Question One: One of our rental properties is in a nice area of Encinitas, in San Diego County. Next door is another rental. Over the past four to five years, there have been numerous criminal activities in the neighboring unit. Police activity is so frequent that our tenants often cannot leave or gain access to their unit. Also, police have used our property during one of the arrest operations. I have spoken with the owner and have sent three or four letters and have received no response. My tenants are not happy and are scared. They should not live in fear. What legal means can I take?
Answer One: I would contact the City Attorney’s office for Encinitas. Explain to them that the owner is allowing a private nuisance to exist and demand that they issue an order to abate the nuisance.
Question Two: Our company recently rented a unit in the City of Downey. A single tenant applied to lease the unit and the lease unit was drawn up in his name as the sole resident. We received an e-mail from a woman claiming to be the tenant’s wife and asked if her name could be added to the lease agreement. She explained that her name had to be included in the lease in order to qualify for a student loan. We asked the wife to fill out an application to rent and ran her credit. Based on our qualifications, she did not qualify. We also felt there were some red flags. Even though we denied the application, she moved in anyway. The owner does not want to approve her and would like for me to serve a 3-Day to Perform or Quit. Can I serve this notice?
Answer Two: Even though your tenant wishes to occupy the premises with his wife, that does not give him authority to violate the terms of his lease. You have the right to serve a 3-Day Notice to Perform or Quit. If the wife does not vacate within the three day period, you may start an unlawful detainer action to evict everyone from the unit.
Question Three: When a renter moves out without leaving me a forwarding address, how do I handle the security deposit? It appears that the damages are greater than the deposit.
Answer Three: You have 21 days to mail the security deposit itemization to the tenant. If you do not have a new address, you should mail it to the last known address, which would be your property. You can always sue the tenant in small claims court for the remaining money that is owed. The problem will be how to serve the tenant, if you do not have the address. If you have the tenant’s work address, you could serve the lawsuit at that location. The other remedy would be to hire a company that can do skip tracing.
Question 4: I know that I can charge up to two months’ rent as a security deposit when leasing out a unit. My applicants have agreed to pay an additional two months of rent in advance. This is a one year lease. May I put in the lease that this advance rent payment will be applied to the 11th and 12th month of the lease? The applicants have marginal credit and I feel I would need additional assurances in order to lease out the unit.
Answer 4: California law is clear that you can only take the first month rent and a security deposit equal to two months’ rent. If you take additional rent, you would be in violation of Civil Code 1950.5. It is better to find applicants that meet your credit standards.
Question 5: I have a client that owns three units in a rent control area of Los Angeles. One of the tenants has been renting for over 30 years, paying $790 a month. My client is renting a condominium and is paying $1,900. He wants to move into that unit. What would be the proper way to ask them to vacate?
Answer 5: Unfortunately, it is doubtful that you will have the right to ask this tenant to move. The Rent Stabilization Ordinance for the City of Los Angeles requires that you choose the last tenant to move into a unit, for that type of apartment. If that tenant is living in a two bedroom apartment, for example, you would have to choose the last tenant who moved into a two bedroom apartment. Assuming this was the last tenant to move in, there is another requirement. You cannot evict a tenant who is over 62 years of age and has lived in the unit more than 10 years. Should you get by these hurdles, you will need to go through an application process with the City. Once approved, you would need to pay relocation to the tenant which ranges from $7,750 to $20,050.
Question 6: I own a home that was built prior to 1978. I have no knowledge of lead-based paint issues in the home, but due to its age, I do not want to rent to any occupants under the age of six. Is that an option based on the possibility that the unit may have been painted with lead-based paint when originally built? Your guidance would really be appreciated.
Answer 6: Almost all units built prior to 1978 contain lead-based paint. That does not mean that the unit is inherently dangerous. If there is peeling or chipping paint, you will need to call in the service of a painter that is certified in lead-based painting. It would be considered discriminatory for you to adopt a policy of refusing to rent to small children.
Question 7: I have a tenant who was occupying the premises prior to my purchase of this rent control building. I had this tenant sign a rental agreement in July, 2016. Since then, he has taken in a roommate. I have had no contract with this person. My tenant has now informed the manager that he will be leaving. He would like to have the roommate assume the lease. The rent is extremely under market value and I would like the opportunity to increase the rent with the new tenants. What is my legal obligation here? I have never taken rent from this individual.
Answer 7: You certainly have the right to bring the unit to market rent. You are free to negotiate a new lease with this person at any rental amount. You also have the right to ask this person to vacate, once your original tenant no longer occupies the property.
Question 8: With the potential of the spread of rent control to many cities in California, is there anything that can be done to protect our property values? I am not a rich person and my only source of income comes from my rental units. If I cannot get a proper return, I will be forced to sell. Is there any hope?
