What Happened?
Milton Reyes lived in a rent-controlled apartment in Santa Monica, at a property named Colonial Manor, for decades, at approximately $666 per month.
His wife, Vilma Reyes, had lived with him for years before they married in 2022. Following Mr. Reyes’ death in September 2023, she remained in the apartment.
The owner served a Notice of Change of Tenancy, raising the rent from approximately $666 to $3,500 per month – an increase of roughly 425 percent. When Ms. Reyes did not pay the higher amount, the owner filed an unlawful detainer action based upon nonpayment of rent.
The owner believed Costa-Hawkins permitted the increase because the original tenant had died.
The court disagreed, based on Mrs. Reyes’ long-time occupancy and Santa Monica’s rent control laws.
The recent Colonial Manor decision is a reminder that occupancy issues should never be ignored. While the case involved arguments over rent control and Costa-Hawkins vacancy decontrol, the bigger lesson for property owners is much simpler: have a process in place whenever a new occupant moves into a rental unit.
Many occupancy disputes begin long before a lawsuit is filed. They often start when an owner becomes aware that an additional adult has moved into the unit but fails to address the situation promptly.
A Five-Step Process for Handling New Occupants
Whenever a new adult occupant moves into a unit, owners should act promptly.
- Identify the occupant.
Determine who the person is and their relationship to the tenant. - Screen the occupant.
If permitted under the laws governing your property, screen the individual using your normal rental criteria. - Determine your legal options.
- Before taking action, identify what state law and any local ordinances allow you to do. Your options may differ depending on the type of property and where it is located.
- Make a decision.
Take the appropriate action. Depending on the applicable law, you may:- Add the occupant to the lease;
- Approve the occupant without adding them to the lease;
- Increase the rent if permitted; or
- Require the unauthorized occupant to leave.
- Document the outcome.
- Whatever decision is made, put it in writing. If the occupant is approved to remain without becoming a tenant under the lease, have the resident and owner sign AOA’s Additional Occupant Approval Addendum documenting that the occupant has been approved to reside in the unit but has not been added to the Rental Agreement as a tenant.
Know the Rules That Apply to Your Property
Not every property is governed by the same laws.
Depending on your property, state law, local rent control ordinances, affordable housing rules, or other regulations may affect your ability to screen occupants, increase the rent, require additional occupants to be added to the lease, or require unauthorized occupants to leave.
For example, some jurisdictions provide specific procedures or time limits for addressing unauthorized occupants, while others limit or prohibit rent increases based solely on occupancy changes. Before taking action, understand the rules that apply to your property.
The Bottom Line
The practical lesson from Colonial Manor is simple: address new occupants as soon as they move in.
Every additional adult occupant should be identified, evaluated under your rental criteria where permitted, and either approved or addressed promptly under the laws that govern your property. If an occupant is allowed to remain without being added to the lease, document that arrangement.
Having a consistent process, following it – and documenting it every time – is one of the best ways to avoid misunderstandings, reduce legal risk, and protect your property rights.