Legal Corner Q & A

How To Obtain a Fair Rent in Diverse Situations

By Various Authors

Q. Recently, the city began to charge landlords a portion of the Rent Board fee. What were the basic changes?

A. Last month, the Rent Board reduced its fee from $27 to $26 per unit. The fee is billed to you along with your property tax. Of this new amount, you may charge $21.50 to the tenant in possession as of November 1, so that you are responsible only for $4.50 per unit. The amount charged to the tenant should be deducted from the interest to be paid on the tenant’s security deposit each year, and any balance remaining may be billed to the tenant. Now you are also entitled to “bank” the Rent Board fee and collect it in later years. This rule applies for fees imposed from November 1999 forward. Until recently, the fee was $16 per year, 100 percent of which could be passed on to the tenant. Last year, the fee was $27, but only $21.50 could have been passed through to the tenant or “banked.”
– Michael C. Hall

Q. We recently rented a flat to a Section 8 family. The fed pays $1,750 and the tenant pays $500. The tenant recently failed to pay his/her portion of the rent. What should we do?

A. In most instances, Section 8 pays all the rent, so the landlord is never faced with a nonpayment of rent situation. In this case, the tenant and the government each contribute towards the rent. Landlords must understand that the Section 8 contract with the government is distinct and separate from the relationship between the tenant and the landlord. According to their contract with the government, Section 8 landlords must satisfy various requirements pertaining to the condition of the rental unit and the treatment of their tenants.

In this case, the landlord should pursue the same course of action that would be invoked absent a Section 8 contract. Specifically, the landlord should serve a Three-Day Notice to Pay Rent or Quit for the tenant’s portion of the rent. However, the following special rules apply. First, the landlord must give the Section 8 administrators notice of the eviction in writing. At a minimum, a copy of the eviction notice along with a letter of explanation should be sent to the local Section 8 office (the San Francisco Housing Authority) at or before the time the tenant is served. Landlords have been known to lose evictions because the Section 8 office had not been served. Second, the eviction notice should state that the landlord has complied with all HUD rules governing the termination of the tenancy. Third, the landlord should avoid depositing the Section 8 checks during the eviction proceeding. Technically, the landlord’s acceptance of Section 8 funds will not constitute a waiver of the landlord’s right to proceed against the tenant for failure to pay rent, but acceptance of partial rent may complicate the proceedings. The eviction, if rent remains unpaid, proceeds in the same manner as a non-subsidy action (five-day summons, complaint and possible trial in Superior Court).

There may also be additional requirements depending on the terms and conditions of the Section 8 contract. The government has many different housing subsidy programs, so keep in mind that blanket advice does not apply in all situations where a tenant’s portion of the rent is unpaid. Thus, a landlord is strongly advised to seek competent legal counsel before attempting to terminate a Section 8
contract.
– David Wasserman

Q. When an owner begins to allow a tenant access to a storage unit and a washer and dryer, can he/she seek a rent increase?

A. The answer is a qualified yes, and the qualifications have more to do with the sequence of events than your right to increase the rent. Hopefully, you have not yet provided the tenant access. If you have allowed the tenant to use these facilities for a sufficient period of time, the tenant may reasonably claim that you have allowed such use without an additional fee and have, therefore, waived the right to collect any additional rent and voluntarily increased the housing services provided under your existing rental agreement What is a sufficient period of time? The tenant’s use has lasted from several weeks to at least two or three months, the use has been open and obvious and you, the landlord, have direct evidence that the tenant is using the facilities.

If you have provided the tenant with access to and use of the storage unit and washer/dryer for a sufficient period of time without an increase in rent, and if you then decide to deny that access, the tenant could reasonably claim that you have decreased his/her housing services and actually could request a rent reduction.

Assuming that you have not yet provided the tenant access to these facilities, you should schedule a meeting with the tenant and offer the additional space/services to the tenant in writing with a corresponding increase in the monthly rent. If the tenant accepts the offer, or you otherwise reach an agreement enabling the tenant to use the storage unit and/or washer/dryer, then draft a new lease or an amendment to your existing lease. This should reflect the terms of your agreement, including the fee or increased rent that the tenant must pay for the increased housing services.

