Legal Q & A by Richard Beckman
Below are questions asked by rental property owners regarding California rent control laws followed by answers provided by Attorney Richard Beckman.
Question 1: I have a single-family home rental in San Francisco. The tenant has been living at the property since 2009. I would like to increase the rent in 2022 (have not increased rent since 2019). I have not served the tenants with any info on AB1482 if the property is exempt from rent caps and just cause evictions or subject to the law since I’m a new landlord. Based on my understanding, I believe the property is exempt from AB1482 because it is “Privately owned single-family home that have no other rented dwellings on the parcel”.
Please correct me if I am wrong if the property is exempt from rent caps and just cause (property located in SF). Can I still serve the tenants with an Addendum to specify that the property is exempt and increase their rent by $300 per month (was $3180 and will be $3480 per month starting March 1, 2022)?
Answer 1: Generally speaking, there is some legal uncertainty as to whether single family homes, which are exempt from the rent control part of the San Francisco rent ordinance, are covered by AB 1482. If they are not, then a rent increase beyond the amount allowed by AB 1482 – which would allow a current increase of 8.8% – would be permitted. If they are, then you would need to provide the required notice to the tenant regarding the AB 1482 exemption prior to imposing a rent increase beyond that limit. However, either way, there may be a statewide state of emergency (SOE) based on the drought, among other issues like the lingering effects of the fall wildfires, which could limit increases to 10% under the ‘anti-gouging’ rules that apply during SOEs. If so (and without an exhaustive review of each announced SOE, it’s difficult to be certain) you would be limited to a 10% increase (absent mitigating factors that would justify a higher amount). Thus, the safest approach would be to provide the tenants the rent addendum notifying them of the AB 1482 exemption, along with an increase of 8.8%, and see what the future brings. If you are able to determine no SOE affects the property, a subsequent increase can be given, though be aware that if the combined increase in any 12-month period exceeds 10%, the tenants are entitled to a 90-day notice of the increase that results in the amount exceeding the collective 10% limit.
Question 2: What’s the maximum fee the landlord can charge a tenant for breaking their one-year rental lease early? Can the security deposit be used towards the fee?
Answer 2: The tenant is responsible for the total amount of rent due under the lease, and if they fail to pay it for whatever reason (other than a breach by the landlord, such as failing to provide habitable premises or other promised or required services etc.), you have a claim against them for that remaining amount. However, there is also the concept known as ‘mitigation of damages’, which requires the landlord to try to limit the tenant’s remaining rental liability by renting the unit out as soon as reasonably possible. The security deposit can be used for any unpaid rent that accrues until they vacate, plus 21 days thereafter. Once they vacate, you have 21 days to account for the security deposit, and cannot apply it towards future unpaid rent. For example, if the tenants owed rent for December, and vacated first of January, in breach of the lease, you could withhold the December rental amount from the security deposit, along with the daily rental amount for the first 21 days of January. Any remaining deposit balance not otherwise applied to cleaning or damages beyond normal wear and tear would be returned to the former tenants along with the required accounting of the application of the deposit to those various charges.
Question 3: This is not a legal question, but could you post where landlords and managers can write to the idiots that are not releasing the moratorium and are making it all about the tenant. I have a tenant that has not paid anything in over a year but has purchased several used cars and always eats out! There is something wrong when the tenant won’t help themselves after you do all the paperwork to help them get their rent paid and they ignore all communication from the Housing is key fund! This has got to end!!!
Answer 3: I completely share your frustration. The ‘bright spot’ is that the moratorium remains only in the East Bay, due to Alameda County, Berkeley and Oakland failing to lift it. Even San Francisco has allowed its moratorium to expire as of January 1. I suggest to all AOA members that they contact the Alameda County Board of Supervisors (and the similar bodies in Berkeley and Oakland if your properties are located in either jurisdiction) and express their frustration at the failure of the Board to end, or at minimum, modify the pandemic eviction laws that were put in place in March of 2020, and by which most if not all indications no longer have any real need. Your situation is a case example in point.
Question 4: Tenant has been living in our Modesto apartment, which does not have any special rent control in Modesto but are subject to AB1482 rental caps, for two years. There was a co-tenant and guarantor (EA Family Services). Co-Tenant has asked to be removed from lease and EA Family Services will no longer guarantee the lease as tenant has aged out of program. Tenant is asking to have a new lease in their name alone and will be applying for Section 8 voucher.
Question: If we write a new lease, do we have to keep the rent the same (we recently increased 6%) or can we write a new lease with market rate rent?
Alternatively, can we give tenant a 60-day notice given that she does not qualify as per our criteria without a co-tenant and guarantor?
