Landlord FAQ

Yes, you can charge the tenant for the deductible, but collecting that money is the real issue. You can always file a small claims action for any money you pay to repair damages caused by your tenant, but we recommend that you simply deduct it from the tenant's security deposit. You have already "collected" the money, and you will not have to compete with your insurance carrier's subrogation claim against the tenant (see below). The deposit can be used to "repair damages, exclusive of ordinary wear and tear, caused by the tenant or his guest(s)." Civil Code §1950.5. This would include payment of your $1,000.00 insurance deductible, which was used to repair the damages caused by the tenant. You might have to wait until the tenant vacates to deduct the $1,000.00 from the deposit, which leaves you with less recourse should there be unpaid rent later, or if you discover more damages after the tenant leaves. However, a well-written lease, like the PPMA Lease, has a provision that allows the landlord to deduct money from the security deposit to make repairs prior to the tenant vacating the unit, and requires the tenant to replenish any used portions of the security deposit.

Typically after all repairs have been made, insurance carriers seek subrogation (or repayment) from the responsible tenant of the money the carrier spent on the repairs. The tenant will therefore be facing collection efforts, and possibly a lawsuit, for this large sum of money. Chances are he will likely ignore any separate claim you bring for the $1,000.00 deductible.

Note, although you cannot force a tenant to carry renter's insurance, you should make sure to place a provision your leases warning tenants that they will be liable for any injuries or damages they cause; the PPMA lease contains such a provision.

The first question is whether or not a landlord-tenant relationship was created. This relationship is created by a contract between the parties; it can be called a rental agreement, a lease or a month-to- month agreement, and it may be oral or written. To be enforceable, the contract must show that the parties intend to create a landlord- tenant relationship, and it must: 1) designate the parties, 2) describe the premises, 3) specify the rent to be paid and the time and manner of payment and 4) specify the term for which the tenant will rent the unit. The exchange of rent, security deposit and receipts of course solidifies the creation of the relationship. Even though the tenant never took possession of the premises, as long as a true landlord-tenant agreement was created, you may be permitted to collect damages (including rent) from the tenant who announces that he does not intend to perform his obligations under the agreement, i.e., move in.

Once you have determined that a landlord-tenant relationship was created, you next look at the type of agreement you created in order to determine the amount of damages you can claim from the breaching tenant. If you simply have a month-to-month agreement, which can be terminated by a tenant giving 30 days' written notice of termination, the damages will likely be "cut off" after 30 days. Even if the notice is only oral, I would not suggest taking damages in excess of the 30 days. If you have created a term lease, say for a term of 6 months or a year, in which the tenant may not terminate the tenancy prior to the expiration of the term without cause, you may have a claim for damages for the entire term of the tenancy. However, you must always do your best to mitigate your damages by immediately looking for a new tenant once the original tenant has breached, otherwise the tenant will have a defense against your claim for damages. Your costs for locating a replacement tenant, i.e. newspaper ads, property management fees, etc, should also be recoverable from the breaching tenant.

Of course, collecting the money from the departed tenant may be difficult, unless you are already holding the first month's rent and/or a security deposit. You may deduct the rent actually lost as a result of the breach from the rent or security deposit held. However, you are required per Civil Code Section 1950.5, within 21 days of the tenant vacating (in this case, 21 days from the time the tenant giving notice that they do not want to move in), to either return the security deposit or provide a written explanation as to any retention of the security deposit. Should the unit remain vacant for a period beyond the 21 days, despite your best efforts to re-rent it, you will have to recover those excess rental losses along with the other non-rent costs you have incurred in a separate court action against the breaching tenant. Remember, for a month to month agreement you can only take a maximum of 30 days' rent anyway. For a term lease, if you are forced to rent the unit for less than the contract price, the tenant may be responsible for the difference in rent due for the entire term of the tenancy (there should be a specific term in the lease covering this issue). For example, if you had a one year contract for $2,500.00 with the tenant, then they told you they weren't moving in, and you did your best to find a new tenant, but given the market, the second tenant was only willing to pay $2,300.00, the first tenant would be liable for $200.00 per month for a year ($2,400.00). Assuming you re-rent the unit prior to the 21 day deposit return period, you may be able to include the rental difference in your explanation and retention of deposit. Otherwise, it will have to be the subject of a separate court action for damages. To be certain you are taking the proper course of action, you should always consult an attorney prior to retaining any monies paid by a tenant who never takes possession of the unit.

