Question 1: Other than AB 3088, which you covered in your online seminar in September, are there any new laws for 2021 that landlords should know about?
Answer 1: Apparently, the California legislature and Governor Newsom were as distracted by the pandemic as the rest of us, and, other than AB 3088, passed no laws of particular significance in the landlord-tenant arena. However, a couple of measures affecting housing were enacted, under AB 3182.
First, a provision of AB 3182 removes the grandfathered ability of a condominium HOA or other ‘planned unit development’ to completely prohibit the renting of units within the community or HOA.
HOAs were already limited in their ability to create new restrictions on the rental units, but rental bans in place before Jan. 1, 2012, were allowed to remain in effect. This bill removes that exemption. It does allow the community to impose a restriction that the total number of rentals may not exceed 25 percent of the individual dwelling units in the overall development, (which is related to federally supported financing for community developments that requires a certain percentage to be owner occupied).
The new law would also allow a common interest development to adopt rules that prohibits transient or short-term rental of a unit for a period of 30 days or less.
AB 3182 also provided relief to common interest property owners who seek to add accessory dwelling units (ADUs) on their property. AB 3182 prohibits HOAs from imposing rental restrictions on ADUs, and makes clear that ADUs are not counted toward the overall 25 percent cap. These units may still be subject to restrictions on “short-term” rental restrictions (i.e., less than 30 days), as provided under existing state law.
AB 3182 also provides a benefit to any owner seeking to add an ADU, by providing that if a local agency has not acted upon a completed ADU application within 60 days, the application shall be deemed approved.
Question 2: I have a tenant that is only paying 25% of rent since September. He lives there part time, and rents the unit out to three people. What can be done to get him to pay 100%? His rent is under market rate.
Answer 2: That is a tough situation, and one that probably falls between the cracks of the pandemic legislation. Depending on where the unit is, you might be able to enforce a non-subletting provision if your rental agreement has one (of course, all standard residential rental agreements include a ‘no subletting without owner’s prior consent’ clause). Certain jurisdictions, such as San Francisco, Oakland and Berkeley have imposed open-ended moratoriums on any eviction that is not based on the Ellis Act, public health and safety, or a non-payment of rent case authorized under AB 3088. Other jurisdictions allow evictions based on ‘just cause’ grounds such as an uncured violation of the lease. You will likely need a review by competent counsel of your specific situation in order to determine what, if any, remedies you may have to prevent your tenant from simply collecting rent from subtenants, but not paying you the full amount of the unit rental.
Of course, the pandemic legislation is not a ‘free pass’ to the tenant to live in the unit without ever being responsible for payment of the rent. However, the remedy of a small claims action six to 12 months after February 1st, which is the typical amount of time the tenant is given to repay the unpaid rent, does not leave many property owners feeling completely vindicated.
Question 3: I have a single-family home that I used to live in, but now rent out, and someone told me my ‘regular’ insurance might not cover me if the tenant files some sort of claim. My question is regarding what type of insurance is best for landlords that would include coverage for such instances like litigation.
Answer 3: That is a very good question, and one that every property owner who rents to tenants should ask themselves. Most larger property owners have commercial insurance policies that provide liability protection for tenant claims ranging from bodily injury on the premises to wrongful eviction claims. However, most homeowner policies do not provide coverage for claims of wrongful eviction or invasion of the tenant’s rights of privacy, which are often alleged by tenants who bring such lawsuits, and also have built in exclusions for claims they are brought by tenants. Homeowner policies are meant to be just that – protection for a homeowner who lives in the property. Therefore, if you no longer owner-occupy your property, you should contact your agent immediately and let them know that you have a tenant-occupied property, and request that they revise or update your policy to provide the standard protections available to a landlord who rents her property. Homeowners policies can be amended with what is called the ‘personal injury endorsement’, which is additional coverage to the standard homeowner policy, and covers claims related to wrongful eviction etc. However, even that may not protect you from the typical exclusion in the homeowners’ policy that rejects claims based on ‘business pursuits’ of the owner, which is typically defined to include renting out the unit.
So, the simplest and best answer is to contact your insurance agent or broker, explain your situation, and make sure they understand and provide you the proper policy. It may cost a little more, but should you need it, it will more than pay for itself. [Call AOA’s Group Insurance Plan at (800) 827-4262. They will probably save you money!]
Question 4: I have a rental lease co-signed by four roommates. One of the roommates sent me a Covid-19 Declaration form stating that she will not be able to pay rent because of reduced work hours. However, her roommates have not provided any Declaration. Can I still proceed to collect rent or file a three-day notice to pay or quit on the other roommates?
Answer 4: As with the question and answer above, individual tenants within a unit who claim pandemic-related, economic distress present unique issues. However, one thing is clear – any demand for rent that came due between March 1, 2020 and the end of January 2021 must be done by a specially modified 15-day notice, regardless of the reason for the nonpayment, or the make-up of the tenancy. The tenant’s response to that notice will then inform your options, which may be limited to notifying the entire tenancy that, while each tenant is responsible for the entire rental amount, under the circumstances, and as long as the remainder of the tenants continue to pay the remaining balance of the rent, you will not seek to hold them liable for the affected tenant’s unpaid rent. While not legally required, this approach may motivate the tenants who are paying to continue to do so.
