informal
conference, stressing your willingness to make
needed repairs. If any of the problems were caused by
tenants, you should point that out. If your building is
recommended for REAP and you believe some of the
defects were caused by tenants, you should see an
attorney about appealing for a formal hearing before a
hearing officer.
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“practice” that the landlord—not the tenant—is
responsible for repairing the dishwasher.
If you violate an express or implied promise relating
to the condition of the premises, the tenant may sue
you for money damages, usually in small claims court.
The tenant cannot repair the appliance and deduct
the cost from the rent. Keep in mind that you can’t
label an essential piece of equipment an “amenity”
and hope to avoid either your duty to supply it or the
consequences (such as a tenant’s rent withholding) if
you fail to.
$
RENT CONTROL
Don’t decrease services. A decrease in promised
services, including a refusal to continue maintenance, may be
considered an illegal rent increase.
e Tenant’s Responsibilities
State law also requires tenants to use rented premises
properly and keep them clean. Specifically, Civil Code
§§ 1941.2–.3 require the tenant to:
•Keep the premises as “clean and sanitary as the
condition of the premises permits.” For example,
a tenant whose kitchen had a rough, unfinished
wooden floor that was hard to keep clean would
not be able to keep the floor bright, shiny, and
spotless.
•Properly operate gas, electrical, and plumbing
fixtures. Examples of abuse include overloading
an electrical outlet, flushing large foreign objects
down the toilet, and allowing bathroom fixtures
to become filthy.
•Refrain from damaging or defacing the premises or
allowing anyone else to do so.
•Use living and dining rooms, bedrooms, and kitchens
for their proper respective purposes. For example,
the living or dining room should not regularly be
used as a makeshift bedroom.
•Report broken door or window locks in the dwelling
unit. Tenants are specifically charged with the
duty to alert you of malfunctioning locks in
their units. If a tenant has not notified you
of a problem, and you in fact are unaware of
the broken device, you will not be liable for a
violation of the state law.
In addition, under Civil Code § 3479, every tenant
is prohibited from disturbing the neighbors’ peaceful
enjoyment of their property. This is known as
refraining from creating or allowing a “nuisance,”
which is discussed more fully in Chapter 12.
To protect yourself, make sure your lease or rental
agreement spells out basic tenant obligations. (See
Clause 11 of our form agreements in Chapter 2.)
A tenant’s isolated or minor violation of these duties
will not relieve a landlord from the duty to provide a
habitable dwelling. (The landlord is still responsible for
the condition of the premises and can be prosecuted
for violating housing standards.) However, if a tenant is
in “substantial violation” of any of these requirements,
and this violation “substantially contributes” to the
untenantable condition (or “substantially interferes”
with the landlord’s obligation to make the dwelling
tenantable), the landlord is relieved from the duty to
repair the condition. The tenant cannot withhold rent
or sue the landlord if the tenant has contributed to the
poor condition of the premises. (CC §§ 1929, 1941.2,
and 1942(c).)
exAmple: Lance complains to his landlord,
Gary, about a defective heater. When Gary’s
repairperson goes to fix the heater, he is
confronted by an overwhelming smell of garbage
and mildewed laundry. Lance cannot sue Gary
for failing to fix the heater until and unless Lance
cleans house, even though the foul smell didn’t
cause the heater to break. Lance’s failure to keep
the place clean and sanitary obviously interferes
substantially with his landlord’s attempt to fix the
heater.
To protect a landlord against a tenant’s careless
damage to the property, our lease and rental
agreements make the tenant financially responsible for
repair of damage caused by the tenant’s negligence or
misuse. (See Clause 18, Chapter 2.) That means, where
the tenant or his friends or family cause damage—
for example, a broken window, a toilet clogged with
children’s toys, or a refrigerator that no longer works
because the tenant defrosted it with a carving knife—
it’s the tenant’s responsibility to make the repairs or to
reimburse the landlord for doing so.
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exAmple: By his own sorrowful admission,
Terry, angry over the loss of his job, puts his fist
through a window. As a result, a cold wind blows
in, cooling off Terry, if not his temper. Terry
can’t withhold rent to make his landlord fix the
window, since Terry caused the problem in the
first place. However, under state and local law,
Terry’s landlord is still responsible for fixing the
window, after which he can and should bill Terry
for the repair.
If a tenant refuses to repair or pay for the damage
he caused, you can sue the tenant, normally in small
claims court, for the cost of the repairs. If the tenancy
is from month to month in a non-rent-controlled area,
you may also want to consider a 30-day termination
notice (or a 60-day notice if the tenant has lived there
one year or longer). If the damage is very severe, such
as numerous broken windows or holes in the wall,
you can use a three-day notice and sue for eviction
on the basis that the tenant has “committed waste”
to the property. (See Chapter 18 and The California
Landlord’s Law Book: Evictions.)
