Legal Corner Q & A
by Various Authors
Q. I am a property manager in a large apartment building that is currently undergoing construction on a remodeled lobby and fitness room. A number of tenants have complained about the noises from the construction, while others are complaining that the work is taking too long to be completed. But the work is taking a long time precisely because we are trying not to affect the tenants when most of them are at home. Both sides are threatening to ask the San Francisco Rent Board for a rent reduction. Do either or both of them have a case?
A. The answer is “yes” and “yes.” Under local law, a tenant may file a petition for a reduction of base rent where a landlord, without a corresponding reduction in rent, has substantially decreased housing services or failed to provide housing services reasonably expected under the circumstances. These petitions often arise where the landlord has taken away parking privileges or storage spaces without reducing the rent.
Yet tenants regularly file these decrease-in-services petitions when the building is undergoing rehabilitation work. Some file for the annoyance created by the work and others seek relief for the deprivation of services caused by the rehabilitation. Until recently, the Rent Board was at liberty to grant reductions even when the project was commenced to effectuate repairs and capital improvements. In 1999, the California Court of Appeal, in a case entitled Golden Gateway Center v. San Francisco Rent Board, held that a landlord who performs reasonable and necessary repair and maintenance work on rental property, which has the effect of temporarily interfering with or preventing the tenant’s full use of housing services, but does not substantially interfere with the right to occupy the unit, will not give rise to a rent decrease. In Golden Gateway, tenants were precluded from using their decks during an exterior deck painting and restoration project at the Golden Gateway Center apartment complex. The Court of Appeal rejected the Rent Board’s contention that a decrease in rent was warranted in this situation.
However, tenants will still receive a temporary rent decrease if they show that the work either substantially interferes with their use and enjoyment of the unit, and/or the work is not reasonable and necessary, but rather cosmetic and elective. Tenants have also successfully received rent decreases when they have shown that the projects were overly lengthy or unjustifiably burdensome on the residents. To complicate matters further, legislation recently passed by the San Francisco Board of Supervisors will seriously impede a landlord’s right to withdraw services, even for a temporary period of time, without the tenant’s consent.
To prevent a petition from being filed, keep your residents informed from the onset about the work you are doing. Give them disclosure and opportunity for comment before the hammering begins. Oftentimes, tenants file these petitions because they feel ignored and left out of the loop. Thus, a good public relations campaign can, in many instances, diffuse the possibility of litigating at the Rent Board.
—David Wasserman
Q. Recently, I approved the application of a prospective tenant and then discovered that a friend of mine needed an apartment as well. The applicant has already given me a deposit, which I would happily return. Even if I do so, is it too late to rent the unit to my friend and not to the applicant who I already approved? Would the situation be different if the friend was a relative?
A. Even before a tenant takes actual possession of a unit, the tenant may have a contractual right to possession. The extent of the landlord’s liability toward the prospective tenant in this situation therefore depends on whether an express or implied contract was established between the landlord and the prospective tenant. The issue of whether the friend is a relative, on the other hand, has no bearing on the landlord’s potential liability.
If the tenant has already signed a rental agreement, even if no rent has been paid, the parties have established a landlord-tenant relationship and the landlord has a contractual obligation to turn over possession on the agreed upon commencement date of the tenancy. If the unit is subject to the San Francisco Rent Ordinance, the landlord arguably now cannot endeavor to terminate the tenancy without a proper termination notice stating one of the fourteen grounds for eviction under the ordinance.
If there was no written rental agreement signed by the parties, but there was a verbal agreement on the main terms such as the amount of rent, the commencement date of the lease and the term (for example, a one-year term or a month-to-month term), the landlord is probably in the same situation as if a written rental agreement had been signed. This is particularly true if the deposit included first month’s rent.
If there has been no agreement or understanding other than the landlord communicating to the tenant that the tenant is approved, and if there has been no rent paid by the prospective tenant, then no contractual relationship exists and no landlord-tenant relationship has been created between the parties. In this case, subject to the Promissory Estoppel (discussed below), the landlord is not bound to rent the unit to the prospective tenant and may decide to rent to someone else without facing liability to the original prospective tenant. Needless to say, the deposit should promptly be returned to the prospective tenant.
