This article was posted on Saturday, Jan 01, 2022
Legal Questions and Answers

Below are questions asked by rental property owners regarding California property management and Section 8 tenants followed by answers provided by the law firm of Simone and Blevins.

 

Q: One of my tenants called me and told me the tenant in the neighboring apartment was running a daycare out of the apartment. Can I prohibit my tenants from running a daycare?

A: No, you cannot prohibit your tenants from running a daycare. Under Health and Safety Code Section 1597.40, houses, condos, and apartment units may be used to run a small family daycare business. These laws were passed in order to make childcare more readily available for working parents in residential neighborhoods.

Further, running a small daycare is not considered a “business use of the property.” California law does require that the tenant provide the property owner with notice and liability waivers or proof of liability insurance. 

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Q: My tenants provided me with notice that they are going to run a daycare in my rental property.  I am concerned about my liability. Are there insurance requirements that I can enforce on the daycare business?

A: Yes, the California Department of Social Services has to assess the conditions of the home as well as your tenants’ qualifications before licensing your tenants as a family daycare provider. If the home is approved, then your tenant can supervise up to 6 children at a time, or up to 8 children if the landlord approves in writing. Furthermore, it is mandatory that the daycare provider carry either: (1) liability insurance of $100,000 per occurrence and $300,000 per year; or (2) affidavits by all parents acknowledging the lack of insurance. You may also request that you are named as additionally insured if your tenant carries insurance. However, property owners are responsible for any increases in insurance premiums as a result of being added to the tenant’s insurance. Lastly, it is always a good idea to require tenants to have renter’s insurance in addition to liability insurance and/or a bond. While the same rules that apply to other tenants are the same for daycare providers, one should be cautious when assessing breaches of the agreement or when considering taking action to correct the violation because such action may be viewed as retaliatory. 

 

Q: I received a letter in the mail from my tenant stating that they were starting a daycare in my rental home. The letter states that the daycare will begin operating in 45 days. What are the minimum notice requirements that this tenant must provide me before they begin operating the daycare?

A: A tenant who is opening a small family daycare business in their rental unit must provide the  owner of the property 30 days’ written notice of their intent to start the business. However, many prospective daycare providers fail to provide written notice to the owner. Additionally, failure to give notice is not considered grounds to refuse operation of the daycare opening because it is not mandatory for the tenant to obtain approval from the owner before starting the business. 

 

Q: My tenant gave me notice that they are opening a daycare at my rental property. I asked my tenant how many children they would be caring for and she told me there would be ten children at a time. Does Health and Safety Code Section 1597.40 limit the amount of children that the daycare can care for at one time?

A:  Yes, Health and Safety Code Section 1597.40 provides additional requirements for family daycares that provide care for over 6 children. You should consult with an attorney to make sure that the tenant has met the additional requirements to care for more than 6 children. 

 

Q: My lease states that the rental unit can only be used for residential purposes. Can I prohibit my tenants from running a daycare in my rental unit?

A: No, while this provision will prohibit the tenant from using the rental property for other business purposes, this does not apply to daycares when the tenant properly complies with Health and Safety Code Section 1597.40.

 

Q:  My tenants informed me that they are opening a daycare.  Can I increase their security deposit? 

Yes, you may increase your tenant’s security deposit amount due to this new business endeavor  even if you charge your other tenants a smaller amount. However, the total security deposit cannot surpass the maximum amount permissible under present law, which is two times the rent for unfurnished units and three times the rent for furnished units. 

 

LINK TO Health and Safety Code Section 1597.40

 

The law firm of Simone & Blevins has been doing evictions for over 28 years.  The office is open Monday – Friday from 9:00 AM to 5:00 PM.  Tel: 619-235-6180

website: www.landlordslegalcenter.com or email [email protected].