The above analysis assumes that there was no express or implied access to use the storage unit or washer/dryer at the time of the signing of the original lease. An example of express authorization would be a verbal representation by you (or a property manager) to the tenant prior to the execution of the lease, indicating that the tenant had access to these facilities. Implied authorization typically occurs when the tenant utilizes, with the owner’s knowledge, facilities not referenced or within the scope of the lease agreement or in a manner (open and obvious) suggesting that the owner should have known the tenant was using the additional facilities.

In short, if the tenant has expressed a desire to use the storage unit and washer/dryer, put your agreement in writing and enjoy your increased rents. If the tenant already uses the facilities, has done so for only a few days or weeks, refuses to pay any increased rent and if you only recently discovered the tenant’s use of the facilities, you should advise the tenant in writing that they do not have access nor the right to use these facilities. If the tenant continues her/his use, consult an attorney as you probably have a problem tenant on your hand.
– Kenneth Vierra, Jr.

Q. If a tenant has already signed a lease, and then decides he/she no longer wants the unit and doesn’t move in, is the tenant still legally responsible for rent payments?

A. The first question is whether or not a landlord-tenant relationship was created. This relationship is created by a contract between the parties. It can be called a rental agreement, a lease or a month-to-month agreement, and it may be oral or written. To be enforceable, the contract must show that the parties intend to create a landlord-tenant relationship, and it must: 1) designate the parties, 2) describe the premises, 3) specify the rent to be paid and the time and manner of payment and 4) specify the term for which the tenant will rent the unit. Of course, the exchange of rent, security deposit and receipts solidifies the creation of the relationship. Even though the tenant never took possession of the premises, as long as a true landlord-tenant agreement was created, you may be permitted to collect damages (including rent) from the tenant who announces that she/he does not intend to perform her/his obligations under the agreement, which is to move into the unit.

Once you have determined that a landlord-tenant relationship was created, you next look at the type of agreement you created in order to determine the amount of damages you can claim from the breaching tenant. If you simply have a month-to-month agreement, which can be terminated by a tenant giving 30 days’ written notice of termination, the damages will likely be cut off after 30 days. Even if the notice is only oral, I would not suggest taking damages in excess of the 30 days. If you have created a term lease (for example for a term of six months or a year) in which the tenant may not terminate the tenancy prior to the expiration of the term without cause, you may have a claim for damages for the entire term of the tenancy. However, you must always do your best to mitigate your damages by immediately looking for a new tenant once the original tenant has breached, otherwise the tenant will have a defense against your claim for damages. Your costs for locating a replacement tenant—for example, newspaper ads, and property
management fees—should also be recoverable from the breaching tenant.

Of course, collecting the money from the departed tenant could prove difficult, unless you are already holding the first month’s rent and/or a security deposit. You could deduct the rent actually lost as a result of the breach from the rent or security deposit held. However, according to Civil Code Section 1950.5, you are required within 21 days of the tenant vacating (in this case, 21 days from the time the tenant gave notice that he/she does not want to move in), to either return the security deposit or provide a written explanation as to any retention of the security deposit.

Should the unit remain vacant for a period beyond the 21 days, despite your best efforts to re-rent it, you will have to recover those excess rental losses along with the other non-rent costs you have incurred in a separate court action against the breaching tenant. Remember, you can only take a maximum of 30 days’ rent anyway for a month-to-month agreement. For a term lease, if you are forced to rent the unit for less than the contract price, the tenant may be responsible for the difference in rent due for the entire term of the tenancy (there should be a specific term in the lease covering this issue). For example, you have a one-year contract for $2,500 with a tenant who then tells you she/he is not moving in. You have done your best to find a new tenant, but given the market, the second tenant is only willing to pay $2,300. The first tenant is then liable for $200 per month for a year ($2,400). Assuming you re-rent the unit prior to the 21-day deposit return period, you may be able to include the rental difference in your explanation and retention of the deposit. Otherwise, it will have to be the subject of a separate court action for damages. To be certain that you are taking the proper course of action, you should always consult an attorney prior to retaining any monies paid by a tenant who never takes possession of the unit.
– James M. Millar and Sally Morin

The opinions expressed in this article are those of the authors and do not necessarily re?ect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Theinformation contained in this article is general in nature.Consult the adviceofanattorneyforanyspecificproblem. Michael C. Hall can be reached at 415-512-9865. David Wasserman is with Wasserman & Taxman, 415-567-9600. Kenneth Vierra, Jr. is with Lynch, Gilardi & Grummer, 415-397-2800. James M. Millar and Sally Morin can be reached at 415-981-8100. Copyright © 2003.