Question 1: I rented a two bedroom Berkeley unit to three students and collected $3,000.00 for first month’s rent.  The rent receipt, which we both signed, states the basics of the lease: monthly rent, occupants, term of lease and start date.  It also states that the rent is non-refundable unless we obtain another tenant to occupy the unit under the same conditions.  Usually, we sign the complete lease a few days later when it’s prepared.

These tenants refused to sign the lease and demanded an immediate refund of their first month’s rent.  They had not yet paid the deposit.  I told them I could not refund their rent immediately because their action was typical of a scam in which a landlord accepts a check for funds that are in fact not available.  They quickly ‘lawyered up’ and threatened me with suits inCaliforniaand Federal courts and attorney’s fees.  (My rent receipts now state no attorney’s fee like my leases.)

I thought such disputes automatically are heard in small claims court where legal fees cannot be collected from the other party.  Were their threats idle, or did they have teeth?
Answer 1: It is very difficult to gauge whether your tenants’ threats have substance or not from your limited facts. It is not clear if the tenants ever took possession, for example. However, assuming they did not, the primary issue would be the legal nature of your ‘rent receipt’. The document everyone signed could be confirmation of payment of the first month’s rent evidencing an agreement between the parties that the tenants have committed to renting the unit from you, and you have committed to renting the unit to them, even though a more formal and complete lease is anticipated to also be signed. If that were the situation, then there would be a binding agreement between you and the tenants, which would be enforceable. In that case, if the agreement was for a month to month tenancy, the tenants could provide immediate notice of their intent to terminate in 30 days, and would be free to leave (or, if they never moved in, simply leave it vacant), and have no further obligation to you, though they would be responsible for the rent for that one month. If the rental agreement was for a one year period, then the student/tenants and you would be bound to that lease, unless you both agreed to terminate it. If not, and the tenants chose to terminate, they would be in breach and responsible for the amount of rent due under the entire lease term, minus the amount you could reasonably collect from new tenants (called mitigation of damages).

If, on the other hand, the rent receipt was only evidence that the tenants had deposited the rent to, for example, ‘hold’ the unit, the legal relationship is more ambiguous. It could be considered the money they gave you was the equivalent of, or to be applied toward, a security deposit, which may not be held as ‘non-refundable.’ The payment could also be considered to have created an ‘option’ in favor of the prospective tenants, giving them the right to rent the unit but not the obligation to do so unless they signed the more formal rental agreement.

In such situations, it is to everyone’s significant advantage for the document that evidences receipt of any payment to clearly explain the intent of the parties. For example, the rent receipt could include a provision along the lines of – ‘the applicant’s tender and the acceptance by the landlord of the amount of the first month’s rent shall constitute a binding agreement that the applicant has agreed to rent the unit on the terms set forth above, and the parties shall execute a standard residential rental agreement before the tenant takes possession.’

As to whether such matters are limited to small claims court, not necessarily. It is up to the claimant to pick the forum, and small claims is preferred for many disputes under the financial limit of $10,000.00. But again, it is up to the claimant.           

Question 2: What is the new law regarding the smoke ban? I have a tenant that just moved into a property in Santa Clara, and they are not allowed to smoke inside their unit but they are smoking on a patio in a common area. Are we able to tell them they are not allowed to smoke on the property?
Answer 2: The ‘new law’ you mention probably refers to SB 332 which took effect  January 1, 2013, and which basically provided landlords with confirmation by the state that smoking in individual units and in common areas can be banned.

For a more comprehensive review of the issue, a very helpful online pamphlet regarding your question can be found at  http://changelabsolutions.org/publications/SFMUH-guidebook. But in brief, you should be able to notify all tenants via a change in terms of tenancy that there is no smoking in the common area, though the patio (if it is attached to the rental unit) may be slightly different and your ability to change that part of the rental relationship may depend on the status of your existing rental agreement with the smoking tenants. If their agreement is month to month, then you should have no problem instituting the change of terms. If it is a one-year lease, then changing the terms of the rental agreement might be challenged by the tenant as a material change which could constitute a breach of the original rental agreement if the new rule is enforced by you.

Question 3: We are attempting to evict a tenant for non-payment of rent. Their response is in ‘pro per’ (meaning they are representing themselves), yet they have an attorney from the EDC assisting them. As a landlord, what is our recourse other than spending a lot of money for an attorney? Why are they allowed to have an attorney, yet filed pro per?
Answer 3: Anyone can represent themselves in court, and still have an attorney advise them, or substitute in at any time. You have the same right. And while it may be frustrating that there are ‘free’ lawyers for tenants, but not for landlords, that is just the nature of the system. Some courts are offering free legal assistance to landlords as well as tenants, so you should check with your particular superior court to find out if your county offers such assistance.  For Alameda County, you might review the Superior Court’s website at http://www.alameda.courts.ca.gov/Pages.aspx/Representing-Yourself. Otherwise, you will have to ‘pick your poison’ – trying to navigate the unlawful detainer and eviction process yourself, which can be challenging, or paying the fee of an attorney to guide you through that process. Of course, there is always the option of trying to negotiate a solution with the tenant.

