Legal Corner Q & A
by Various Authors
Q. I am considering renting a parking space to a nontenant. Do any eviction or rent control rules apply?
A. California has outlawed all forms of commercial rent and eviction control. Therefore, as renting a parking space to a nontenant for parking use is a commercial tenancy, there are no eviction or rent control regulations that apply. This means that the landlord can raise the rent or terminate the tenancy without restriction. Thus, the lease agreement, whether written or oral, dictates the terms of the landlord-tenant relationship. However, should the tenant breach the lease (for example, fail to pay rent), the landlord will still have to resort to legal processes in order to terminate the tenancy and to force removal of the vehicle.
Please note that renting garage spaces to nontenants requires the owner to obtain a business license from the city. In addition, the local Business and Tax Regulations Code imposes an annual licensing fee for operators of all “parking stations,” even if it consists of one garage space. While many residential landlords may choose to ignore this requirement, there are civil and even criminal penalties that can be imposed onto violators. Finally, your insurance company must be informed that you are leasing part of the property for commercial purposes, as this mixed commercial-residential use affects coverage.
In addition, please be mindful of safety issues. Renting a parking space in a residential building to an outside tenant allows a nonresident access to your building. Oftentimes, a landlord is less likely to screen a commercial tenant in the same way a residential tenant is scrutinized. Landlords are usually held liable for harm and injuries that occur to the residents at the premises, so be mindful of who is using the garage. In addition, a parking tenant’s use of the garage should not be allowed to compromise the security of the building, so ensure that the car owner keeps access doors locked at all times.
Landlords are understandably drawn to the practice of renting garage spaces to nontenants. As parking privileges leased to residents are covered by both price and eviction control, a landlord has no ability to raise parking rent beyond the strict rent limitations; in addition, with recent changes to the rent law, parking usually cannot be severed from the tenancy even with a corresponding rent reduction. Not surprisingly, these factors have led many owners to lease their spaces to outside users. In sum, if you are inclined to pursue this practice, use a well-written parking agreement such as the SFAA Parking Lease, screen your tenants, notify your insurance carrier, and comply with all local licensing and tax regulations.
–David Wasserman
Q. I just realized that my tenant hasn’t been paying for his garage since the first month he moved in. It’s now been five months. Can I collect this past due amount without problems?
A. Whether or not there will be problems in collecting past due rent really depends on the tenant. If the tenant pays the rent demanded upon request, there’s no problem. However, if the tenant does not pay upon request, the landlord’s remedy is to engage in a legal process. That process, due to the cost and time involved, can usually be considered a problem in and of itself, regardless of whether the landlord has the law on his/her side. However, from a strictly legal point of view, it should not be problematic to demand that the rent for the garage be brought current or that the tenant vacate the garage.
Whether the tenant has a separate rental agreement for the garage, or the garage rental is included in the tenant’s residential rental agreement, with a portion of the rent designated for use of the garage, the landlord may serve a Three-Day Notice to Pay Rent or Quit if the rent for the garage is outstanding. As noted above, if the tenant pays the rent within the three-day notice period, the rent has been collected without problem.
If, however, the tenant fails to pay the rent in response to the notice, the landlord’s remedy is to file an eviction lawsuit (unlawful detainer action) in court to seek a judgment for possession of the garage and rent damages for each day until judgment is obtained, plus the outstanding back rent. Because the garage is not used for residential purposes, the tenant cannot assert any defense based on the condition of the garage (breach of the implied warranty of habitability), and absent some extraordinary circumstance, the landlord’s eviction case should be straightforward.
For a few years, the San Francisco Rent Ordinance has required a landlord seeking to remove a garage rental provided in conjunction with the rental of a residential unit to assert one of the 14 “just causes” in recovering possession of the garage. However, since the tenant has not paid the rent, and failure to pay rent is one of the just causes, that is not an obstacle here. Possibly, a tenant could claim that since the garage rental is essentially a part of the residential rental, the tenant should be able to assert habitability claims (i.e. defective conditions) in the residential unit, as a defense to the garage eviction. However, as long as possession is sought for the garage only, that argument is not persuasive.
–Fredrik Emilson
Q. My tenant’s rental agreement states that no pets are allowed. In fact, there are no pets allowed in the building at all. However, the former owner allowed this tenant to keep very noisy pet birds. As a new owner, what are my rights and how can I make the tenant get rid of the birds?
A. It’s a reality that in many cases the strict terms of a written rental agreement are not followed by landlords and tenants alike over the years. By the accepted habits and practices of the parties, written terms may be deemed modified to conform to the actuality. This is quite frequently true in the case of “no pets” clauses, where the owner has permitted the possession of a pet for an ongoing period of time. A point is reached where it must be inferred that, regardless of the written lease provision, the owner has, by his failure to enforce the prohibition, accepted the tenant’s right to the pet–other tenants’ lease terms and general building policies notwithstanding.