You could also evict based on the tenant’s breach
of the lease or rental agreement provision forbidding
damage to the premises (Clause 18), but you would
have to give the tenant a chance to correct the
problem. On the other hand, if you proceed under
the theory that the tenant has committed waste, your
three-day notice need not give this option—except
in some rent-controlled cities. (CCP § 1161(4).) In any
eviction case based on a three-day notice, you must
also be able to establish that the damage was truly
caused by the tenant’s neglect, or you will lose the
case and have to pay the tenant’s court costs and
attorney fees.
e Tenant’s Right to
Repair and Deduct
Under certain circumstances a tenant can, without your
permission, have a defect repaired and withhold the
cost of the repairs from the following month’s rent.
(CC § 1942.) (A tenant can also just move out of an
untenantable premise—see below.) This is commonly
called the “repair-and-deduct” remedy. It is subject to
the following restrictions:
•The defect must be related to “tenantability.” In
other words, the problem must be serious and
directly related to health or safety. Examples
are broken heaters, stopped-up toilets, broken
windows, and the absence or malfunctioning of
legally required door and window locks.
•The defect or problem must not have been
caused by the careless or intentional act of the
tenant or a guest. Thus, a tenant cannot use this
remedy to replace a window he broke himself.
•The amount the tenant withholds must be less
than one month’s rent.
•The tenant can use this remedy no more than
twice in any 12-month period.
•Before having the repair done, the tenant must
give the landlord or manager notice of the
problem and a “reasonable” amount of time to
fix it. The notice can be oral or written.
Of all these rules, the rule that the tenant give “rea-
sonable” notice is the one most open to interpretation.
According to Civil Code § 1942(b), reasonable notice is
presumed to be 30 days. But it can be a lot less for an
urgent problem, such as a defective heater in winter,
a leaky roof during the rainy season, or a stopped-up
toilet in a one-bath unit any time.
exAmple 1: In July, Pam tells her landlord,
Lorraine, that she was treated to some April
showers in her living room three months earlier,
due to a leaky roof. Unless it suddenly starts
raining regularly in the middle of summer, this
problem, though serious, isn’t urgent. Pam must
wait at least 30 days before she can take the
repair into her own hands.
exAmple 2: On a cold Monday in January,
Frank tells his landlord, Regina, that the heater
no longer works. By Wednesday night, Regina
still hasn’t fixed the heater. In the meantime,
Frank and his family must sleep in a 45-degree
apartment. So on Thursday, after only two days,
Frank has the heater fixed, at a cost of $200. In
February, Frank deducts this amount from his
rent. Regina sues to evict Frank for nonpayment
of rent. The judge decides that two days’ notice
was reasonable under the circumstances, and
Regina loses. She must pay not only her own
court costs and attorney fees, but Frank’s as well.
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exAmple 3: Phil complains to his landlord, Linton,
that the kitchen sink faucet drips slightly. Under
their rental agreement, the tenant is not allowed
to do any repairs on the rental unit. Although
the duty to fix the faucet is Linton’s, the problem
does not pose a serious health or safety threat.
Consequently, Phil cannot use the repair-and-
deduct remedy.
If it comes to a fight, reasonable notice will be
defined by a judge, not by the landlord. Going to
court over this sort of dispute, unless the tenant’s
behavior was truly outrageous, is not a productive
way to arrive at a decision. Your best bet is to set up
a good responsive maintenance system and stick to it.
We discuss this in more detail below. When deciding
whether the tenant acted reasonably, a judge will
consider how much it would have cost you to make
the same repair. Obviously, a tenant who pays $300 for
a simple toilet repair that should have cost only $100 is
acting more unreasonably than one who paid $100 for
a repair you could have accomplished for $75.
Common Myths About
Responsibilities for Repairs
Paint. No state law requires a landlord to repaint the
interior every so often. So long as the paint isn’t actually
flaking off, it should comply with the law. e situation is
different, however, if you are dealing with deteriorating
lead-based paint. (We discuss landlord liability for
health problems caused by exposure to lead paint in
Chapter12.)
Drapes and Carpets. As for carpets and drapes, so long
as they’re not sufficiently damp or mildewy to constitute
a health hazard, and so long as carpets don’t have
dangerous holes that could cause someone to trip and
fall, you aren’t legally required to replace them.
Windows. Quite a few landlords think a tenant is
responsible for all broken windows. is is not true.
A tenant is responsible only if the tenant or a guest
intentionally or carelessly broke the window. If the
damage was outside the tenant’s control, however—for
example, because a burglar, vandal, or neighborhood
child broke a window—you are responsible for fixing the
window.
e Tenant’s Right to
Withhold Rent When the
Premises Aren’t Habitable
The repair-and-deduct remedy isn’t the only legal way
a tenant can withhold part or all of the rent from a
landlord who doesn’t properly maintain residential
property. A tenant can also legally refuse to pay all or
part of the rent if the unit falls short of the minimum
requirements for a habitable dwelling as set forth in
Civil Code § 1941.1 and other applicable housing and
industry codes. In addition, one court decision seems
to have expanded tenants’ rights by allowing them to
withhold rents for deficiencies not even addressed by
building or housing statutes. (For example, in Secretary
of HUD v. Layfield, 88 Cal. App. 3d Supp. 28 (1979),
an appellate court ruled that a tenant could withhold
rent if the landlord failed to provide adequate security
patrols, even though there is no law requiring security
guards.)