Question 5: We have a SFD rental home on 1/3 acre that was built in 1946. That is when the septic system was installed as well. It is 1,000 sq. ft. and has a master bedroom and two additional, very small bedrooms. Because of the age and size of the private septic system, are we able to limit the number of tenants to less than the ‘two adults per bedroom, plus one’? We know that seven adults and unlimited children would overwhelm the system.
Answer 5: Generally speaking, if there is a nondiscriminatory reason for limiting the number of occupants of the premises, there would be no legal impediment to limiting the number of occupants. Someone may potentially challenge your explanation, in which case, you may have to prove the septic limitation as the basis of the physical restriction on the number of occupants. But again, generally speaking, such a valid reason should protect you from the charge of discriminating against families based on the number of occupants.
Question 6: I do not wish to extend my Elk Grove tenant’s rental agreement past the expiration date of 7/1/2021. The question is am I required to provide her a proper notice, say a 60-day notice, and a reason? I’d like to give her a 60-Day notice to move out due to not extending the lease agreement with no reason stated.
Answer 6: Assuming Elk Grove does not have its own local form of rent and eviction control, your unit is subject to the state law from 2019 called AB 1482. However, the provisions of that law – which would require a ‘just cause’ ground to terminate or not renew (assuming the tenant has been in occupancy for at least one year) do not apply to single family homes and condominiums, if the owner has provided the tenant with the required notice set forth below (assuming the facts in it are correct). If that has been done, and the unit is exempt, then the lease will expire at the expiration date and the tenant will be unlawfully holding over if they remain in possession. As a courtesy, I always recommend that owners give tenants at least a 60-day notice of their intention not to renew the lease, and you can even combine that with a 60-day notice to terminate so there is no uncertainty, should they remain in possession, of your right to file an unlawful detainer to recover possession the next day.
AB 1482 exemptions: Single family homes or condominiums – provided that both of the following apply:
(A) The owner is not any of the following:
- A real estate investment trust, as defined in Section 856 of the Internal Revenue Code.
- A corporation.
- A limited liability company in which at least one member is a corporation.
(B) (i) The tenants have been provided written notice that the residential property is exempt from this section using the following statement: “This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”
Question 7: My tenant has not paid the rent since April 2020. According to AB 3088, I can sue the tenants in the small claim court if the tenant has not yet paid any rent back. My question is that can I hire a collection agent/lawyer to directly collect that debt from the tenant without going through the small claims court? If the collection lawyer failed to collect the money from the tenant, can the lawyer go with me or represent me to the small court to sue the tenant? Also, the tenant moves out without leaving a forward address, is it possible to have the collection agent/lawyer do the collection, or even bring the tenant to the small claim court?
Answer 7: While your question has certain issues that I won’t address here, claims for unpaid rent that accrued during the covered pandemic period, currently March 1, 2020 through January 31, 2021, may be brought in “regular” Superior Court, as well as Small Claims Court. In recognition of the likelihood that many such claims would exceed the small claims jurisdiction on all matters of $10,000, AB 3088 also provided that any claim which sought pandemic related debt was not subject to the $10,000 limitation. In other words, you may file a back-rent claim exceeding $10,000 in Small Claims Court, but you are not required to.
Whether to hire a collections agent/attorney or not to pursue your claims depends on the situation, which I am unable to analyze from the information you provide.
Finding a tenant who has vacated without a forwarding address sometimes requires employing the services of a private investigator, which the attorney that you select may be able to assist you with. However, you need to be aware that the tenant may have an opportunity to repay unpaid rent that accrued during the March through January period, and in many cases has up to one year to repay those amounts before being subject to a small claim lawsuit. You should check your city and county ordinances to find out if Saratoga or Santa Clara county has such protections for the tenant. From my brief research, I found the following: Residential tenants who were protected from eviction while the County’s residential eviction moratorium was in effect must now pay back at least 50% of the past-due rent (rent due between March 24, 2020 through August 31, 2020) by February 28, 2021, and the remaining unpaid rent for that same time period by August 31, 2021. Landlords may not charge a late fee if tenants make such payments.
Richard Beckman, of Beckman Feller & Chang P.C., has been practicing landlord-tenant law for over 26 years, primarily in rent-controlled jurisdictions such as San Francisco, Oakland and Berkeley. He represents clients in a broad range of real estate-related disputes, including partition of co-ownership interests, purchase contract disputes, insurance coverage analysis and land use. Mr. Beckman also specializes in all aspects of landlord-tenant issues, representing landlords and tenants in residential and commercial matters. He can be reached at 510-548-7474; email [email protected] or by visiting the website www.bfc-legal.com.