Legal Corner – May/June
By: Stephen C. Duringer, Esq. The Duringer Law Group, PLC
QUESTION Seems like my residents just keep paying their rent later and later each month. I usually try and work with them; I don’t even begin to nag them until about the tenth of the month. I’ll start with a phone call, and then when they don’t call back, I send them a reminder note. Often the rents don’t come in until after I serve a notice to pay or quit, usually after the twentieth of the month. My lender doesn’t seem to care; they still want their payment of the first. How can I change this pattern?
ANSWER Your residents pay their rent late because you have trained them to pay that way. Your rent collection techniques are lax, and your residents are all too aware of your procedures. Many residents live paycheck to paycheck, and will wait until the last possible moment to pay their obligations. Your residents apparently know that you “try and work with them” and that you don’t even start looking for the rent until the tenth. Your phone calls and reminder notes are nice but not legally sufficient to ensure timely payment. Your residents know the drill, phone call, letter, and then the notice. They pay when they absolutely have to in order to avoid being evicted. A tighter rent collection policy, coupled with a good rental agreement will eliminate your problem of late payments. Consider using a rental agreement, which includes a properly drafted late charge provision. It is important to note that not all late charge provisions are enforceable. The language used in the agreement must characterize late charges as “liquidated damages,” that is, it must state that the damages sustained by the landlord are difficult or impossible to ascertain, and that the parties agree that a certain sum, the late fee, is the amount of compensation due the landlord. Your rental agreement will define when the late fee is incurred. Typically, the late fee is incurred if rent is not paid by the third of the month. Remember, this clause does not provide a “grace period” to the resident; it merely defines when the late charge is incurred. Late charges must not be punitive, but must reasonably relate to the costs incurred by late payments. Don’t charge a variable fee, one that increases by a certain amount each day the rent is late. Although the law is silent on the subject, courts generally allow late charges of 6% of the rental installment. Additionally, consider adding a clause in your rental agreement requiring the resident pay a “notice service fee” in the event the landlord consults an attorney and serves a notice of default. Again the fee must be reasonable rather than punitive. If your primary goal is to just get the rent paid timely, you should send all of the residents a notice reminding them of their obligation to pay their rent on the first of the month, and they should budget accordingly. Let them know that you intend to strictly enforce the terms of the rental agreement. If you have allowed the late payments over a long period of time, provide the residents at least thirty days warning of your intentions. Late rent payments in a rent-controlled unit are opportunities for vacancy decontrol. Rent controlled jurisdictions require aggressive rent collection techniques and strict enforcement of the terms of the rental agreement. If the rent is due on the first, and the first falls on a weekday, a three-day notice should be served immediately, on the second of the month. Failure to pay the rent in full by the expiration of the notice will support an eviction. Remember, you set the tone for your buildings. If you allow your residents to ignore the terms of your rental agreements, you can be assured that they will do just that.
QUESTION My wife and I are relative newcomers to the rental business. To date, we have had the good fortune of problem-free tenants. The building is in a real nice area, so the higher rents dissuade a lot of riffraff. Anyway, I recently had a prospective tenant come by to look at one of the two-bedroom units. He filled out the application, and marked “yes” on the box when asked if he’d been convicted of a felony. You could imagine my surprise to find that he had served time in the slammer. The guy seemed real clean cut and sharp. He even asked me if the building was for sale! Could I legally ask him what the felony conviction was for?
ANSWER Yes. Diligent tenant screening will require further investigation into the prospective applicant’s background. A felony involving a crime against persons or property is highly relevant to the qualification of this particular applicant. You have a legitimate business reason for inquiring further to determine if accepting this applicant will endanger your building or any of the other occupants. A felony conviction for rape, burglary, murder, arson, possession for sale of narcotics, felonious assault or other serious crime against persons or property are all grounds for denial of a tenancy. Many landlords will distinguish certain felonies that are not violent crimes against persons or property, for example, tax evasion conviction, or other so called victimless crimes.
QUESTION I am one of three on-sight managers for a large complex. Recently, I had a couple enter the manager’s office and request an application to rent a unit. I had several vacancies, but the prospective tenants looked as if they had not bathed in a week. Also, as they drove up to the manager’s office, their Ford Fairmont looked like it was on its last leg, and filled the parking lot with smoke. I imagined that the car would break down as soon as they moved into the unit. Needless to say, the other residents would be up in arms if I let these two characters into the complex. Was I correct in refusing to give them an application to rent?
ANSWER No. Provided you have a unit available for rental, you should provide an application to any adult requesting one. Upon receipt of a completed application, and your required tenant-screening fee, you should qualify them as you would any other applicant. Often times, fair housing ‘testers’ pose as physically unappealing or objectionable individuals intentionally to test your response. Subjectively dismissing them out of hand based upon their appearance would give rise to a fair housing complaint based upon arbitrary discrimination. The next time you meet, the ‘down and outers’ will most certainly be well dressed and articulate.
QUESTION My tenant and I have been on good terms for several years. To my surprise, he didn’t pay this month’s rent. It is now the tenth, and I’ve not seen hide nor hair of my tenant. Actually, it’s been a while since he showed his face around these parts. I’m pretty sure he’s gone, but he hasn’t returned the keys. Since I haven’t seen him and he owes me money, can I change the locks and re-rent the premises?
ANSWER Probably not. Under most circumstances, California law requires that a landlord only retake possession of a property following a voluntary surrender, a judgment for possession, and enforcement of that judgment through the Sheriff, or after compliance with the notice of belief of abandonment statutes. A landlord, who has a reasonable belief that the tenant has vacated, and the tenant’s rent is due and unpaid for at least 14 days old, may post a Notice of Belief of Abandonment of Real Property. Once the Notice of Abandonment of Real Property has been posted and mailed to the tenant, and 18 days have expired without contact from the tenant, the landlord may retake possession of the property without resorting to the courts. It is strongly advised that before you retake possession of a unit without initiating a court action, and when the tenant has not returned keys, that you consult an attorney. Sometimes, it will be in your best interest to pursue an unlawful detainer simultaneously with the running of the abandonment notice. Possession will be restored to you upon the first to conclude.
Stephen Duringer
This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, has successfully handled over 225,000 landlord tenant matters throughout California, and has collected over $130,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Visit www.DuringerLaw.com for more information.
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