Legal Corner Q & A
by Various Authors
Q. A tenant makes changes to his apartment without the owner’s
approval (the lease states that no alteration can be made without
the owner’s written consent). What is the best approach for
the landlord to take in dealing with this kind of problem?
A. When faced with an unauthorized
alteration, the landlord may first want to try to resolve it informally.
If so, the landlord should immediately object to the unauthorized
alteration in writing and then try to persuade the tenant to correct
the situation. This is a practical way to respond to the situation
and possibly to avoid litigation.
If this does not work, then you may have grounds to terminate the tenancy because the tenant has breached the written rental agreement. San Francisco’s Rent Ordinance requires the landlord first give the tenant in a rent-controlled unit an opportunity to cure any breaches of the rental agreement. Accordingly, when a tenant breaches a rental agreement, the landlord must give the tenant written notice of the breach and provide the tenant an opportunity to cure the breach. This includes breaches such as unauthorized alterations.
The written notice to the tenant should sufficiently describe the breach, describe how it can be cured and give the tenant three days to cure it or to vacate the premises. This Three-day Notice to Cure or Quit is similar to a common Three-day Notice to Pay Rent or Quit, except that it requires the tenant to cure a breach other than the failure to pay rent. The tenant must cure the breach or vacate the premises within the notice period. If the tenant does neither, then the tenancy is terminated, and the landlord can commence an eviction action against the tenant in Superior Court.
Alternatively,
if the alteration is such that it causes substantial damage to
the rental unit, then the landlord is entitled to simply terminate
the tenancy without giving the tenant any opportunity to cure the
breach. Such termination likely requires a written 60-day notice
of termination of tenancy.
In any event, whenever a landlord discovers that the tenant has breached
the rental agreement, the landlord should respond quickly to enforce the
landlord’s
rights under the rental agreement. Failure to do so might result in a waiver
by the landlord of the right to enforce those terms of the rental agreement.
– Steven C. Williams
Q. A fellow landlord friend recently asked if I could lease out one of her apartments while she is away on vacation. What are my legal responsibilities and potential liabilities should I agree to assist her in this endeavor?
A. By agreeing to lease out one of your friend’s apartments, you are undertaking responsibilities and potential liabilities to both your friend and the tenant to whom you rent the apartment. You will be acting as your friend’s agent, and you will have a responsibility to act competently. (I am assuming you are performing this function without compensation, or you would need a real-estate broker’s license.) This means you should carefully review the qualifications of all potential applicants, conduct the necessary credit checks, possibly negotiate the rent, complete the necessary paperwork, adhere to all laws and make the apartment available for occupancy. You and your friend should agree on as many of the details as possible concerning these matters beforehand and put your agreement in writing for future reference and/or reliance by either of you. Questions regarding your authority to negotiate rental amounts and terms should be fully covered. Also, you should be clear about the exact form of the rental agreement you will use and what type of supplemental documentation (for example the lead booklet, house rules and mold notification) you will provide to the tenant.
If you act less than thoroughly and professionally in any of these matters, you could incur liability to your friend. For example, you might find yourself liable should you fail to investigate adequately the tenant’s references or perform a credit check. As a consequence, you would then place a troublesome tenant in the unit, resulting in the need for your friend to do an eviction or to suffer a loss of rent. Of course, these risks and others can be and probably should be waived in writing in any agreement you have with your friend. Another example is that you might expose both you and your friend to liability if you fail to comply with all laws, such as fair housing laws, or if you do anything that might suggest to a potential tenant you are discriminating based on race, religious preference, sexual orientation, age or family status.
You also have responsibilities to the tenant to provide advice on any conditions and circumstances that might materially affect the tenant’s decision to rent or not to rent the apartment—just as you would to any of your own prospective tenants. Issues such as noisy neighbors, physical defects in the unit and anything else that might result in a problem for the tenant after occupancy should be thoroughly disclosed and documented in writing. In addition, you must not make any representations to the tenant regarding any aspect of the tenancy that is not in writing in order to protect both yourself and your landlord friend from liability to the new tenant.
As a practical matter,
in most cases, as long as you act in a prudent and professional
manner, there should not be any problems. The list of horrible questions—what
if and what might be—are probably more theoretical than real.
Nevertheless, renting out your friend’s unit is a major responsibility,
and one that should not be undertaken lightly. Do not do it unless
you are willing to assume all the work and burdens associated with
it. In addition, do not even contemplate moving forward in this role
unless your landlord friend is a reasonable person who, if after
all is said and done and the tenancy just does not work out, will
not start blaming you.