We would recommend that you follow the same general principals that apply for any damages to the unit that were not caused by the tenant or his/her guests. That being, if you have notice of the damages to the unit, and do not make repairs after you have been given reasonable time to do so, the tenant may legally be permitted to pay a reduced rental amount.

Clearly, what is considered "reasonable time" really depends on the circumstances of your individual case. For instance, if you have a 30 unit building with each unit having substantial damages due to a disaster, it would be reasonable for a tenant in a unit with slight damage to wait much longer for the repairs than a tenant in a three unit building in which his/her unit is the only one needing any repairs.

Another issue is whether the slight damage to the unit—as described in your question—constitutes a "reduction in housing services" or endangers the life, health, property, safety or welfare of an occupant or any person. In either of these situations, the tenant would be entitled to a reduction in rent. If the damage is merely cosmetic or "slight", the tenant is not permitted to pay a reduced rent. However, if it affects their use and enjoyment of the premises (no hot water) or potentially their health and safety (shattered windows), the tenant may pay a reduced rent if repairs are not made as described above.

In all situations where a tenant advises you of repairs needed in their unit, you should use your best efforts to make the necessary repairs promptly. In a disaster situation, you should certainly prioritize what repairs to do first to avoid rental losses and ensure the welfare of your tenants. If you expect a delay in conducting any of the repairs, you will want to provide the tenant details in writing that establish the "reasonableness" of the expected delay. Of course, if you have a tenant who pays or demands to pay less than the contract rent, you should consult a qualified landlord-tenant attorney before taking any action against the tenant.

Be advised that any increase you pass onto the tenant for increased water costs is considered a "rent increase" by the Rent Board. Therefore it cannot exceed the annual allowable rent increase, unless it is approved by the Rent Board, or fits into one of two limited exceptions.

When you encounter an increase in water bills, which you believe is the result of increased tenant usage (not Water Department penalties or improvement bonds), you should file an Operating and Maintenance Expense Petition (called an "O&M petition") with the Rent Board to pass the increase onto the tenant. Note that water is not considered a "utility" by the Rent Board, so a Utility Passthrough Petition is improper. An O&M petition can allow for a rent increase of up to 7% beyond the normal annual allowable increase (only for tenants of at least a year). An O&M petition can in some instances include increased expenses related to property taxes, insurance, maintenance, repairs and debt service.

The O&M petition must be based on increased expenses which occurred over a recent 2-year period. To be successful, you must provide copies of all claimed charges and proof of payment of the charges - prospective increases will not be considered. The "bonus' of the passthrough is that it will be added to the tenant's base rent, and affect (increase) all subsequent annual rent increases.

For increased water bill passthroughs, the two exceptions to the petition process for are: (1) penalties assessed by the Water Department for water usage in excess of Water Department allocations, or (2) increases from Water System Improvement Bonds authorized in the 2002 election. If usage penalties or bond increases are imposed, you may pass 50% of those costs onto the tenant without filing a Rent Board petition. However, there are several requirements that must be met for you to qualify for these passthroughs. For instance, the penalty passthrough requires you to have installed several water-saving devices in the unit(s), and despite this still be assessed with penalties. More details on these passthroughs are set out in Sections 37.3(a)(5)(A) and (B) of the Rent Ordinance. You should consult an attorney before attempting either of these.

However, with the complications of the foregoing, you may be tempted to remove the laundry equipment. If you remove it, you will undoubtedly face a decrease in services petition filed by the tenant with the Rent Board. The laundry equipment and water are housing services included with their tenancy, and your removal of those services may entitle them to a reduction in rent. The amount of that reduction will be determined at a Rent Board hearing. In an extreme situation, the tenant might even claim that the removal of the equipment somehow resulted in their "constructive eviction" from a portion of the premises.

Finally, you should note that a sudden "spike" in the water bills may simply be due to a leak or defective equipment. We recommend that you send a professional plumber to check for leaks and efficiency of the equipment before resorting to any of the above.

If you have not already done so, you should post Proposition 65 warning signs at your apartment building(s) immediately. Note that merely posting a warning does not constitute an admission. The Office Of Environmental Health Hazard Assessment ("OEHAA"), the agency that implements Proposition 65, states that posting a warning sign can mean one of two things: (1) You have identified and evaluated chemicals on the property, and know that the chemicals present a significant risk to occupants and guests; or (2) You have provided a warning simply based on the belief that a chemical could be present. You have not taken any steps to determine if the chemicals are located at the property; you have simply taken a precautionary step.

