Legal Corner Q & A
By Various Authors
Q. How long should rental agreements, applications and documentation be retained after a tenant moves out?
A. At the very minimum, these documents should be retained as long as necessary to meet the recommendations and requirements of your t tax adviser. But the issue certainly doesn’t stop there. To determine how long you might require such documentation, it would be helpful to consider when the need for documentation might occur. A few examples will illustrate the point.
First, if you have done an Ellis Act removal of rental units from the market, or an owner or relative move-in, there may be times in the future when today’s records concerning past tenants will still be important. Such issues could include the appropriate rent at rerental, if there ever is a rerental, or perhaps documentation relative to particular occupants that have left, such as Section 6.14 Notices that were served. In the case of an owner/relative move-in, records would be important to retain for at least 36 months, and for at least 10 years in the case of an Ellis Act removal.
If you have done any eviction at all, and that can mean just giving a Notice Terminating a Tenancy and not necessarily filing an action in court, you may need records if you are sued by the tenant for wrongful eviction. Theoretically, a former tenant has only one year to bring such an action, but the starting point of that year may be suspended until the date that the tenant discovered the circumstance giving knowledge of the alleged wrongfulness of the eviction. That discovery may occur well after one year from the actual eviction. Likewise, a complaint for any of the potpourri of charges that frequently accompany allegations of wrongful eviction may be brought for several years, depending on the individual allegations. A suit for alleged breach of contract, whether with regard to habitability issues or failure to return a security deposit, could be brought for up to four years.
If the tenant who moved left you with revolving-door subtenants, those remaining persons may still be subject to terms and conditions in the rental agreement in effect at the time they first arrived. Moreover, the rent increase history may be relevant to them, if they inherited the rent history, for an indefinite number of years to come.
The bottom line is that no one has a crystal ball. I would prefer
the landlord maintain the paper for as long as possible, just in
case it’s needed. The file is usually not very large, and one
never knows what might come up. If, however, storage space is at
a premium, and barring an ongoing linkage of a current tenancy to
a past tenancy or advice from your tax consultant to hold records
longer, in most cases keeping records for five years should be adequate.
– Saul M. Ferster
Q. What is the definition of “ordinary wear and tear” for purposes of determining how much to deduct from a tenant’s security deposit?
A. Unfortunately, there is no definition. Or at least no “official” definition from either the legislature or the courts.
California Civil Code § 1950.5 governs the retention and disposition of residential security deposits. With respect to deductions for damage to the unit, Civil Code §1950.5(b)(2) specifically provides that a landlord may deduct sums from the deposit in order to compensate him or her for: the repair of damages to the premises, exclusive of ordinary wear and tear, caused by the tenant or by a guest or licensee of the tenant.
At the same time, Civil Code § 1950.5(e) further provides:
“…The landlord may not assert a claim against the tenant or the security for damages to the premises or any defective conditions that preexisted the tenancy, for ordinary wear and tear or the effects thereof, whether the wear and tear preexisted the tenancy or occurred during the tenancy, or for the cumulative effects of ordinary wear and tear occurring during any one or more tenancies.”
Though the term “ordinary wear and tear” has been “on the books” since 1986, the statute does not attempt to define it, and the courts have issued no published decision interpreting this provision. This lack of guidance, and consequent uncertainty, is common with respect to provisions of local laws such as a Rent Ordinance (since such laws are commonly very poorly drafted), but less so with state laws.
When read together, the statute effectively provides that, with respect to deductions for damage to the unit, you can make deductions for extraordinary wear and tear, caused by the tenant (or his or her guests) during the term of that tenant’s tenancy. If the wear and tear is extraordinary when the tenant vacates because it accumulated over the years, after multiple tenancies, and because the landlord let everything “snowball” by not repairing each departing tenant’s ordinary wear and tear before the inception of the next new tenancy, you cannot fault the most recent tenant for the aggregate wear and tear, and cannot deduct anything from his or her deposit. You have to repair it all at your cost.
