Question 1: I have a Duplex in Oakland. What is the best way to deal with roommates/sub leasing?

Answer 1: That question is simply too open-ended to try to answer completely. Generally, having your tenants comply with the lease provision requiring the landlord’s prior written approval is a start, which allows you to know who is in your unit, and to run a background/credit check on them, to be sure they are not being evicted from someplace else for behavior you do not want them to duplicate in your building. Since your duplex is in a rent-controlled city (Oakland), you should also let each and every new occupant know they are not an ‘original tenant’ for purposes of a rent increase when the last tenant named on the lease (aka the last original tenant or occupant) vacates (what is sometimes  called a “6.14 notice’ if your units were in SF). 

One of the ‘don’t do’s’ regarding subtenants is to accept rent directly from the subtenant rather than the master tenant. Some tenant attorneys, and possibly the Oakland rent board or a judge, can interpret that act to mean you have created a direct tenancy with the subtenant, elevating him or her to co-tenant status with the master tenant, and eliminating your opportunity for a ‘Costa Hawkins’ rent increase when the last original tenant vacates.

Because the issues and legal uncertainty surrounding subtenants in rent controlled tenancies is so confusing for most landlords, it has been the basis of an actual course taught to landlords by some of the various local housing associations, so do not despair if you find it extremely confusing.  If you feel you need specific advice on your particular situation, you can contact an attorney who specializes in that field.           

Question 2: I evicted a tenant and then the tenant proceeded to move-in with a relative that lives in another apartment on the property in Oakland. The evicted tenant has been living with his brother since Feb. 2014. How can I get the evicted tenant out of the complex or do I have to evict the brother?
Answer 2: Unless your rental agreement with the brother has a sublease restriction, you may not have any grounds to get the evicted tenant out of the brother’s unit, unless he (the evicted tenant) is creating an independent eviction basis such as nuisance etc.

Also, even if you have a sublease restriction in your rental agreement, if the unit is covered byOakland’s Measure EE (the eviction control law), a tenant is entitled to have a relative (or other subtenant) move in, if they follow the proper procedure and are replacing a departing tenant.

Also, since this has been going on since February, it is possible you have ‘lost’ any right to challenge the situation, by waiver or estoppel, though those are generally complicated legal and factual issues that require a close analysis by an experienced attorney.

I can sympathize with your frustration, but you may have no real choice but to put up with the move unless legal grounds exist to challenge it.

Question 3:  I mailed my previous tenant a letter for the lists of the amounts of deduction from his security deposit, including unpaid rent, cleaning and repairs, along with a refund check. The letter was mailed 17 days after he moved out. But on the 21st day after the tenant moved out, he claimed that he did not receive the refund from me, and should be entitled the full security refund. I have a copy of the letter and a copy of the check for the refund. The forwarding address has been verified by the tenant. Normally, it will take two to three days for the US Post Office to deliver the mail to his address inOakland.  Questions:

  • Does California law require the landlord to mail out the statement and check within 21 days after tenant moved out, or require the check be received by the tenant within 21 days?
  • If the check should have been received by the tenant within 21 days, when the tenant repudiates on receiving the check on the 21st day, can I stop the check from my bank, and resend the statement and the check after 21 days?
  • I  already sent an email to tenant and told him the check was mailed on the 17th day after he moved out, and attached the soft copy of the letter.  What else should I do?

Answer 3: Per Civil Code Section 1950.5 (g) (1), the landlord’s obligation is to mail the security deposit accounting within 21 days, not to insure that the tenant receives it within that period. The exact language is as follows: “No later than 21 calendar days after the tenant has vacated the premises, but not earlier than the time that either the landlord or the tenant provides a notice to terminate the tenancy under Section 1946 or 1946.1, Section 1161 of the Code of Civil Procedure, or not earlier than 60 calendar days prior to the expiration of a fixed-term lease, the landlord shall furnish the tenant, by personal delivery or by first-class mail, postage prepaid, a copy of an itemized statement indicating the basis for, and the amount of, any security received and the disposition of the security, and shall return any remaining portion of the security to the tenant.”

Given the above, and assuming you can establish timely mailing, the tenant has no claim that you violated the statute by mailing the check and accounting information, and you may email him the applicable section of the law to explain that to him.

As to getting the refund check and accounting letter to the tenant, if he continues to represent having never received it after a reasonable period has passed for the postal service to deliver your letter, a 2013 revision to Civil Code 1950.5 provides that after either the landlord or the tenant provides notice to terminate the tenancy, a landlord and tenant may mutually agree to have the landlord deposit any remaining portion of the security deposit electronically to a bank account or other financial institution designated by the tenant and that the landlord and the tenant may agree to have the landlord provide a copy of the itemized statement along with the copies of documents showing charges incurred and deducted by the landlord to repair or clean the premises to an email account provided by the tenant. Given this additional provision, I suggest contacting the tenant by email and requesting that he agree to have the accounting sent by email, and he can provide an account number to deposit the refund directly. If the tenant refuses, canceling the check and re-sending the letter and new check by certified mail return receipt requested will eliminate any further claims of non-receipt.

It will be up to the tenant to challenge the security deposit refund and accounting. But on those facts, I do not think the tenant’s claim would be well received by a small claims judge.