The proper posting of the warnings includes three elements: size, content and location of the signs. OEHHA requires that Prop 65 warnings "must be reasonably calculated, considering the alternative methods available under the circumstances, to make the warning message available to the individual prior to exposure. The message must clearly communicate that the chemical in question is known to the state to cause cancer, or birth defects or other reproductive harm." This may sound confusing, and it is. However, the California Apartment Association has signs available to you which meet the OEHHA requirements for size and content.

As for location of the signs, you must do the most appropriate of the following: (1) Post a warning sign in the "affected area"; (2) Post warning signs at all usual points of entry; (3) Mail or deliver a warning notice to each occupant (these notices are also available from CAA); or (4) Deliver a public media announcement which targets the affected area. Clearly, the method you choose will depend on the size and physical set up of your building(s).

We recommend that you post warning signs at all points of entry, including garage or basement entrances, in all common areas, including lobbies, pools and laundry rooms, and send the warning notice to each existing tenant, along with a cover letter to your tenants to calm their fears about your posted Prop 65 warnings (a sample letter is available from CAA). Also, you must provide the warning notice to all new tenants at the time of execution of the lease, and post a sign on every employee bulletin board and administrative office, if any, in your building(s).

The first thing you must do is serve proper written notice of the rent increase. This notice must be given at least 30 days prior to the increase taking effect (The notice period is extended to 60 day's if the rent increase exceeds 10%). Assuming your tenant is under San Francisco rent control (the unit was built prior to 1979, and she is not a long-term - pre-1996- tenant in a single-family home), you are limited to very small annual rent increases. If you have not raised the rent in several years, you can add together all the allowable annual increases into one larger increase, but you will not receive the benefit of compounding that you would have had you instituted the smaller increases annually. You can find a schedule of the annual allowable increases on the San Francisco Rent Board's website or by calling them for a copy. For units not covered by the rent control limitations, raising the rent is very simple. Upon 30 days written notice, the rent can be raised by any amount, assuming it is not raised exorbitantly in retaliation against the tenant.

If you have given proper written notice as explained above, and the 30 or 60 day notice period has expired, but the tenant still refuses to pay the increase, you can serve the tenant with a 3 Day Pay or Quit notice. Do not accept payment of any amount less than the increased rent from the tenant . If you accept partial payment, most courts would find that you have waived your right to proceed with the 3 Day Notice.

Finally, before serving a 3 Day Notice, make sure the unit is in good condition, and free of any major problems. If there are outstanding habitability issues with the unit of which you have been given notice and reasonable time to repair, the tenant may defeat your 3 Day Notice in an Unlawful Detainer (eviction) action, by successfully claiming that the rental value should be reduced because of such defects.

If you have served a solid legal rent increase notice, and the unit is in good condition, you can confidently proceed with a 3 Day Notice. However, prior to serving any eviction notices, you should make sure to consult a qualified landlord-tenant attorney.

As with the large majority of buildings in San Francisco, yours contains both lead-based paint and asbestos. Absent substantial remodeling or remediation, almost all buildings built before 1978 likely have lead-based paint on some surface of the interior or exterior of the home, and most homes built prior to 1950 commonly contain asbestos.

In general, "the lessor of a building intended for the occupation of human beings must put it into a condition fit for such occupation, and repair all subsequent dilapidations thereof, which render it untenantable." Civil Code Section 1941. Specific characteristics that render a unit untenantable are listed in Civil Code Section 1941.1. However, there is no specific mention of lead paint or asbestos in this section. As a general rule, if the lead paint or asbestos make the unit unsafe, removal or repairs should be conducted. A good guideline to follow is Health and Safety Code §17920.3, which states that "a unit is deemed to be substandard under the State Housing Law and in breach of the warranty of habitability whenever a proscribed condition exists that endangers the life, health, property, safety or welfare of an occupant or any person."

Further, as with all potential dangers that may exist at any of your rental units, if you have knowledge of a dangerous condition, and fail to do anything to remove that condition, you could be held liable for any injuries resulting from that dangerous condition. Civil Code Section 1714. For example, if you know that the lead paint is cracking and flaking, but you do not make repairs, you could be liable for the child's injuries caused by the ingestion of paint chips.

