Q:  My tenant informed me that they plan on running a small day care business out of their apartment. However, my rental agreement strictly prohibits operating a business out of the apartment and the area in which the apartment building is situated is not zoned for commercial businesses. What can I do as a landlord if I do not want my property used in this way?
Under California law, houses including condos and apartment units may be used to run a small family day care business. These laws were passed in order to make childcare more readily available for working parents in residential neighborhoods.  Further, running a small day care home is not considered a “business use of the property”.  So, even if your rental agreement specifically states that the premises may only be used as a residence, small day cares are still permitted. 

Q:  What does this mean for the provisions I have included in my rental agreement?
This means that any provision in your rental agreement which aims to prohibit utilizing the premises as a small family day care business is invalid.  

Q:  What type of notice is my tenant supposed to give me before he opens a small family day care business?
A tenant wishing to open up a small family day care business out of their rental unit is expected to give the owner of the property 30 days’ written notice of their intent to start the business. In spite of this, many prospective day care providers fail to provide written notice to the owner. Given that it is not mandatory for the provider to obtain approval from the owner before starting the business, failure to give notice is not considered grounds to refuse operation of the day care opening. Additionally, small family day care providers relocating to a new address may not be required to give 30 days’ notice at all.  

Q:  What can I do as a landlord to ensure that my property is well maintained?
Once you are made aware that your tenant intends on running a small day care business out of the property, you may increase your tenant’s security deposit amount due to this new business endeavor. You may demand an increased security deposit amount even if you charge your other tenants a smaller amount. However, the total security deposit amount you charge your tenant running the day care cannot under any circumstances surpass the maximum amount permissible under present law.  

Q:  Is there any criteria my tenants must meet in order to open the small family day care?
Yes, the California Department of Social Services has to assess the conditions of the home as well as your tenant’s qualifications before licensing your tenant as a family day care provider.

  • ·         If the home is approved by the Department your tenant can supervise up to six children at a time unless it is approved as a large day care home.
  • ·         In large day care homes, 10 children are permitted without permission from the owner and 12 with permission.
  • ·         Furthermore, it is mandatory that the day care provider carry either: (1) liability insurance of $100,000/$300,000; or (2) a bond of $300,000.
  • ·         It may also be a good idea for you to request that you be named as an additional insured if your tenant does happen to carry insurance or a bond. However, property owners are responsible for any increases in insurance premiums as a result of being added as an additional insured.
  • ·         Lastly, it is always a good idea to require tenants to have renter’s insurance in addition to liability insurance and/or a bond. While the same rules that apply to other tenants are the same for day care providers, one should be cautious when assessing breaches of the agreement or when considering taking action to correct the violation since it may potentially be viewed as a retaliatory or biased act against the day care business.  

Attorney Franco Simone, of the Landlords Legal Center and has been doing evictions for 20 years.  He is also an adjunct law professor at the University of San Diego.  Mr. Simone’s office is open Monday- Friday from 9:00 AM to 5:00 PM – Tel: 619-235-6180, website: www.landlordslegalcenter.com or email info@landlordslegalcenter.com

 

 

 

 

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