Landlord-Tenant Law II

In a prior post I discussed helpful tips for a new residential landlord. This week I thought I would write about tactics a landlord should not pursue. The following are 5 no-nos for a residential landlord.

1. Wrongfully turning off the utilities

Many landlords, for foolish reasons, do not like to use the legal process to remove a tenant from the rental unit. Even though eviction proceedings are largely expedient and straight-forward, many landlords nonetheless engage in non-judicial evictions, which is unlawful and potentially criminal. The term for this is "self-help." Even though it sounds harmless and borderline patriotic given the U.S.' self-reliance mentality, it is very much frowned upon by the law.

Assume that Thomas, the tenant, has not paid rent for the month of March. Leonard, the landlord, is irate over this because Thomas has been delinquent in paying rent for the past couple of months and Leonard has warned Thomas about being prompt with rent. Leonard then goes to an attorney who tells him that Thomas can delay eviction proceedings for weeks if he pulls the right legal levers. Incensed that he has to wait weeks to evict Thomas, Leonard decides to cut the power line to Thomas' unit because no rational human can live in a dwelling without electricity. Therefore, Thomas will naturally want to leave the unit immediately. 

The obvious problem with this is two-fold. First, California law says that a landlord is prohibited from tampering with utilities in order to terminate the tenant's occupancy. CC § 789.3. The civil penalties for this include (1) actual damages; (2) up to $100 for each day that the landlord violates CC §789.3, but not less than $250 for each separate cause of action and subsequent or repeated violations being treated as separate causes of action subject to separate awards of damages; (3) attorney fees; or (4) injunctive relief. Second, it may be considered criminal to interfere with utility equipment. Pen C § 591.

2. Improperly entering the unit

A residential landlord may enter the rented premises only during specified situations at certain times and typically only after giving the tenant written notice. CC §1954. Many landlord mistakenly assume that they can just show up to the rental unit without prior notice and demand entry into the unit to inspect the premises. The following are the permissible reasons to request entry into the unit

1. in an emergency;
2. to make necessary or agreed-on repairs, decorations, alterations, or improvements;
3. to supply necessary or agreed-on services;
4. to exhibit the unit to prospective or actual purchasers, mortgagees, tenants, workers, or contractors;
5. to make an inspection under CC §1950.5(f);
6. when the tenant has abandoned or surrendered the premises; or
7. under a court order.

Reason #5 relates to a security deposit inspection in case you were curious what CC §1950.5(f) meant.

Although it should be noted that a landlord may enter without prior notice if done to 

1. to respond to an emergency.
2. if the tenant is present and consents to the entry at the time of entry.
3. after the tenant has abandoned or surrendered the unit.

Two additional key components of the landlord's right of entry is the fact that notice of the entry must be given in writing and the landlord may only enter the unit during business hours.  
CC §1954(d)(1). Unfortunately there is no definition of "business hours" in civil code. Still, the reasonable interpretation of business hours is 8:00 - 5:00pm or 9:00 - 6:00pm Monday - Friday. Although the lease agreement may define what constitutes business hours such that the weekend is included.

If the landlord commits a significant and intentional violation of CC § 1954, the tenant can receive up to $2,000. CC § 1940.2(b). 

3. Appropriating the tenant's valuable belongings

A common scenario is where the tenant breaks the lease early and the landlord is relegated re-renting the unit as required by law. CC § 1951.2. The tenant will often leave behind belongings, e.g. clothes, furniture and/or appliances. The landlord will then decide that since the tenant put them in a bind, the landlord will return the favor by appropriating their possessions left behind. Surprisingly, a landlord is legally able to keep the tenant's property provided the landlord has served them with a notice of abandonment and the value of the property is less than $300. CC § 1988(a). However, if the value of the property is above $300, the landlord is obligated to sell the property at public auction.  CC §1993.07. 

Since the landlord is granted the discretion to appraise the value of the tenant's belongings and is probably disgruntled that the tenant left behind some possessions, it is easy to see that this situation is ripe for abuse. For example, the landlord can easily devalue or deflate the true value of the items because there is no check on their discretion, plus they already view the tenant in a negative light for breaking the lease early. Moreover, many tenants are not prepared to litigate over a $275 couch and $50 mattress that the landlord misappropriated since attorneys charge that for an hour of time typically. Still, a landlord should know that just because the tenant left behind some property, this does not give them a license to appropriate the item for their own personal use. Rather the landlord needs to value the items and then make the appropriate legal determination.

4. Improperly raising rent for a month-to-month tenancy

When a new landlord takes over, he or she often likes to increase rent to put their unique stamp on the situation. In other words, the new landlord wants to show that they are in charge. However, California law is very specific as to when rent increases become effective. If the rent increase is 10% or less of the rent charged during the 12 months preceding the increase, the landlord needs to give 30-day notice before the rent increase becomes effective. CC §827(b)(2). If the rent increase is more than 10% of the rent charged during the 12 months preceding the increase, the landlord needs to give 60-day notice before the rent increase becomes effective. CC §827(b)(2).    

5. Retaliating against the tenant's lawful conduct

Retaliation seldom leads to positive results in life and the landlord-tenant relationship is no different. California law bars a landlord from retaliating against a tenant who invokes his or her tenant rights. CC § 1942.5. 

