Q&A

Below are questions asked by rental property owners regarding California rent control laws followed by answers provided by Attorney Richard Beckman.

 

Question 1: Are we allowed to seek unpaid rent now by going to small claims court?  

Answer 1: Depending on when the rent accrued, and what jurisdiction (city etc) your tenancy is located in, the answer is a qualified yes. The state law prohibition on seeking unpaid rent as  “consumer” debt (i.e. just money owed from one person to another) was lifted as of November 1, 2021. At that time, any unpaid rent could be sought in a collection action, though in certain cases could also be sought via the unlawful detainer nonpayment of rent procedure.

However, certain cities and counties had baked into their eviction moratorium laws a provision that also prohibited the lessor from suing the tenant for unpaid back rent, instead providing a safe harbor period of time for the tenant to repay back rent before he or she could be sued for it.

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For example, Oakland’s ordinance and regulations provide “Repayment Guidelines” which state that “within twelve (12) months of the expiration of the Local Emergency, any rent that became due during the Local Emergency that was unpaid for reasons related to the COVID-19 pandemic, as set forth in the Ordinance (hereinafter Delayed Rent) shall be due and payable.”

Thus, an Oakland lessor faces an open-ended period of time (since there is no indication the state of emergency is about to be lifted any time soon) before he or she can try to force payment of unpaid back rent if the reason for nonpayment was related to Covid. However, the final state law on the tenant protections that were put in place in August 2020 – AB 2179 – does put some brakes on that otherwise far away event. AB 2179 provides that:

Any provision which allows a tenant a specified period of time in which to repay COVID-19 rental debt shall be subject to all of the following:

  • If the provision in effect on August 19, 2020, required the repayment period to commence on a specific date on or before August 1, 2022, any extension of that date made after August 19, 2020, shall have no effect.
  • If the provision in effect on August 19, 2020, required the repayment period to commence on a specific date after August 1, 2022, or conditioned commencement of the repayment period on the termination of a proclamation of state of emergency or local emergency, the repayment period is deemed to begin on August 1, 2022.

In addition, a provision may not permit a tenant a period of time that extends beyond August 31, 2023, to repay COVID-19 rental debt. Cal. Civ. Proc. Code § 1179.05 (West)

Thus, regardless of the Oakland state of emergency, the tenant has until at the latest August 31, 2023 to have repaid all unpaid rent or is subject to collection efforts, regardless of the state of emergency in Oakland or Alameda County  (though the eviction moratorium  may still be in place).

Also, it should be noted that the provisions above  only apply to tenancies regulated under the Oakland Just Cause for Eviction and the Oakland Rent Adjustment Ordinances. 

So, again, the lessor’s right to bring a small claims action for unpaid rent depends on where the tenancy is located, and every lessor should familiarize him or herself with the applicable local rules.

Question 2: I have a single family home in Santa Clara, CA where the tenants have been since January 2004. I did not start to raise their rent until August 2014. So, their current rent of $2,210.00 is well below market. I want to transition the house to a local property manager and have them increase the rent. They are telling me that a rent increase up to 10% only needs a 30 day notice, but I can increase the rent over 10% with a 60 day notice. Is this correct or am I bound by some kind of rent control increase in the city of Santa Clara? We are considering a rent increase of perhaps $1,000. Thank you.

Answer 2: Research did not reveal any online indication that the city or county of Santa Clara has independent rent control. Thus, properties in that jurisdiction would be subject to the state rent and eviction control law of AB 1482, which limits rent increases to 5% plus the annual CPI increase.  However, as set out below, single family homes are exempt from the rent increase limitations if the criteria set out below apply:

Residential real property that is alienable separate from the title to any other dwelling unit, 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 real 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 (c)(5) and 1946.2 (e)(7) 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.” (ii) For a tenancy existing before July 1, 2020, the notice required under clause (i) may, but is not required to, be provided in the rental agreement.(iii) For a tenancy commenced or renewed on or after July 1, 2020, the notice required under clause (i) must be provided in the rental agreement.

However, your proposed property manager should be aware that any rent increase over 10% requires a 90-day notice. Civil Code Section 827(3)(A)  states that “If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail (add five days to the effective date is the increase is served by mail).

Question 3:  I am a licensed broker. My tenant is going through a divorce and stopped paying for the last two months. His rent is $3,250.00 and his deposit is only $2,150.00. He may not pay the last two months’ rent. Can I keep his deposit towards the rent? 

Answer 3: A tenant’s security deposit may be applied to unpaid rent owed by the tenant when the tenant vacates. Ordinarily (i.e. pre-Covid) lessors could apply part  or all of the security deposit to any ongoing unpaid rent, and, if the lease allowed, serve a three day notice for the tenant to replenish the security deposit amount. However, if the reason for failure to pay is related to financial impact from the pandemic, state law does not allow application of the security deposit to such unpaid rent until the tenant has in fact moved out.