Nevertheless, even where a pet is permitted, the pet may not become a nuisance disturbing the peace and quiet enjoyment of the other occupants of the building. Therefore, I must ask, who are the “noisy” birds bothering, and during what hours? If you are receiving complaints from other tenants about unreasonably loud noise during quiet hours, or bird noise with an annoying frequency during other hours, you may have a right to ask the offending tenant to remove the birds. This will require the full support of the complaining tenants, including their willingness to go to court and testify, should it reach that level. They should keep written records of the dates and times they have been disturbed, and be prepared to recount the episodes, clearly demonstrating why removal of the birds is necessary.
If you are the only one disturbed by the birds, and are not residing in the building, I would say forget it. If you live in the building, and no other tenants would back you up (perhaps this is just a two-unit building), you have a greater problem than if you had such support. Hopefully, the offending tenant would honor your request or three-day notice to eliminate the nuisance, and find the birds a new home. If you are forced to go further, as with an unlawful detainer action, for example, other issues must be considered. With nuisance, as with any other ground for eviction, your primary motive for bringing the eviction must be the reason stated, and there must be no ulterior motive. Any time a landlord seeks to remove a tenant that is long term, usually paying well below market rent, the tenant has the ready-made argument that the landlord wants the unit vacant to rerent at a market level. This will create a greater burden for you to persuade a court or jury that your motives are pure. It may not be that easy to send the Birdman of Alcatraz on his way.
–Saul M. Ferster
Q. I read recently that landlords are now allowed to charge their tenants for water, even if they do not have separate water meters. Is this true? If so, what paperwork is required to get tenants who do not currently pay for water to do so?
A. The only recent change related to passing through water/sewer charges has to do with Water Revenue Bonds authorized by voter-initiative Proposition A, which passed in November 2002. Water rates increased citywide in July 2005 as the voter-authorized bonds were issued. Under Rent Ordinance Section 37.3(a)(5)(b) and Rent Board Rule 4.14, owners are permitted to pass through 50% of the water bill increase attributable to these bonds. I recommend that you use this simple passthrough procedure to recover a portion of your costs and to encourage your tenants to conserve water usage.
Each water bill that you receive after June 2005 includes a description of the amount of charges related to the Water Revenue Bonds, such as: “Your current water charge includes $XXX amount attributable to water rate increases resulting from the issuance of Water System Improvement Revenue Bonds authorized by voters at the November 5, 2002, election (Proposition A).”
In order to pass through these water bond increases, you do not need to file a Rent Board petition, but you must complete a worksheet that you can obtain from the Rent Board or online from the Rent Board’s website. Detailed, step-by-step instructions are provided along with the worksheet. The completed worksheet and copies of the underlying water bills should be provided to the tenants along with the notice of rent increase. You may elect to pass through the charges based upon individual water bills periodically during the year or, in the alternative, once per year based upon all of the water bills for a calendar year. The monthly passthrough remains in effect only for the same number of months covered by the water bills used to calculate it, i.e., either 2 months or 12 months. If you calculate the passthrough annually, you should include it with the tenant’s annual rent increase notice. If you choose to pass it through periodically during the year, you must give a separate 30-day rent increase notice each time (35 days, if served by mail). In the unlikely event that the total rent increase exceeds 10%, then you must give a 60- or 65-day notice. The water bond increases passed through in this manner do not become part of the tenant’s base rent.
Alternatively, you may pass through water bill increases as part of an overall operating and maintenance expense increase pursuant to the petition process. Once the Rent Board has approved your petition and rent increase, the amount will become part of the base rent. You may view the Landlord Petition on the Rent Board’s website to gain an understanding of the requirements for an operating and maintenance rent increase.
In addition to the Water Revenue Bonds, there are other bond increases that you may pass through by using the Rent Board worksheet for each tax year and serving the completed worksheet to the tenant along with the annual rent increase notice. Forms and instructions are available on the Rent Board’s website.
For new tenancy agreements, you may validly include a provision that the tenant shall pay a negotiated share of the periodic water bill for the entire property. For example, you might agree to divide the water/sewer bill based upon the number of units or based upon the number of occupants per unit. As long as the percentage that you initially agree upon remains the same, any increases in the gross amount payable by the tenant would not constitute a rent increase. The tenant’s share of the periodic water/sewer charges is not part of the base rent, but should be invoiced to the tenant in a timely manner along with a copy of the periodic water/sewer bill. Your rental agreement should provide that the tenant’s share is payable within a specified number of days after the invoice. Be sure to provide that the tenant must pay a percentage of both water and sewer charges, rather than just “the water bill.” An attorney could assist you in drafting the appropriate clause.
–Michael C. Hall
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. David Wasserman is with Wasserman-Stern and can be reached at 415-567-9600. Fredrik Emilson is a principal with Cornerstone Law Group and can be reached at 415-357-2099. Saul M. Ferster can be reached at 415-863-2678. Michael C. Hall can be reached at 415-512-9865. Copyright © 2007 by SF Apartment Magazine. All rights reserved.