It should be noted that even if no agreement has been established or rent paid, the landlord could still be liable toward the prospective tenant for refusing the unit under the legal doctrine of Promissory Estoppel. Under this doctrine, if you make a promise to someone, and that party relies to their detriment on that promise (such as tenants giving up their current home), you may be liable for damages incurred by the party who acted in reliance on the promise.
—Fredrik Emilson
Q. I have laundry facilities in my 4-unit building and occasionally tenants leave their laundry in a pile on the table, where it remains. Can I throw this laundry away if unclaimed in a certain number of days? What notice should I post or send to tenants regarding this issue?
A. There are specific statutory procedures for a landlord to follow in the case of lost or abandoned property. Common sense would dictate that left laundry is neither, but to assess your obligations, those statutes are instructive. Civil Code §1982 requires a landlord to dispose of property he reasonably believes to be lost pursuant to §2080 et seq., and provides immunity from liability if he complies. By inference, failure to comply would create liability. The landlord must, within a reasonable time, inform the owner of his possession of the lost property and offer to return it free of charge. If the owner is unknown or has not claimed it, and the property is valued at $100 or more, the landlord must turn it over to the police (this does not apply to abandoned property). If the police won’t accept it, the procedures for disposition of abandoned property after a unit is vacated would apply. Those procedures burden the landlord to notify the owner and provide an opportunity to recover the property. All theses statutes require the landlord to safeguard the property for a period of time, and then to follow specified procedures that protect the rights of the property’s owner.
It is advisable to post a sign in the laundry room informing your tenants that the landlord has no responsibility for any items left unattended, and warning such items may be removed. (I would strongly recommend against discarding them, however.) With only four units, you can probably determine the laundry’s owner. If the laundry remains for more than a day or so, you should give each tenant a small written notice that laundry has been left and must be removed by its owner. No matter how tempting it might be to just trash the left laundry, you may not simply do so. You need to exercise reasonable care to find the owner and return it. If you cannot, you must choose between disposing of it, if it is not of value (not legal and not recommended), and assuming the liability risk, or following the procedures for turning lost property over to the police. If they won’t take it, you could then dispose of it without liability. However, before disposing of it, you should catalogue and photograph the property as your record.
—Saul M. Ferster
Q. I rented to a tenant who is in the U.S. Army. Only two months into the lease, he was transferred out of the Bay Area. Are there any laws allowing him to terminate his one-year lease early without facing any penalties?
A. Yes. The Servicemembers Civil Relief Act, a federal statute that overrides state law and lease provisions, allows a servicemember tenant to terminate a real property lease any time after entry into military service or as of the date of the military orders. This applies to a lease of a rental unit occupied, or intended to be occupied, by a servicemember or his or her dependents for residential, professional, business, agricultural or similar purposes where the lease is executed prior to military service or executed during active duty when the servicemember later receives military orders for a permanent change of station or deployment for a period of not less than 90 days. The servicemember must give the landlord or property manager written notice of the lease termination, including a copy of his or her military orders. Where the lease provides for monthly rent, the termination is effective 30 days after the first date on which the rent payment is due after delivery of the servicemember’s notice. If the lease does not provide for monthly rent, the termination is effective on the last day of the month following the month in which the notice is delivered. Other protections for the servicemember tenant are also provided by this act in the event of an eviction or other litigation.
—Lawrence M. Scancarelli & Jerod Hendrickson
The opinions expressed in this article are those of the authors 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. David Wasserman is with Wasserman & Stern, 415-567-8230. Fredrik Emilson is a principal with Cornerstone Law Group and can be reached at fred@cornerlaw.com or 415-357-2099. Saul M. Ferster can be reached at 415-863-2678. Lawrence M. Scancarelli and Jerod Hendrickson can be reached at 415-398-1644. Copyright © 2006 by the San Francisco Apartment Magazine. All rights reserved.