Question One: I have a tenant who vacated leaving me with $15,000 in unpaid rent. Based on a cost factor, do you think it would be wise to sue this tenant in Small Claims Court?
Answer One: In Small Claims Court, there is a jurisdictional limit of $10,000. Corporation and other business entities are limited to $5,000. In your situation, while you can bring forth your action, you would be limited to recovering only $10,000. If you chose not to use Small Claims Court, you would be required to bring a civil suit in the Superior Court. In most instances, that would require the hiring of an attorney.
Most attorneys would charge based on an hourly fee with a required retainer. Even if the attorney is successful in obtaining a judgment for the full amount, there is no guarantee that you would be able to collect on this judgment. Based on economics, it probably would be wise to file in Small Claims Court. It should be noted that if you file in Small Claims Court and are unhappy with the judge’s decision, you will not be able to appeal this matter.
Question Two: I had a flood occur in one of my units. The tenant is claiming that I am responsible for the damage to his personal property. Am I responsible?
Answer Two: In general, a person is responsible on a legal basis under two theories of law. The first one would be on a contractual basis. I am sure that you did not sign a contract obligating yourself to pay for damage to your tenant’s personal property. The second theory would be based on negligence. The tenant would have to prove that you had advanced knowledge that a flood could occur and you did not take steps to prevent it. This would be a very difficult proposition for your tenant to prove. On that basis, you are not liable for your tenant’s personal property. There is an additional way in which you should shield yourself from this type of legal responsibility. Your lease should contain a provision that the tenant is to maintain renter’s insurance. This policy would cover any damage to personal property or even relocation costs for the time the unit cannot be occupied. By having this requirement in your lease, you would strengthen your position that you are not responsible. You may also add this provision to your existing rental agreements by using a “Change of Tenancy” form. This form would be valid in both rent control and non-rent control units.
Question Three: I have been attempting to lease out a vacant unit. I have approved a tenant’s application and he has signed the rental agreement that I provided. I now have changed my mind as a family member wants the unit. I feel bad for this tenant as I did consent. Am I obligated to lease the unit to her?
Answer Three: Technically, the lease is not binding unless it is fully executed. Since the parties understood that a written lease is required to initiate the tenancy, you have no legal obligation to perform. I would recommend that you return the application fees that you might have obtained from this applicant.
Question Four: I recently bought a four-unit rent control apartment building in the City of Los Angeles. After doing some investigation, I realized that one of the tenants is being charged rent in excess of the maximum allowable rent. It appears the previous owner charged an illegal rent increase. How should I handle this?
Answer Four: These types of situations become a ticking time bomb. If this tenant stops paying rent, your eviction would fail. In addition, the tenant could always ask for all the excess rent to be returned. This would include all the rent collected, prior to you even owning the property. My suggestion would be to disclose to the tenant the correct rental amount. You should immediately pay the tenant all excess rent collected during the entire lease term. I would then make a claim against the previous owner for reimbursement.
Question Five: I am planning on selling my apartment building. Is there any notice that I need to give to my tenants?
Answer Five: There is no requirement that an owner disclose to existing tenants that the premises are to be sold. The buyer, however, might require that tenants fill out an estoppel agreement. An estoppel is an acknowledgement that the tenants are required to sign. The tenants acknowledge the names of the occupants who are residing in the unit, the current rent and the amount of the security deposit being held.
Question Six: I recently was attempting to access a unit when I discovered that the tenant had changed the locks. I have owned buildings for over 30 years and I have never had a tenant do this. How should this situation be handled?
Answer Six: It is imperative for owners to have the keys to a tenant’s unit in case of an emergency. I would immediately demand that the tenant provide you with a key. If this tenant refuses, I would check your lease agreement. Most agreements prohibit tenants from changing the locks or making alterations. Assuming this provision is in your rental agreement, you should serve a 3 Day Notice to Perform or Quit, which would give the tenant three days to supply you with a key. If the tenant refuses, this would be grounds to evict.
Question Seven: I have a tenant who wishes to lease a unit in the name of his corporation. He states that for taxes purposes he will be able to deduct the rent he is paying. He claims that he can justify the deduction as all of the bookkeeping for the corporation would be conducted at the apartment. Is this something I should do?
Answer Seven: The problem with a corporation as a tenant is that if the tenant breaches the lease, collection would be very difficult. Corporations can be easily dissolved and the collection would be fruitless. Many people might suggest having this person sign as a guarantee for the lease. In this way, you still would be able to hold the individual liable. I think the best approach is to have this person on the lease as a second tenant. In this way, each tenant would be jointly and severable liable in case of a breach of the lease agreement.
Question Eight: I have a tenant who is an up and coming actor. He continually asks me to give him more time to pay the rent. He has even said to me that one day people will point to this apartment and say that a famous actor once lived here. What should I do?
Answer Eight: Tell your up and coming tenant that if the rent is not paid immediately, that he will never be famous living here.
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: 714.634.8232, 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. “Landlord Tenant Radio Weekly Podcasts can be heard at any time at www.EVICT123.com or download the app “EVICT123”.