A common example is where the tenant complains to a city's housing authority about the habitability of the unit and when the landlord learns of this, attempts to evict the tenant. In short, this is prohibited by California law. CC § 1942.5. Moreover, if a tenant engages in protected tenant activities, the landlord is barred for 180 days from terminating the tenancy, increasing rent or decreasing any services, if done in retaliation. CC § 1942.5. This can be particularly frustrating to a landlord because they will have to endure a tenant they clearly dislike for an additional 6 months unless the tenant leaves under their own free will. In light of this, whenever a tenant invokes the right to live in habitable unit, a landlord should not reflexively think "eviction" to eliminate the problem immediately. Instead, the landlord should constructively engage the tenant or else they run the risk of having to deal with the tenant for at least another 6 months.

Landlord-Tenant Law I

It is quite common for a trust beneficiary to inherit residential rental property from the settlor. Once the transfer has been formalized the beneficiary then becomes the new landlord. For example, the trustee transfers the property to the beneficiary's own name from the trust's name. The following are 5 helpful recommendations to consider for new landlords coming from a present landlord, myself.

1. Read the lease/rental agreement

In just about any situation, a person is best served to read the controlling document, e.g. the contract, before embarking on any action. A rental agreement definitely falls within this category. By reading the lease, the new landlord will be able to gather the necessary information about the property: the tenancy's term, the amount of rent, the amount of the security deposit, when rent is due, how many occupants are there, can the tenants assign or sub-lease their interest, etc. Without knowing this pertinent information, the landlord will not be able to make an informed decision about what to do next.

2. Communicate with the tenant

An old adage says that communication is key. When a new landlord takes over, he or she should contact the tenant(s) to arrange a time to meet. At this meeting, the landlord can state that they are the new landlord and any problems should be directed to them. Also, this meeting can provide the tenant with an assurance that the new landlord will not become a slumlord or absentee landlord who just collects rent. Rather, a meeting will indicate to the tenant that the landlord takes this obligation seriously.

3. Inspect the property to ensure habitability

California law requires a landlord, within the context of a residential lease, to provide the tenant with a habitable living environment. Green v. Superior Court (1974) 10 C3d 616 This naturally raises the question of what is a habitable living environment? The Green Court said that "in most cases substantial compliance with those applicable building and housing code standards which materially affect health and safety will suffice to meet the landlord's obligations under the common law implied warranty of habitability."

Also, the California civil code says that a residential dwelling breaches this implied warrant of habitability if it substantially lacks any of the following affirmative standard characteristics (see CC §§1941.1;1941.3;):

1. effective waterproofing and weather protection,
2. proper plumbing or gas facilities,
3. hot or cold running water with connection to sewage disposal system,
4. proper heating facilities,
5. proper lighting or wiring,
6. clean grounds or adequate garbage cans,
7. floors, stairways, or railings in good repair or
8. operable dead bolt locks on the entry doors.

It is particularly important for a landlord to ensure a residence's habitability because a tenant can lawfully withhold rent or sue the landlord for damages when this duty is breached.

4. Follow the correct procedure for disposing of the tenant's security deposit

One of the most common reasons for a small claims action is the dispute over a tenant's security deposit. Many landlords fail to properly follow the correct procedures when returning a tenant's security deposit. The entire body of statutory law is found in Civil Code Section 1950.5. A landlord is best served to read the statute in its entirety. Unfortunately, the law is very poorly written as many clauses are ambiguous. Regardless, a landlord must adhere to this law when returning a security deposit.

A small claims action is very desirable to a disgruntled tenant because the law states that any portion of a security deposit retained in bad faith is grounds for the tenant to recover twice the amount of the security deposit in addition to actual damages. For example, if the landlord in bad faith retains a mere $50 of the tenant's $1,000 security deposit, the tenant can sue the landlord for $2,000 plus actual damages. In light of this financial benefit for the tenant, it is quite clear why so many small claims court cases involve security deposit disputes. 

5. Have the tenant sign a fixed-term lease

This is a personal preference as I have been a landlord for 7 years involving multiple properties. Many landlords let fixed-term leases, for instance a 6-month lease, roll into a month-to-month tenancy at the conclusion of the lease. When this happens, the landlord and tenant are each put in a difficult situation. 

The landlord has to be concerned that the tenant can just provide 30-day notice and leave, and at that point the landlord will have to find a new tenant. This jeopardizes the landlord's cash flow because a vacancy will result in no rental income for that particular period.  Furthermore, screening tenants is not an easy matter. There are numerous fair housing laws that a landlord must be aware of when showing a unit to a prospective tenant. Sadly many people who post on Craigslist list blatantly discriminatory requirements for their unit such as no families, only one sex allowed, etc. There are serious legal consequences for running afoul of fair housing laws.

In contrast, the tenant has to be concerned because the landlord may unilaterally terminate the tenancy by giving 30- or 60-day notice to the tenant. Under California law, a tenant has no inherent right to live at a particular dwelling for an indefinite period of time. Ferry v. McNeil (1963) 214 CA2d 411. A landlord may evict, through lawful non-discriminatory means, a tenant from the unit if he or she so pleases. A notable exception to this rule is municipal ordinances which mandate cause to evict a tenant. These are known as "just cause" eviction laws. A few cities that have just cause evictions include Oakland and San Francisco. Still, the vast majority of California cities do not have just cause eviction laws to allow a tenant to remain at a residence indefinitely. Thus, the landlord is free to remove the tenant if he or she chooses. In light of this certainty, it is my opinion that a tenant should request a fixed term lease to guard against unexpected termination.