Legal Corner Q & A

Late Fees and Window Replacements

by Various Authors

Q. We currently have no late fees in our leases. We would, however, like to add a late-fee clause to the leases of all our tenants by using the 30-Day Change in Terms of Tenancy Notices. Would the notice be effective and enforceable? Would the Rent Board recognize the change as valid and legally enforceable? Would the courts recognize the change as valid and legally enforceable?

A. California Civil Code Section 827 provides that a landlord in a month-to-month tenancy may change the terms of tenancy with 60-days written notice to the tenant. Thus, you may change the terms of the tenancy by adding a late-fee clause to your rental agreement pursuant to this provision. Whether the change would be effective and enforceable depends to some extent on how you choose to enforce it. The typical way to enforce such a clause, barring the restrictions imposed by the Rent Ordinance and Rent Board, is to serve a Three-Day Notice to Cure Breach of Covenant or Quit if the tenant fails to pay the late charge, and then evict if the tenant fails to comply with the notice. In San Francisco, however, Section 12.20 of the Rent Board’s Rules and Regulations severely restricts the landlord’s right to evict for a unilaterally imposed obligation or covenant. This section states that a landlord may not evict for violation of an obligation or covenant unilaterally imposed by the landlord without the tenant’s agreement. In this situation, the obligation or covenant was either omitted or was not materially the same as the one that both parties mutually agreed to in the rental agreement.

According to the Rent Ordinance, this restriction does not apply to:

changes in obligations or covenants that are not material;
changes in material obligations or covenants required by law or to protect the health, safety and quiet enjoyment of the occupants of the building or adjoining properties; or
material changes that have resulted in a substantial decrease in housing services with respect to garage, storage space, or access to common areas for which a commensurate rent reduction has been provided by the landlord; and
rent increases or other changes in the terms of the tenancy authorized under the Rent Ordinance and Rules and Regulations.

The addition of a late charge to a rental agreement clearly does not come under category numbers 2, 3, or 4 above. It might come under category number 1, but if the change is not material, one could argue that a landlord should not be entitled to evict for breach of a non-material provision. Until our courts rule, in a published opinion (necessary for precedential value), that a San Francisco rent-controlled tenant may be evicted for a breach of a unilaterally imposed late-fee provision, I would be reluctant to bring an eviction on that basis. The probability of success is questionable, for the potential cost of litigation on the unlawful detainer action and exposure to a countersuit for attempted wrongful eviction is significant.

Of course, Section 12.20 simply prohibits eviction. It does not restrict any other form of enforcement. Consequently, you could either take the late fee from the security deposit or sue the tenant for the late fee in Small Claims Court. Either of these means of enforcement should work. In conclusion, sometimes the tenant will comply with the provision simply because it is there, and you may not necessarily deal with the fine points of enforcement under Rule and Reg. 12.20.
– Saul M. Ferster

Q. Our tenant has requested that we put double-pane windows in her unit to reduce the street noise. She has offered to pay 50 percent of the costs. If we were to accept this, would this be considered an illegal rent increase under the Rent Ordinance?

A. The short answer is no, but there are conditions. The payment must be made as a lump sum based on the mutually agreed portion of the cost of the window replacements. In addition, the condition of the existing windows to be replaced must provide waterproofing and/or weather protection, and also include operable window security or locking devices for windows that open. If the windows to be replaced leak, have dysfunctional locks and are in generally poor condition, California Civil Code Section 1941.1 requires the landlord to make repairs at his or her own expense. The tenant cannot waive this requirement. Thus, even if the tenant agrees to pay one-half of the replacement cost, the landlord is liable for the entire cost of replacing the windows if the windows are determined to be in an “untenable” condition.
– Jeffery P. Woo

To submit a question for this column please send a brief (1-3 sentences) question to editor@sfaa.org. The opinions expressed in this article are those of the author and do not necessarily reect the viewpoint of the SFAA or the SF Apartment Magazine. Saul M. Ferster can be reached at 415.863.2678 . Jeffery P. Woo can be reached at 415.705.6470