Answer 8: An all-out effort must be made to prevent the repeal of The Costa Hawkins Act on the November, 2018 ballot. The initiative is deceptively called the Affordable Housing Act. It is purely designed to redistribute wealth on a socialistic level. Numerous studies have shown that this act will only create more housing shortages and will force rents to increase. Tell everyone that you know that they must get to the polls and VOTE NO to this initiative.
There could also be help on the horizon from a case currently being decided by the U.S. Supreme Court. It deals with a provision of the U.S. Constitution called the Contract Clause. Generally speaking, this clause was added to the Constitution in order to prohibit states from interfering with private contracts. The clause states that, ‘No State shall…pass any…Law impairing the Obligation of Contracts…’
The case, being reviewed by the court, involved a married couple and a life insurance policy. In 1998, Mark Sveen named Kaye Melin, then his wife, primary beneficiary of an insurance policy. The couple divorced almost a decade later, and Sveen died in 2011. He hadn’t changed his policy, but in 2002, Minnesota had passed a law automatically removing a spouse as a life-insurance beneficiary if the couple divorces. Sveen’s children claim to be the rightful beneficiaries. The U.S. Supreme Court is now considering whether Minnesota violated the Constitution’s Contract Clause.
This case could have tremendous impact on the legitimacy of rent control. If the Court determines that Minnesota violated the law, then States and local governments would be prohibited from putting limitations on contracts, including residential leases.
The Ellis Act – The Ultimate Rent Control Solution
Under a California law called the Ellis Act, landlords can remove tenants from rent controlled properties if they are demolishing the property or taking the property off the rental market. Landlords can also invoke the Ellis Act in order to “go out of business” in the rental market. In fact, the Ellis Act is used by many landlords in order to move family members into their properties. Our law firm has successfully filed over 250 Ellis unit applications.
In order to proceed with the Ellis Act, the landlord must file documents with the Housing and Community Investment Department of Los Angeles. Once the Ellis Act is approved, the tenant is entitled to a 120 Day Notice to Quit. However, if the tenant is disabled and/or over 62 years of age, the tenant is entitled to a one-year notice, if the tenant requests the extension.
Within five days of service of the 120 Day Notice to Quit, the landlord must pay the tenant relocation assistance. If any current tenant is 62 years of age or older, disabled, or has minor dependent children, they will be entitled to either $16,950 or $20,050 in relocation. Tenants who do not meet one of these qualifications are entitled to either $8,050 or $10,550 in relocation. These amounts are subject to change on a yearly basis.
If a landlord decides not to demolish the existing units, there are various limitations in place for units returned to the rental market. Displaced tenants have a right of first refusal on the unit from which they were displaced for a period of 10 years after the withdrawal of that unit from the market. Additionally, the accommodations shall be offered and rented at the lawful rent in effect at the time any Notice of Intent to Withdraw was filed, plus annual adjustments available under the RSO.
As landlords are well aware, there are a significant number of tenants in rent controlled units paying well below market rent. An option for landlords to obtain market rent is to “Ellis” their properties. Under the Ellis Act, an owner is permitted to establish the initial rental rate for new construction. Although the property is still under the Rent Stabilization Ordinance (RSO), owners are now able to obtain market rent for their properties.
Opponents of the Ellis Act argue that the Ellis Act should be repealed because it allows landlords to remove rental housing units from the City of Los Angeles. Last year, approximately 1,370 rent-controlled units were taken off the market through Ellis Act evictions.
However, what many opponents fail to see is that the Ellis Act actually results in more rental units being put back into the market. For instance, many landlords and developers demolish smaller buildings and construct larger buildings containing more units, thus, actually increasing the number of rental units added to the market.
Tenants’ rights groups are vigorously attempting to repeal the Ellis Act and tighten its restrictions. Some have even proposed a requirement that a developer own a property for at least five years before invoking the Ellis Act. Opponents also argue that tenants are unfairly displaced from their rental units without compensation. However, they fail to mention that tenants are provided with relocation assistance.
Notwithstanding the constant oppositions, more and more landlords are removing their properties through the Ellis Act. These landlords realize the benefit of the Ellis Act and how it affects their bottom line. It is unknown if or when the Ellis Act will be repealed. As such, landlords looking to increase their rental income should consider the Ellis Act, as this right may no longer exist or its provisions may become more onerous in the near future.
Dennis Block, of Dennis P. Block & Associates can be reached for information on landlord/tenant law or evictions at any of the following offices: Los Angeles: 323.938.2868, Encino: 818.986.3147, Inglewood: 310.673.2996, Long Beach: 310.434.5000, Ventura: 805.653.7264, Pasadena: 626.798.1014, Orange: 714.634.823, San Diego: 619.481.5423 or by visiting www.evict123.com. Now, you can also read Dennis Block on Twitter, www.twitter.com/dennisblock or text him at (818) 570-1557. Get the NEW App for iPhone or Android phones. Search for “EVICT123“. “Landlord Tenant Radio Weekly Podcasts can be heard at any time at www.EVICT123.com or download the app “EVICT123”.