Question 4: We own a two unit building inSan   Francisco, with one ‘unwarranted’ unit in the building. The two flats are rented with lease agreements in place. My question is regarding the unwarranted unit. It is occupied with tenants. They have been there approximately one year with no lease agreement. We are on good terms and they have been good tenants. Should I have a lease agreement with them? What are the positive and negatives of having an agreement versus not having an agreement? What are the potential liabilities or problems for me as a landlord if we don’t have an agreement??
Answer 4: Having tenants in an unpermitted (also known as ‘illegal’) unit is increasingly risky, as there seems to have arisen a new cottage industry in San Francisco involving lawsuits against owners who do so, by their current or former tenants. While these cases used to routinely settle in the $30,000s, they are now settling for amounts over $100,000.00.  In short, this area ofSan Francisco rental law is really troubling, and I am having some very difficult cases in that area.

As to your question, once tenants are in occupancy, changing the rental terms is difficult, including trying to impose a written rental agreement. If the tenants prefer the security of a term lease (for example a one year lease instead of month to month), you may be able to agree to the standard written rental agreement terms such as no subletting, no pets etc. that typically are included in a written rental agreement. One issue that comes up is removing ‘housing services’ from the tenant without a corresponding rent reduction. If you add something – such as the security of the term lease – you may (I repeat ‘may’) be able to ‘legally’ change the existing terms by adding the typical restrictions on the tenant’s rights found in your average written rental agreement. But you may not know whether the new lease is enforceable or not until there is a legal dispute between you and the tenants which requires a judge or the rent board to evaluate that issue.

However, it may also be of significant benefit to you to disclose the unwarranted nature of the unit to the tenants if they do not already know its status. I am not advising that you do so, as I do not give advice in these Q&A exchanges. Because of the increasingly contentious nature of the unwarranted unit issues, you may want to consult an attorney for specific advice as to whether or not disclosing the unwarranted status of the unit is a good idea or not. The argument for disclosure is to limit, to some extent, a tenant’s claims that they rented a unit thinking it was a legal unit, only to later find out it was not (usually when the department of building inspection issues a notice of violation), with the result that they are forced to vacate a rent-controlled unit for a new ‘market rate’ unit through no fault of their own. The tenant will typically seek as ‘damages’ the rent differential for the unit they are forced to move to, along with all prior rent paid (on the theory that the illegal or unwarranted nature of the unit rendered the entire rental agreement illegal and so unenforceable). Because the statute of limitations for claims based on non-disclosure is generally three years, disclosing the status of the unit (again, assuming the tenants have not already learned the status) triggers that three year period in which tenants can sue for the non-disclosure. The argument against disclosure is obvious – it might give the tenants incentive to seek to bring a claim based on the status of the unit. There is no easy answer to this dilemma. You should also follow the recentSan Franciscolegislative efforts to legalize ‘in-law’ units, as it may provide a safe harbor from future tenant claims related to the renting of an unpermitted unit.

Question 5: DidSan Francisco just change its relocation payment for Ellis Act evictions?
Answer 5: Yes. Effective June 1, 2014, Rent Ordinance Section 37.9A(e)(3) was amended to require a landlord to pay the greater of the existing Ellis relocation payment amount or the “Rental Payment Differential” defined as “the difference between the unit’s rental rate at the time the landlord files the notice of intent to withdraw rental units with the Board, and the market rental rate for a comparable unit in San Francisco as determined by the Controller’s Office, multiplied to cover a two-year period, and divided equally by the number of tenants in the unit”. The Controller has established a San Francisco Rental Payment Differential Schedule which will be updated each subsequent year by March 1. The schedule will also be available to the public at the Rent Board’s office.

According to a published report, the city controller’s office calculates that an extremely long term tenant who paid $909 a month for a two-bedroom apartment would get a relocation payment of over $44,000.00. The previous limit for Ellis Act evictions was closer to $5,200.00 for a one-tenant unit (though that amount was payable for each of up to three tenants).
Landlords must pay one-half of the Rental Payment Differential at the time of service of the Ellis eviction notice and the other half when the tenants vacate the unit. Elderly and disabled tenants still separately qualify for the additional payment amounts.
The amendment applies to any tenant who “has not vacated the unit” by June 1, 2014. Any such tenant is therefore entitled to the Rental Payment Differential upon vacating the unit, reduced by relocation payments already received from the landlord in the case.

Landlords may file a written request for a hearing at the Rent Board to determine either of the following claims:

  • Whether payment of the Rental Payment Differential constitutes an undue financial hardship for the landlord in light of all the resources available to the landlord, with the exception of retirement accounts and non-liquid personal property such as clothing, cars, jewelry and art. The burden of proof is on the landlord. After a hardship hearing, the Rent Board’s Administrative Law Judge may order a payment plan or a reduction of the relocation payment amount or any other relief that is justified based on the evidence.
  • Whether the Controller’s Rental Payment Differential Schedule does not reasonably reflect the market rent for a comparable unit in the City. The burden of proof is on the landlord. Based on the evidence at a hearing, the Administrative Law Judge may affirm the Controller’s Schedule as reasonable or order a downward adjustment of the relocation payment amount due.

Question 6:     How far back in time can a landlord go to collect past due rents from a tenant. I have a tenant(s) that keep shortchanging me for months on end. I am getting tired of this, and want to send out a statement showing the deficient rents for the past year.

Answer 6: You can demand rent using a Three Day Notice to Pay Rent or Quit to legally demand rent that is due only within the past 12 months. The use of the Three Day Notice allows you to proceed via the summary legal process called unlawful detainer (the ‘eviction’ lawsuit). However, if you file a lawsuit that is NOT an unlawful detainer based on the Three Day Notice, you can seek unpaid rent going back two years on an oral rental agreement, and four years on a written lease. In other words, if you file a small claims act, or a superior court case, you can seek rent more than one year old, as permitted by the statute of limitations governing oral and written contracts.

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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