Legal Corner #3
By: Stephen C. Duringer, Esq. The Duringer Law Group, PLC
QUESTION Many of my rental units are in central Los Angeles, near the campus. Of course, most of my current residents are full or part time students. The units are large, and are typically shared by four or five roommates. I’ve been reading your articles, and am familiar with fair housing rules and proper tenant screening procedures, but I have been faced with a dilemma and I’m not quite sure the best way to handle it. Often, one of the roommates goes out of town for an extended period, or just plain moves out, and takes the liberty of replacing himself with another. I usually don’t even know it happens until I happen to be at the building fixing something, or collecting rents. My buddies say it’s best to just ‘look the other way’ and not acknowledge the new ‘tenant,’ be happy to get the rent on time, from whoever is willing to pay it. I’m not sure that is the best way to handle the situation, any advice?
ANSWER It’s crucial to successful ownership and management of rental units that you adhere to proper management practices. One of the most elementary practices is good screening, coupled with proper documentation prior to and during the tenancy. Ensuring that you have a completed application, and a written rental agreement signed by all authorized adult occupants, and a set of written rules and regulations regarding conduct in and around the apartment, is an absolute must. The forms that you use should be industry standard, the best are from your local apartment association. Ensure that the rental agreements contain the standard provision that the resident cannot sublet or assign the unit without your prior written consent. Make sure that the rental agreement lists the authorized occupants by name, and does not just give blanket permission for ‘five occupants.’ If your rental agreement only lists one or two adults, but goes on to authorize a maximum of five persons, you have arguably given consent to the primary occupants to have a total of five occupants, without restriction as to who they are. Qualify each authorized person, name him or her on the agreement, have him or her sign it, and do not allow any substitution without your knowledge and written consent. Train your residents to get permission to change roommates by strictly enforcing the terms your rental agreement. If the resident requests permission, evaluate the prospect by getting a fully executed application. If the substitute qualifies, and you agree to the substitution, prepare a written modification to the existing rental agreement, replacing the original tenant with the new resident’s name. The modification should clearly state that the original resident is vacating and is no longer entitled to possession, and he or she is surrendering his claim to any security deposit, and transferring his interest to the substitute resident. Ensure that all of the original signatories to the rental agreement and the new resident sign the modification. Of course, don’t even think about doing this if the residents are in breach of the agreement, either owing rent, not maintaining the unit or some other issue. If you see a new face on the premises and learn of the substitution after the fact, you may serve a three day notice to perform or quit, requiring the unauthorized person to vacate the premises. If the unauthorized occupant is still there on day four, immediately file the unlawful detainer. An uncured material breach by the residents will result in all of the occupants being evicted from the premises. Active and knowledgeable management is critical, especially in rent or eviction controlled areas, as eviction for a material breach is a powerful tool, and results in a rental unit that will re-rent at market after the eviction.
QUESTION I’ve always heard that I should post my rental criteria in a conspicuous place so that applicants can plainly see whether or not they are qualified before they submit their application. I typically require that the applicants combined income exceed three times the rent, however I might make exceptions. Also, in years past, a foreclosure on an applicant’s credit report was an automatic disqualifier, but after attending your tenant screening class, I have reconsidered. With so many exceptions to my rental criteria, my sign would be huge! How do I handle this?
ANSWER Yes, it’s a good practice to post your rental criteria in a conspicuous place. The details and specifics of your rental criteria, however, do not need to be included, as these details and specifics are not necessarily static, that is, they may change or evolve over time depending on your situation. For example, your three times income requirement may work fine if you have a single vacancy and a dozen applicants, however it may be a bit too restrictive in the present economy, or in the event you have three vacancies, your phone hasn’t rung in days, and you’ve only received a single application in the past two weeks. Every owner should establish the following as their general rental criteria. A qualified applicant should: i) have a verifiable and positive credit history; ii) have a verifiable and positive past tenancy history, iii) have sufficient and verifiable income to meet his or her present and future financial obligations, and iv) should not pose a risk of harm to the rental property or to others. These general rental criteria can and should be applied equally and fairly to all applicants, and in compliance with all fair housing rules. Once applied, the best applicant should be accepted, not necessarily the first to apply.
QUESTION One of my residents is taking advantage of me. Lately he’s been deducting a portion of his rent because he claims to have fixed things in the apartment, and he thinks I should reimburse him for his efforts. I just saw his most recent rent check and it’s $118 short. Seems like he had to replace all of the faucet washers because one was apparently leaking and he doesn’t want to waste water. Not only did he charge me for the three washers, but he thinks he’s worth $85 an hour for his time. Had he told me, or my handyman, the problem could have been easily corrected in about twenty minutes. This is the third time he’s done it this year, can he do this?
ANSWER No. Your tenant is abusing a remedy that is provided to residential tenants in California. Under certain extreme circumstances, a tenant may make repairs and deduct certain out of pocket expenses from his rent. The defect must be a serious dilapidation that renders the rental unit uninhabitable, and the tenant must provide the landlord notice of the dilapidation and a reasonable opportunity for the landlord to fix the problem. Generally thirty days is deemed a reasonable time, but some defects, such as a defective heater in winter, will require the landlord to respond quicker. If the defect is serious, and the landlord fails to correct it, the tenant may then “repair and deduct” the cost of repairs from the next rental installment. This remedy may only be invoked twice in any twelve-month period and each time may not exceed the monthly rent. Your tenant would not be entitled to deduct his costs for replacing the faucet washers under the repair and deduct theory because the defect isn’t a serious dilapidation and he failed to give you prior notice. As such, the resident is in default and you could serve him with a three-day notice to pay rent or move out for the amount improperly deducted.
QUESTION I’ve been on the receiving end of several small claims actions recently claiming that I withheld more of the security deposit than I was rightfully entitled. After going to trial on a couple, it seems like there isn’t really one correct way to do it, seems like each judge that heard my cases had a different opinion as to how much I could rightfully deduct for certain items. Can you give me some guidance that will keep me “out of court?”
ANSWER Disposition of security deposits upon move out is one of the most litigated issues in civil court. It is important that you understand what may rightfully be deducted from the deposit and what may not. Civil Code Section 1950.5 provides that a landlord may deduct unpaid rent, cleaning and necessary repair charges in excess of “ordinary wear and tear.” But the code does not adequately define “ordinary wear and tear,” which is the reason for the differing opinions from different judges. There are certain guidelines that most courts follow. Most courts agree that paint should last three years, and carpet should last seven. Any damage that is tenant caused that shortens these expected life spans would be chargeable to the tenant. Scratches, holes, or unauthorized painting of the walls would also be recoverable. Ordinary wear and tear following a one year tenancy would normally include a couple of picture nail holes in primary walls, vacuum scrapes along certain baseboards, minor dust build up in out of the way areas, and minor traffic wear in the carpet. These would generally not be allowable as deductions. But ordinary wear and tear would not include repair or removal of numerous lag or anchor bolts, grease spots or stains in the carpets, or scratches or holes in the walls. An accurate move-in and move out checklist plus pictures will definitely improve your chances of prevailing in court. If you are claiming carpet replacement, cut out and save a sample of the damaged carpet as evidence at trial. Remember, if you are deducting more than $125 for damage and cleaning, you must include copies of your receipts and each receipt must state the name address and telephone number of the vendor who provided the service.
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.