What Justifies Rent Withholding
Under California law, every landlord makes an
implied promise that a dwelling will be fit for human
habitation—whether or not that promise is written
down in a lease or rental agreement. (Green v.
Superior Court, 10 Cal. 3d 616 (1974).) When landlords
don’t keep the place in a habitable condition at all
times, they are said, in legal jargon, to have “breached
the implied warranty of habitability.” That breach
justifies the tenant’s withholding of rent.
For a tenant to legally withhold rent, the problems
must not have been caused by the tenant, and both of
the following must be true:
•The defects must be serious ones that threaten
the tenant’s health or safety.
•The tenant must have given the landlord
reasonable notice of the problem. (Hinson v.
Delis, 26 Cal. App. 3d 62 (1972).)
Severity of Problems
A tenant can withhold rent only if the premises have
“substantial” defects. Examples of substantial defects
are a bathroom ceiling that has collapsed and not
been repaired; rats, mice, and cockroaches infesting
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the building; lack of heat or hot water; the presence
of lead paint hazards in sufficient concentration (and
extent); or the absence or malfunctioning of required
door and window locks. Fairly trivial defects, such as
leaky water faucets or cracked windows or plaster,
aren’t enough to violate the implied warranty of
habitability. A landlord’s breach of the duty to provide
a tenantable dwelling rarely excuses the tenant’s duty
to pay all of the rent due under the lease.
exAmple: Wilbert rents a two-bedroom apartment
from Molly for $1,700 a month. Because the toilet
makes an occasional running sound until Wilbert
jiggles the handle, Wilbert withholds an entire
month’s rent. Molly gives Wilbert a three-day
notice and follows this with an eviction lawsuit.
The judge decides that because the problem
wasn’t substantial, Wilbert had no right to
withhold the rent, and gives Molly a judgment for
the $1,700 rent, court costs, and possession of the
property. (Because Molly handled her own case,
she is not eligible for attorney fees.)
Notifying the Landlord
A tenant who wants to withhold rent must first notify
the landlord or manager of the problem. There are,
however, no precise notice requirements—for example,
that the notice be in writing or delivered a certain
way. And, unlike the rules with the repair-and-deduct
remedy, there is also no definite rule as to how much
time the landlord has to fix the problem after receiving
notice of it, except that 35 days is too long under any
circumstances. (CC §§ 1942.3 and 1942.4.) In other
words, the tenant can give the notice orally or in
writing, but before withholding rent on account of a
defect, she must give the landlord a “reasonable” time
to respond. If the question ends up in court, what’s
reasonable will be decided by a judge.
Some tenants make false claims to try to get out of
paying some rent or avoid being evicted. For example,
a tenant who is simply unable to pay the rent calls the
health department to complain about—and exaggerate
the effect of—a minor plumbing problem that the
tenant previously tolerated and never complained
about to the landlord. The best way to thwart these
kinds of tenants is to establish and follow a good
maintenance and inspection system.
How Much Rent a Tenant
Can Legally Withhold
If you do not fix a serious problem within a reasonable
time, the tenant can withhold rent. But how much?
Theoretically, the tenant can withhold as much rent as
the defect lowers the value of the property. But as a
practical matter, the tenant can withhold as much rent
as the landlord—or a judge, if the case gets to court—
will allow under the circumstances. A judge will make
a decision based on an estimate of the rental value of
the premises, in light of the seriousness of the defect.
Judges use various criteria to determine what’s
a reasonable amount of rent to withhold. Under the
“percentage reduction” approach, the judge figures
what percentage of the dwelling was rendered unfit,
and reduces the rent accordingly. (For example, if a
leaky roof made one room of a four-room apartment
unlivable, the rent would be reduced by 25%.) Another
method is to calculate the value of the dwelling in its
defective state, subtract that amount from the fair market
value of the rental (usually the agreed-upon rent), and
allow the withholding of the resulting difference. Most
courts use the percentage reduction approach.
exAmple: For $1,800 a month, Lou rents a two-
bedroom house to Ken. The house is heated
by two wall heaters, one in the kitchen and
one in a bedroom, which is somewhat isolated
in a separate wing. In mid-November, the
bedroom heater stops working, and Ken notifies
Lou immediately. This leaves one end of the
house, including one of the two bedrooms
and a bathroom, chilly and uncomfortable. On
December 1, the heater is still not fixed, so Ken
refuses to pay Lou any rent. Lou finally fixes the
heater on December 15 and demands the rent.
Ken claims he only owes $900, half the rent for
December. Lou takes the $900 but insists on the
other $900, giving Ken a three-day notice to pay
up or get out, followed by an unlawful detainer
(eviction) lawsuit when Ken doesn’t respond.
After hearing the case, the judge decides that
Ken gave adequate notice to Lou regarding a
substantial defect affecting the tenantability of
the house, and that Lou should have fixed the
problem by December 1. Since half the house was
livable for the first half of December, Ken should
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