Legal Corner Q & A
by Various Authors
Q. What is a reasonable late charge for a late rent payment? Once you set this charge, can you ever increase it?
A. There is no state law that specifically covers late fees for a late rent payment and courts vary in their rulings on late fees. But, a landlord should be able to show that he or she derived the late fee through a reasonable endeavor to estimate fair compensation for the landlord’s expenses incurred as a result of the late rent payment.
The lease or rental agreement should specifically state the charges for a late rent payment. Include language stating that the parties agree it is extremely difficult to fix the actual damage a landlord incurs in the event of a late rent payment and the parties also agree that the stated fee for a late rent payment is fair compensation for any loss the landlord sustains as a result of the late payment.
A landlord can increase the late charge for a late rent payment under California Civil Code Section 827, by serving a “Notice of Change of Terms of Tenancy” and therein increasing the late charge (this is a 30-day notice and can only be served in a tenancy that is month-to-month, or less than one month). However, keep in mind that whatever the late charge is, it must be reasonable. Landlords cannot use the late rent payment charge to punish or penalize their tenants.
–Stephen K. Lightfoot II
Q. My domestic partner and I are getting ready to purchase our first home. We are in the market for a duplex. He will be residing in one unit and I in the other, and our daughter somewhere in between, so to speak. If one or both units are being rented, what are our options for taking possession of one or both units without having to go through a nasty eviction process?
A. The ideal situation is, of course, to purchase an unoccupied two-unit building, thereby alleviating the need for any evictions. However, in San Francisco those buildings are rare and usually sold at inflated prices.
If the building has only one tenant-occupied unit, you or your partner can move into the vacant unit, and the other can do an owner move-in (OMI) eviction into the tenant-occupied unit. Note that an OMI is not available if the unit is occupied by a “protected tenant” (a disabled or senior tenant of 10 years or a terminally ill tenant of 5 years). To avoid the surprise of a protected tenant popping up after you begin eviction proceedings, obtain completed estoppel certificates from the tenants during escrow. If tenants refuse to fill out the estoppel, this can be a red flag of a protected tenant. Alternatively, it is a way for a perfectly healthy tenant to deter you from buying and evicting them. Either way, you should seek expert legal advice before closing the deal.
Be warned, tenant advocates will insist that as domestic partners you have no need for two separate units, and that your motive for the OMI is not pure (since one of you already moved into the vacant unit). Your true motive for the OMI must be that you intend to use the unit as your principal place of residence for 36 consecutive months.
If both units are tenant-occupied, keep in mind that owners (at least for now) are limited to one OMI per building. That is, unless the owner is moving his relative into the building simultaneously. Your other option would be an Ellis Act eviction. This is where you declare that you are going out of the rental business. The building can only be used for residential purposes, with limitations on renting it for 5-10 years, but you can take possession of a unit occupied by a protected tenant. Note that the notice period for an Ellis Eviction is 120 days, or one year if the tenant is disabled or elderly.
Be advised that with the passage of Proposition H, payments to evicted tenants in both the OMI and Ellis evictions are significant. They are capped at $13,500 per household, but can go higher if there are elderly and/or disabled tenants in possession. You should have knowledgeable legal counsel available to advise you while you are looking for your first home.
–Sally Morin & Christina J. Collins
Q. I have a unit with a pair of roommates. One of the roommates recently moved out and damaged the stairwell in the process. Can I take money out of their combined security deposit to pay for the damage, even though one of the roommates still lives there and was not responsible for the damage? When the other tenant does move out, should I give her the entirety of what remains from the deposit?
A. A landlord’s options with a security deposit are governed by California Civil Code Section 1950.5. There is nothing in the code that specifically addresses deducting before all tenants vacate, but certain provisions would seem to be consistent only with that timing, for example, cleaning of the apartment. Other applications, such as compensating for the tenant’s default in rent, would seem to be fully applicable when the default occurs. There is no reason why a landlord should wait years in order to take from a security deposit to remedy a rent shortfall. (Of course, the landlord may choose to serve a Three-Day Notice to Pay Rent or Quit instead, keeping a maximum deposit against other deficiencies at the end of the tenancy.)
One feature of Section 1950.5 is the requirement that a landlord provide a departing tenant with a pre-move-out inspection within two weeks before the termination or the end of lease date. The purpose of this requirement is to permit the tenant to remedy, consistent with the rental agreement (that is, assuming the rental agreement doesn’t prohibit it), any damage in the unit. This provision would seem to suggest that deduction couldn’t be made until the last tenant departs. However, although it may be reasonable to compel a landlord to defer minor repairs in the tenant’s unit until the tenant has vacated, in this case, the damage is not to the tenant’s unit but rather to the common area of the building. Clearly, the landlord need not wait for the last tenant to vacate before repairing the damaged stairs. It is also not reasonable to require the landlord to give the remaining tenant the opportunity to repair them. Therefore, I would say the landlord must be permitted, having made the necessary repairs to the stairs, to deduct from the security deposit the cost of doing them at the time made. (The same would be true, of course, if tenant-caused damage to the interior of the unit was so serious that remedy could not await conclusion of the tenancy.)
Finally, when the remaining tenant moves out, you should return the balance of the security deposit to the persons specified in your rental agreement to receive it. If the agreement does not specify, I think it reasonable to pay the balance to the last tenant vacating, unless other directions are given to you by the tenants themselves. Don’t forget to provide the required itemization and supporting documentation to all tenants within 21 days after the unit is vacated.
–Saul M. Ferster
Q. How do you force a tenant to comply with a lease provision that requires the tenant to carpet 80% of the floor?
A. In San Francisco, there are many multiple-level residential buildings that are built with hardwood floors. It is not uncommon for a landlord to require that the tenant place area carpets over a portion of the hardwood floor in the rental unit. This not only preserves the hardwood floors, but it reduces the amount of noise that may carry into surrounding rental units.
After the tenant moves into a rental unit, the landlord should ensure that the tenant is carpeting the floor in compliance with the provisions of the written rental agreement. If the landlord discovers that the tenant is not complying with this requirement, then the landlord should immediately send the tenant a written letter reciting the applicable provision of the rental agreement and requesting that the tenant immediately comply with it. If applicable, the letter should also point out that the failure to carpet is (or may be) damaging the hardwood floors and/or is (or may be) disturbing other tenants in the building.
If the tenant refuses to carpet the rental unit in compliance with the written rental agreement, then the landlord may have grounds to terminate the tenancy based on a breach of that agreement. The San Francisco Rent Ordinance requires the landlord to 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 should give the tenant written notice of the breach and an opportunity to cure the breach. This would include a breach of a provision requiring a tenant to carpet 80% of the floor.
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. 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 may commence an eviction action against the tenant in San Francisco Superior Court. 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
The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Stephen K. Lightfoot II is a partner at Ropers, Majeski, Kohn & Bentley and can be reached at 415-543-4800. Sally Morin and Christina J. Collins are with Millar & Associates and can be reached at 415-981-8100. Saul M. Ferster can be reached at 415-863-2678. Steven C. Williams is with Wiegel & Fried, LLP and can be reached at 415-552-8230. Copyright © 2007 by SF Apartment Magazine. All rights reserved.