In short, you are not required to remove all lead paint and asbestos that exists in the unit. Such a requirement would in many cases be prohibitively expensive. However, to ensure your tenants' health and protect yourself from potential liability, you should send a professional to inspect the unit for existing dangers presented by the lead paint and asbestos. When we say professional, we do not mean your regular handyman; we mean an inspector certified by the health department, the EPA or other equally reputable hazard control organization. The bottom line is that this expert will be the person who determines whether the lead paint and/or asbestos "endangers the life, health, property, safety or welfare of an occupant or any person," under the Health and Safety Code, and therefore whether or not it must be removed.

If after receiving the test results, it is recommended that you conduct remediation, the EPA regulations require that current tenants receive the EPA pamphlet entitled, "Protect Your Family From Lead In Your Home," or a state-approved version of this pamphlet, at least 60 days before the renovation begins. If common areas will be affected, you must distribute a notice to every rental unit in the building describing the nature and location of the renovation work and the dates work is expected to begin and end. Further, if the lead and/or asbestos constitute a health hazard, the costs for remediation cannot be passed through to the tenant if deferred maintenance by the landlord caused or contributed to the existence of the hazard. Also, the landlord must provide relocation expenses to tenants displaced during the remediation, and must complete the repairs within 30 days. Of course, under the Rent Ordinance, the tenants must be allowed back into their units under the same lease terms as when they temporarily vacated.

For future reference, federal law requires that landlords disclose the presence of lead-based paint to tenants if they "know" it exists. The "Protect Your Family" pamphlet mentioned above must be given to all prospective tenants if the unit was built prior to 1978. Both the landlord and tenant must sign an EPA-approved disclosure form to prove that the landlord told the tenants about any known lead- based paint or hazards on the premises. Property owners must keep this disclosure form as part of their records for three years from the date that the tenancy begins. If a landlord knowingly fails to make the required disclosures, they could be fined, jailed and/or be liable for trebled damages claimed by a tenant in a civil suit. There are a few minor exceptions to this requirement: (1) housing built after January 1, 1978, (2) lofts, efficiencies and studio apartments, (3) short-term vacation rentals of 100 days or less, (4) a single room rented in a residential dwelling, (5) housing designed for persons with disabilities or for seniors, unless any child less than six years old lives there or is expected to live there.

As is common in these kinds of questions in San Francisco, there is no clear-cut answer, and no specific law or statute that addresses the issue. With that caveat, the only sure recommendation is that landlords should seek to include lease terms that provide for re-keying all units if one key is lost, thereby giving notice to the tenant that such costs will be borne by them.

To protect yourself from the tenant making a claim that her payment for the total replacement is unfair or excessive, we would suggest that you do two simple things. (1) Collect a key deposit from each tenant when they sign the lease in an amount that would cover the cost of re-keying all locks. Make sure that this deposit, added to any other security deposit(s), does not exceed two months' rent. The deposit, whether or not it is earmarked as a "key deposit", can be used to "repair damages, exclusive of ordinary wear and tear, caused by the tenant or his guest(s)", i.e. repair the damage caused by the breakdown of security at the building. Civil Code §1950.5. (2) Explain to the tenant, prior to the tenancy, that the loss of even one key could result in the tenant paying for the replacement of all keys.

Although the above advisements would give the tenant warning, and hopefully cause her to be a more careful with her keys, we can see how this straightforward remedy could be muddied: (1) What about the possible high cost of re-keying a large multi-unit building, or (2) what about the tenant who simply "misplaces" her key, leaving it uncertain whether someone could identify the key as the one to your building. As a general rule, if you do not have notice of a potential breach of security, there is no duty to change the locks. By law, the tenant is "responsible for notifying the landlord" when she becomes aware of an inoperable lock at the premises (which we read to mean - a lock that doesn't keep unauthorized persons out, even if those persons have keys), and the landlord will not be liable unless she fails to fix the locks within a reasonable time after receiving notice of the problem. Civil Code §1941.3.

On a related issue, many landlords are surprised to learn that if a landlord fails to maintain the integrity of dead bolt locks on all doors and locks on windows, a tenant may bring an action for damages and injunctive relief under Civil Code §1941.3. Also, the tenant may refuse to pay rent, and can defend against an unlawful detainer action for non-payment of rent on the basis that the landlord failed to provide adequate locks. The landlord should always make sure that proper locks are in place, both to ensure security, and if that were not sufficient reason, to prevent any such defense from being asserted by a tenant in a unlawful detainer action.