“Wear and tear” should be understood to be the typical kinds of damage occasioned by the mere use of housing, just as we expect a car to suffer wear and tear as it is used. A good rule of thumb is to use common sense and be reasonable. In fact, Civil Code § 1950.5(e) specifically provides that a landlord may only deduct those sums that are “reasonably necessary” to repair the extraordinary wear and tear. It would not be possible to give examples of “extraordinary wear and tear,” without a specific factual context. Otherwise, readers might be lulled into thinking that, regardless of the context, sums can be deducted for certain types of damage to certain features of an apartment. Obviously, if a tenant throws a wild party, and a drunken friend stumbles through a wall, tearing out a big hole in the process, you can deduct the reasonable repair cost from the tenant’s deposit. Nobody expects such damage to occur, and it is doubtful that this kind of damage could even be properly considered to be “wear and tear.” But, what if a tenant vacates after three years of occupancy, leaving 30 nicks and scratches on what were freshly-painted walls when he moved into the unit? This is probably ordinary wear and tear. But, what if a sole tenant takes ten showers per day for three years, causing various water-related wear and tear in the bathroom? This is probably extraordinary. It all depends on the facts, and each case will vary according to those facts.
As we speak, the California Assembly is currently considering a bill sponsored by Assemblywoman Carole Migden (see page 17), which would, among many other things, amend Civil Code § 1950.5 to specifically define "ordinary wear and tear." If SB 2330 is passed and becomes law, you will most certainly be reading about its provisions in upcoming editions of this magazine.
Again, be reasonable, and use common sense. If the issue is really
serious, consult an attorney.
– Curtis F. Dowling
Q. Can tenants be evicted after three late payments? If so, can the tenants turn around and sue for unlawful eviction?
A. The local rent control ordinance, as well as many lease agreements, provide as a ground for eviction the habitual late payment of rent. What constitutes “habitual” is not defined by state or local law. Rather, common sense and reasonable interpretation of this term governs. Some lease agreements, such as the new PPMA Lease, define “habitual late payment.”
For example, Paragraph 6 of the Lease states: “Owner and Tenant agree that Tenant paying rent five days after the Due Date on three separate occasions within any twelve month period shall constitute habitual late payment of rent and may be considered a just cause for eviction [emphasis added].”
In situations where the lease agreement does not define habitual late payment, I usually recommend documenting at least four or five instances within a twelve-month period. Most importantly, the landlord must “document” each late payment, meaning either (1) a letter to the tenant stating that such conduct is not permitted and may cause legal action to be initiated, and/or (2) Three-Day Notices to Pay Rent or Quit served after each payment due date that is missed. In order for the habitual late payment action to succeed, the landlord must have a complete paper trail that documents the offending conduct. Otherwise, the tenant will argue that the landlord “waived” the right to enforce this lease covenant. Moreover, the landlord needs strong and plentiful evidence to show the judge and jury.
After a sufficient number of offenses have been documented, the tenancy is terminated by way of a 30-Day Notice to Quit. This notice should be served during a month when the tenant is again late with the rent, and oftentimes the tenant will immediately tender rent with an apology. Both the apology and the rent check should be rejected.
There is no such thing as a sure thing in the landlord-tenant universe! Thus, as with any type of eviction matter, the landlord should have sufficient “wrongful eviction” insurance coverage. Most landlord lawyers in San Francisco now require their clients to carry coverage before any notice is served. Even when the landlord is justified in evicting the tenant, both judges and juries are notoriously unpredictable. If you lose the eviction, the tenant will most likely sue you. In San Francisco, being sued for wrongful eviction means that the landlord may potentially be responsible for all of the tenant’s damages (attorney’s fees and court costs in both actions, emotional distress, and any other claim the tenant conjures up) multiplied by three [referred to as “treble damages”]. For instance, a $50,000 claim automatically, under the local rent control ordinance, turns into $150,000. With the monetary stakes this high, insurance is a must.
Finally, please do not initiate any eviction action without first consulting a qualified attorney. The rent laws are extremely complicated, and there have been many recent changes. The worst cases I have encountered happened because the landlord decided to draft and serve the notice without an attorney’s advice.
Usually, something is wrong with the notice and/or with the landlord’s file, thereby requiring the judge to dismiss the eviction. In places like San Francisco, even dismissing an action could create substantial wrongful eviction liability.
– David Wasserman
The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Saul M. Ferster can be reached at 863-2678. Curtis F. Dowling is a senior associate attorney at Dillingham & Murphy, 397-2700. DavidWasserman is with Wasserman & Taxman, 567-9600. © Copyright 2002.