Legal Corner Q & A

by Various Authors

Q. I have converted most of my units to electrical heat. Can I make a deal with the remaining tenants to reduce the rent and, in exchange, have them pay their own heating costs (which is now included as part of the rent)? Do I have to go through the Rent Board? Is there a precedent for a fair cost of heat as a percentage of total rent?

A. You can make a deal, but as with any other voluntary arrangement made with a tenant, it is not necessarily enforceable if the tenant goes to the Rent Board. As you know, the situation you are describing is a “reduction in service,” which justifies a reduction in base rent. The landlord and tenant can make an agreement on what the reasonable value of the reduced service is, but if the tenant is dissatisfied and goes to the Rent Board, the Rent Board will not be bound by the agreement.

In determining the appropriate rent reduction, the Rent Board uses a formula available from PG&E which is posted on their Web site under “Save Energy and Money.” Their formula involves a calculation of the wattage of the individual heaters in the unit, times the number of heaters, times the required 13 hours of heat to be provided in the day, times 30 days per month, and the average rate per kilowatt hour. The Rent Board will use this formula to calculate the value of the service withdrawn. Individual consideration may be given to people who are not present in the rental unit during the full 13 hours on a regular basis (e.g., they are away at work outside the home), thus lessening the amount of the rent reduction. The full reduction would be granted to someone who is homebound or works at home.

Once the calculation is completed, it will not be re-figured in subsequent years based on increases in energy costs. The base rent is reduced for the withdrawal of the service on a one-time basis only, regardless of fluctuations in the price of energy in the future. (The Rent Board rarely looks at the building’s actual PG&E bill itself, because they don’t find it particularly reliable or helpful.)

By using the computations available on the PG&E Web site, the landlord can usually work out an agreement with the tenant and avoid Rent Board involvement. If the tenant chooses to go to the Rent Board with a reduction in service petition, the result obtained should be similar, although the Rent Board is not bound by the agreement between landlord and tenant. Simply go to www.pge.com, and locate “Save Energy & Money” in the left-hand column of the site. Click on that, and select “Residential” from the drop-down menu. Go about halfway down the page and on the right side click on “Energy Calculator.” Then, under “Appliance Type” select “Heating, Electric,” and voilà! You have your calculator. Be sure to insert the average kilowatts per hour for your particular heaters into the calculation—you need to know the figure if it’s different than what is shown.
– Saul Ferster

Please Note:
In response to a question in a recent issue of this magazine regarding the ability to raise the rent on an occupant who was timely served with a 6.14 Notice, but who the landlord had sign the original lease, I was too quick to jump on the landlord for having the new person sign on, and mistakenly said this fact might prevent the landlord from raising the rent when the original occupant left. Under Section 6.14, you can raise the rent of a co-occupant (i.e., a subsequent occupant who has a rental agreement directly with the owner) provided that a 6.14 Notice was timely served upon the co-occupant. I apologize if the earlier answer caused any confusion.

– Saul Ferster

Q. Can I deduct the costs of changing a lock if the outgoing tenant fails to return the keys?

A. California Civil Code Section 1950.5 governs security deposits for residential properties. In Section 1950.5(b), “security” is defined as a payment, fee, deposit or charge including but not limited to, an advance payment of rent, used or to be used for any purpose, including, but not limited to, the following: (1) compensation of the landlord for a tenant default in rent; (2) repair of damages to the premises, except for reasonable wear and tear; (3) cleaning of the premises upon termination of the tenancy; and (4) “to remedy future defaults by the tenant in any obligation under the rental agreement to restore, replace, or return personal property or appurtenances, exclusive of ordinary wear and tear, if the security deposit is authorized to be applied thereto by the rental agreement.”

The key point is that the lease/rental agreement determines whether the tenant is obligated to return the keys, and whether the landlord can apply the deposit if the keys are not returned to remedy that default. Also, the list of four allowable purposes is not an exclusive list. Any “security” defined by a lease must be limited to charges imposed to secure the landlord against future tenant defaults.

The PPMA Tenancy Agreement, Paragraph 5, that relates to security deposits states: “Owner may retain such amounts of the Security Deposit as allowed by law including but not limited to, Tenant’s obligation to restore, replace or return personal property....Tenant shall not be deemed to have vacated the Premises for purposes of this paragraph until a) Tenant returns to Owner ALL keys to the Premises....” If you are using the PPMA Agreement, you can deduct the costs of changing the lock from the deposit. If you do not have an agreement that covers item (4) above, you will have a problem, for deducting the cost of changing the lock is not covered by purposes (1), (2) and (3) above.
– Lawrence M. Scancarelli

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 Ferster can be reached at 863-2678. Lawrence M. Scancarelli can reached at 398-1644. © Copyright 2002.