Question 4: When does the moratorium end for non-payment of rent evictions in San Francisco? Can the eviction process happen now?

Answer 4: San Francisco’s eviction moratorium expired as of December 31st, 2021. Efforts to demand unpaid rent now fall under state law, the last version of which was AB 2179. It requires particular notices for particular periods of rent due, etc, but I believe AOA has the specific forms for each particular rental period.

Question 5: Can I ask to see copies of the tenants’ tax returns to prove income? There are four women who want to move into the house. The income claimed on the application is a little off from the income stated on the verification and now they are claiming that they have two jobs each. Way too much math.
Answer 5: I am not aware of any prohibition on requesting an applicant’s tax returns to verify stated income. You are entitled to their Social Security number to run credit checks etc, and while they would not have to provide you with the tax return (or their SSN), I don’t believe there’s any legal restriction on asking. If the applicant refuses to provide the form, you can suggest they provide you what is called a redacted version, in which much of the financial information is blacked out, but for the final amount of income reported in the filing.

Question 6: Can we advertise saying “no section 8”? Or saying “No Smokers”? Is there a list specific for San Mateo county requirements? Or Redwood City requirements?
Answer 6: A lessor can no longer advertise a unit as not accepting Section 8 applicants. That is almost a certain path to being sued for source of income discrimination. However, you can advertise that the apartment is ‘smoke free’. 

As for a list, AOA is putting together a seminar that will be presented in June which discusses in detail the applicant selection process, i.e. the do’s and don’ts. It should answer any additional questions you may have, and you will likely receive an email from AOA providing notice of that seminar when it is scheduled.

Question 7: Hello, we had a fire in one of our units. The tenants do not have renter’s insurance and our homeowner’s insurance covers rent loss and repairs. Are we required to find housing or a hotel for our tenants and cover the cost? Thank you.
Answer 7: It depends on how the fire started, and whether the unit was destroyed or damaged. Generally, destruction of the unit terminates the lease and that’s that, regardless of how it started. 

If the fire was started because of the landlord’s negligence, the tenants may have a claim for some damages incurred as a result, including the cost of temporary housing. If the tenant caused the fire, you would be entitled to seek compensation from them. Either way, your insurance adjuster may have additional guidance on that particular question.

Question 8: I have four commercial properties located on the ground floor of an apartment complex. I wanted to find out exactly what is needed to make these commercial units ADA compliant. Are there any exemptions due to size? I want to avoid this “drive-by” lawsuit that is occurring all over California.
Answer 8: You can contact what is known as a CASp (Certified Access Specialist) service for an inspection of the property.  According to the state Department of General Services website, at https://www.dgs.ca.gov/casp, a CASp will know which standards apply to a property based on the age of the facility and its history of improvements. While a licensed design professional, such as an architect or engineer, can provide an access compliance evaluation of a facility, only a CASp can provide services that offer “qualified defendant” status in a construction-related accessibility lawsuit. The good-faith effort of hiring a CASp may lessen a business or property owner’s liability and provide certain legal benefits if an accessibility claim is filed against them. You can retain the services of a CASp at any time; however, “qualified defendant” status is only provided if you receive an inspection of your existing facility, a report from a CASp, and have a compliance schedule in place before a construction-related accessibility claim is filed. The “qualified defendant” benefits are as follows:

  • Reduced statutory damages .
  • 90-day stay of court proceedings and an early evaluation conference.

Question 9: We just purchased a twelve-unit apartment building. We would like to give a tenant 90 days to leave so we may fully remodel their unit. Can we do so and what form should we use? Thanks for your help.

Answer 9: Generally speaking, the unit is likely subject to state eviction control under AB 1482, which requires ‘just cause’ to terminate a tenancy that is at least one year old. One such ‘just cause’ includes “Intent to demolish or to substantially remodel the residential real property.

(ii) For purposes of this subparagraph, “substantially remodel” means the replacement or substantial modification of any structural, electrical, plumbing, or mechanical system that requires a permit from a governmental agency, or the abatement of hazardous materials, including lead-based paint, mold, or asbestos, in accordance with applicable federal, state, and local laws, that cannot be reasonably accomplished in a safe manner with the tenant in place and that requires the tenant to vacate the residential real property for at least 30 days. Cosmetic improvements alone, including painting, decorating, and minor repairs, or other work that can be performed safely without having the residential real property vacated, do not qualify as substantial rehabilitation.

If you have sufficient just cause, you will also need to pay the tenant one month’s rent as relocation assistance, but only a 60-day notice is required, unless the tenant is ‘Section 8,’ which would require a 90-day notice.

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.