Question 4:  We would like to evict our tenants due to non-payment of rent. My manager thinks that the tenants will respond that they have bed bugs in their unit. Tenants said they have to get rid of all of their furniture and buy air beds and new comforters because the bed bugs are really bad. Tenants said that those costs have to be deducted from the rent. My manager is concerned that the judge will say this is a habitability issue. What are the laws on bed bugs?
Answer 4: The basic rule on bed bugs is if the tenant brought them in, the tenant is responsible for the problem, and not entitled to a rent reduction based on habitability issues. If the tenant is not responsible, then the tenant may be entitled to a rent reduction. So, it becomes a factual issue, which are sometimes very difficult to prove one way or the other. In such cases, some sort of compromise approach is often the most cost-effective (e.g. waive some rent and agree the tenant will vacate, then start fresh with a new tenant after the unit/complex has been confirmed clear of bedbugs). If the facts are clear (regarding who is responsible for the problem), then the compromise would tend to lean more favorably in the direction of the ‘innocent’ party. Your local health department may be a good source of information on the recent surge of bedbugs. For example,San Francisco has instituted a comprehensive regulatory scheme for bedbug complaints, which can be found by going to http://www.sfdph.org/dph/files/EHSdocs/Vector/BedBug/BedBugRegs_070112.pdf.

Question 5: It is my understanding that if served a 3 Day to Cure or Quit and the tenant complies within the three days, then the tenant has to be served for a subsequent violation all over again. I want to serve a 3-Day Notice to Quit since the 3-Day to Cure or Quit violation notice isn’t working.
Answer 5: If the tenancy is month to month and not in an eviction-control city, you should be able to simply serve a 30 or 60 day notice of termination due to the tenants’ repeated acts in violation of the rental agreement. If you are in an eviction-control city, or the tenancy is a one year lease, then you may have a lease provision that will allow you terminate the tenancy. Many current leases provide the owner the right to terminate the lease if the tenant violates a material term three or more times in one year. For example, the AOA lease provides: RESIDENT understands and agrees that rent paid after the due date, or paid by dishonored check, shall be considered a Rent Default, and that three or more Rent Defaults in any 12 month period shall constitute a non-curable lease breach, and conclusive evidence of habitual late rent payments, and shall constitute grounds for termination of the tenancy for good and just cause, at any point during the tenancy.

Also, you could – depending on the violation – consider it a non-curable breach and serve the 3 Day to Quit without chance to cure. But that would require some analysis beyond the scope of this column.

Question 6: Can I legally force my tenants to have renter’s insurance?
Answer 6: You can change the terms of a month to month tenancy (that is not covered by any rent control law) to include a requirement that the tenant have renter’s insurance, and provide you proof of that fact. The tenant’s failure to do so after the notice has expired will put the tenant in breach of the lease and subject to receiving a three day notice to cure or quit.

Question 7: Do you know ifOakland rent control ordinance impacts a landlord’s decision whether to charge more rent for a new pet, rather than just more of a (new) deposit?
Answer 7: TheOakland rent control law does not allow for a rent increase based on the addition of a pet. Whether you can charge additional deposit is not completely clear, as it may be considered a “rent increase” under the terms of the ordinance, and I believe some tenant attorneys have argued that a deposit increase is equivalent to a rent increase and must follow the same guidelines. However, a close reading of the applicable ordinance does not show any restriction on increasing the security deposit by a properly noticed change of terms of tenancy, requiring an additional deposit that is not otherwise in violation of the state law governing the amount of security deposit (maximum of two months’ rent for an unfurnished apartment and three months’ rent for a furnished apartment). However, as with all covered rentals inOakland, you have to provide two required notices to the tenant before or along with any rent increase or change of terms of tenancy, per the Oakland Rent Adjustment Ordinance – see section 8.22.060 and 8.22.070 for the details of those notice requirements.

There are other issues associated with a tenant’s request to add a pet to an existing tenancy, such as the reasonable accommodation request, or whether your lease prohibits pets without the owner’s prior consent, and the above is limited to the question you submitted.

Richard Beckman, of Beckman Blair, LLP has been practicing landlord-tenant law for over 19 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 415-871-0070; email rich@beckmanblairllp.com or by visiting the website www.beckmanblairllp.com. 

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