Answer 4: Your questions present various issues. If the tenancy has gone ‘month-to-month,’ which sounds likely, the co-tenant (and the guarantor) may terminate their lease responsibility by giving you 30 days’ notice. That would leave the remaining tenant responsible for the rental amount going forward. Given AB 1482’s ‘just cause’ requirement, I don’t think either of those events – the co-tenant and the guarantor departing – would constitute cause to terminate the tenancy. Thus, her failure now to qualify for your income requirements would not constitute just cause, any more than if she had lost her job. If she fails to pay the rent, you would have a just cause ground to seek eviction.
If the remaining tenant requests a new rental agreement (though it’s unclear why he or she might), that might allow for a negotiated lease (e.g., higher rent, reduced services etc.), that would be considered a ‘novation’ – where a new agreement between parties to a contract supersedes the prior agreement. But given the application of the housing laws that are designed to protect tenants from being bound by contracts they enter into if the contract violates the protective housing law, it is not certain the novation rule would apply.
If the tenant qualifies for Section 8 assistance, the rent amount will be subject to the housing authority’s rent caps for the size of the unit and the area. Also note that there is a state law that prohibits discriminating against a tenant based on the source of income, which includes receiving Section 8 assistance.
Question 5: We have reason to believe that tenants placed in a home on 8/18/21 are not the people on the lease. Perhaps they used someone else’s identity. Please advise how to move forward.
Answer 5: If you believe the tenants on the lease have sublet or assigned the lease to others, you can serve a three-day notice to cure the lease violation, and follow it up with an eviction action if the facts are established. But I would try to communicate with the tenants and find out what is going on first, just to avoid any misunderstanding if possible. If the current occupants simply lied about who they were, I believe a three-day notice to terminate without opportunity to cure based on fraud would also be permitted, assuming no local eviction moratorium applies. If so, you would have to convince the judge that the mere fact the occupants gained occupancy by fraud constitutes a ‘public health or safety’ issue, and so exempt from the moratorium. Whether a judge would be persuaded or not is impossible to predict.
Question 6: I have a duplex in Oakland, CA. One of my tenants moved in seven months ago and their 12-month lease ends April 2022. As a landlord, do I need a reason not to renew the lease and give a 30-day notice? There is more reason not to renew, as surrounding neighbors have called to complain of noise, fights, etc. One of my tenants moved out due to unable to cope with constant issues. Also, they are rude when complaining about maintenance issues. I also need to repair and replace the roof. Thanking you in advance for your advice.
Answer 6: Tenants in Oakland rentals are generally covered by the eviction control law known as Measure EE, which you can review by going to the Oakland rent board website. If so, the expiration of the lease does not mean they have to move out. The lease simply becomes month to month, although you are entitled to require them to renew the lease for another year (clearly not an option for your situation). Any termination of tenancy, even at the expiration of the lease, requires what is known as a ‘just cause’ ground. However, from your description, his behavior likely qualifies as nuisance conduct, which is a just cause ground. You do not have to wait until the lease expires to notify the tenant that his conduct may subject him to eviction if it is not eliminated or corrected. However, to do so legally, you have to make sure your notices comply with the local eviction protection ordinance. Alternatively, the need to replace the roof may provide a temporary just cause ground, but would involve relocation payments, and the tenant’s right to return after the work is completed, so that option may not solve your problem. Rudeness, while unnecessary from any tenant, probably is not a ‘just cause’ ground.
Question 7: I served a 60-day notice to move out to my tenant, because I want to move into my own apartment. I waived last month’s rent and extra seven days as helping. He is a disabled person who was diagnosed with bipolar mental issue. Can he claim not to move out or ask for more money?
Answer 7: The tenant can refuse to move out when the notice expires, and force you to go through the unlawful detainer (eviction) process, which can be complicated due to the Covid laws that are in place to protect tenants. There is also the possibility he would claim his condition constitutes a disability which entitles him to a ‘reasonable accommodation’, including withdrawal of the termination notice. However, I do not believe that tactic would be successful. I would continue to try to communicate with the tenant to try to learn his response, but not to badger him about moving. If he honors the notice, great. If not, you will likely need to consult an attorney to further your effort to move in. Also, I strongly suggest you check your insurance policy to make sure you have ‘wrongful eviction’ coverage, often referred to as the ‘personal injury endorsement’. But I recommend that to every landlord!
Question 8: Do you have a form letter to remind the tenant to purchase Renter’s Insurance, which is required in our lease agreement? Can I threaten to raise their rent if the tenant does not provide the Renter’s Insurance proof after a reminder?
Answer 8: There is no ‘form’ letter to remind the tenant about getting insurance – just simply state the request in writing to the tenant. However, there is no risk to the tenant if they fail to do so, as a court has held such a lease breach will not support eviction, as the provision is for the tenant’s benefit, not the landlord’s. As for a rent increase should they fail to do so, that’s an interesting question, and I do not know whether such a reaction could be considered retaliatory or not. If so, it would be an unenforceable increase, and could subject you to some potentially significant penalties just for trying.
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.