– Saul M. Ferster
Q. Can an owner charge separate rent for parking or storage
in order to bypass the restrictions of the Rent Ordinance?
A. No. The San Francisco Rent Board considers
garages rented to a tenant, even under a separate agreement, as a housing service
of the tenancy that is subject to the restrictions of the Rent
Ordinance.
Under Section 12.20 (3) of the Rules and Regulations, you are allowed to remove as a housing service the right to use the garage and enforce that change of term of tenancy by eviction. If you choose to remove the garage as a housing service under Section 12.20, you must lower the rent to compensate for this loss of service. If you and the tenant cannot agree on the amount of rent decrease, the Rent Board will hold a hearing to decide the amount. The PPMA Residential Tenancy Agreement attempts to set the value of the garage for just this reason. However, Section 10.10 of the Rules and Regulations provides that the Rent Board may award a “corresponding reduction in rent” for a substantial decrease in housing services. The reduction may not be limited by the value for the use of the garage placed in the PPMA Lease.
You should note that even though Section 12.20 allows for the removal of the use of the garage, certain judges have found that such an act is tantamount in San Francisco to removing a kitchen or bathroom and, as such, will not allow such a removal of the garage. There are no published cases supporting this view of the law.
Last, remember that if you rent a garage
to a nontenant, the Rent Ordinance does not apply to that tenancy.
In this situation, you are free to evict without cause or raise
the rent at any time. While this difficult rental climate currently
does not allow landlords to offer units without parking when available,
this can be an option for some landlords to keep a portion of
their buildings out of the restrictions of the Rent Ordinance.
– Jeffery P. Woo
Q. Can you buy out a tenant?
A. This is an easy question: the
answer is yes. The risk is in getting to yes. There are basically
two factual scenarios that result in tenant buyouts. The first
is that the tenant—without any prior communication or suggestion
(directly or indirectly) from the landlord—offers
to vacate the unit in exchange for a reasonable amount
of money. The second is that the landlord approaches the
tenant.
The bad news is that the first scenario does not happen very often. If it happens to you, thank your lucky stars. You should have an attorney who specializes in San Francisco landlord/tenant law prepare a written agreement with the tenant. The agreement should state that the tenant made the original offer in order to avoid an after-the-fact claim by the tenant that the payment was the result of the landlord’s wrongful endeavor to recover possession without just cause. The agreement should also include a release of any claims that the tenant may have against you. With a properly prepared written settlement agreement, there is no significant risk.
The second scenario raises the hard question of how do you approach the tenant when you do not have just cause to evict under the Rent Ordinance. The problem is that you are endeavoring to recover possession of the unit, which is illegal. If your approach is successful—that is, the tenant signs a settlement agreement that releases all claims—the risks are relatively low. The only possible remaining consequences are a civil enforcement action by the City Attorney or a criminal prosecution, which are rather unlikely. By contrast, the consequences of a failed negotiation can be extremely serious. The tenant has a good claim for emotional distress (by the time of the jury trial, the tenant may remember a series of threats and menacing gestures that accompanied the offer); and those damages are trebled, plus the tenant receives attorney’s fees. In addition to creating a monetary liability to the tenant, you may have given the tenant a valid defense of retaliatory eviction, if you later learn that you had just cause to evict. Before approaching a tenant, carefully review the facts and the lease with a qualified lawyer, which may reveal that you have just cause that would make an approach to the tenant legal if you give the tenant a written statement specifying your just cause.
A final note: This answer
is based on the law from two recent decisions by the state Court
of Appeal—Baba v. SF Board of Supervisors and Action
Apartment Assn v. Santa Monica. Those cases significantly
reduce (and may even eliminate) the risks in approaching tenants;
however, both cases are still subject to review by the California
Supreme Court and should not be relied upon until those decisions
are final
– Paul F. Utrecht
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or the San Francisco Apartment Magazine. The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Steven C. Williams is with Wiegel & Fried, 415-552-8230. Saul M. Ferster can be reached at 415-863-2678 or fersterlaw@yahoo.com. Jeffery P. Woo is with Woo & Associates, woo@mypropertyrights.com or 415-705-6470. Paul F. Utrecht can be reached at 415-956-8100 or utrechtlaw@hotmail.com. Copyright © 2005 by the San Francisco Apartment Magazine. All rights reserved.