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So many times a California landlord will call my office seeking to finally evict a non-paying tenant only to find out that their generosity may in fact have come back to bite them. California landlords need to respect the fact that being a landlord is a business. You cannot treat your property, or your tenants, with empathy. If a tenant is one day late with the rent, you need to properly serve a three day notice.
Tenants rights in California tend to be more generous than in many other states and this can make the eviction process more difficult to endure. If you have ever owned a rental property, chances are you have had to deal with late rent payments, and if you are a small mom and pop landlord in California you don't employ a management company (nor should you) to collect your rents. So do you immediately post a 3 Day Notice to Pay Rent or Quit? Do you call your tenant to inquire about their situation? Do you wait a week, month, or more hoping your tenants will eventually catch up? Do you offer your tenants a payment plan? While every landlord has his or her own approach, my 20 years of experience tells me California landlords need to start treating their rental more like a business with standard policies and protocols.
1. Screening Your Applicants and Tenants with Bad or No Credit.
Every California tenancy should begin with the screening process. A California landlord may charge a non-refundable screening/application/credit fee equal to the actual out of pocket cost, not to exceed $30 per applicant. Every California landlord, whether they are renting their home, an apartment, or even just a room in their house should have a prospective tenant (even if it is a friend): (1) provide a picture ID and drivers' license and (2) fill out an application which asks for references, prior history of unlawful detainers (evictions), prior rental history, present work situation, and average bank balance. Once in hand, the landlord should actually check the prospective tenant's references, verify the person they are actually calling is a landlord and/or employer (not the tenant's friend), perform a check of the local and surrounding counties unlawful detainer (eviction) database, and if applicable check the prospective tenant's credit. It is also a good idea to perform a search on the internet....you never know what you may learn. If a tenant is coming with bad credit, or a prior eviction on his or her record, a California landlord may require the prospective tenant under a written lease agreement to prepay six months' rent or more. See, California Code of Civil Procedure § 1950.6. A California landlord may also require a tenant with bad credit, or an eviction, to have a co-signer guarantee the tenant's monetary obligations under the lease. See California Civil Code § 2819
2. Oral Tenancies or A Written Lease.
If there is no written lease agreement, then California's default rules apply. A tenancy is automatically established as soon as the landlord allows an individual to move in and accepts rent. The term of the rental agreement is presumed to be month to month; if the term is different, it must be expressly specified in your lease agreement (California Civil Code § 1943). Absent an agreement to the contrary, rent is presumed due at the end of the term, not the beginning. (California Civil Code § 1947). If the date rent is due falls on a holiday, or weekend, the tenant has until midnight on the following business day to remit payment of the rent. (California Civil Code § 12a, 12b)
In most (but not all instances) a written lease dated and signed by all parties is recommended for all rentals, even month to month tenancies and even between roommates. Roommate situations should set forth all of the house rules (e.g. noise, guests, etc..) and terms for the payment of the rent and utilities. For the typical rental situation, the lease should at the very least set forth who is going to live in the rental unit, describe the premises to be rented, set forth the amount of the monthly rent and the date it which to be paid, NOT provide for late fees or a grace period, list additional provisions such as rules (no pet clause, no subletting clause, no smoking, etc.), provide only for a limited attorneys fee provision, an arbitration clause that is limited to personal injury claims, etc...
That said, I caution my clients (both tenants and landlords) to be wary of form lease agreements available from friends and online. Why? This is not self-serving. I have seen some real disasters this year! One lease I had to contend with prevented the landlord from filing for eviction when his tenant stopped paying the rent; in that case the landlord got his lease off the internet and it contained a mandatory arbitration clause for all claims including eviction (a Petition for arbitration will often cost 1000s of dollars and will take the Los Angeles Courts at least 6 months to hear). In another case, my client used a form lease he got from a neighbor/friend and that lease required the landlord to give the tenant 30 days notice to pay the rent, as opposed to just a 3 day notice. And finally, in one last case, my client improperly filed out a relatively good form lease and in so doing the tenant was allowed by law to move in up to 5 additional occupants into the rental unit without the landlord's consent.
In addition to the above disasters, unsophisticated landlords need to be made aware that state law and local rent control ordinances not only require some lease provisions, but also prohibit other lease provisions, many of which are commonly found in form leases. When a lease contains such an invalid provision the courts will not enforce it. See California Civil Code § 1953
Now, should you offer a month-to-month lease, or a lease for a term? That discussion goes well beyond the scope of this article and often turns on whether the property you are renting is under rent control. That said, all landlords should consider the fact that the prospective tenant they are about to rent to may turn out to be bad news.
CAUTION: Do not provide a grace period for late rent in your lease. If the rent is due on the 1st of each month, it is due on or before the 1st of each month. If you allow for a grace period, you will not be able to serve a 3 Day Notice to Pay Rent or Quit until the expiration of the grace period.
CAUTION : While late fees may sound like a good idea, most seasoned landlords have come to realize that they are very difficult to get, and if you have a property in a rent controlled jurisdiction, it may invalidate a Three Day Notice to Pay Rent or Quit.
3. Rent.The amount of rent charged is typically up to the landlord, but in cities with rent control provisions there may be limits on not only what the landlord can initially charge a new tenant, but also on any rent increases. For example, if a landlord seeks to evict a Los Angeles Rent Control tenant under a declaration to intent to move in, and a few years later the landlord decides to move out and re-rent that unit, the landlord may be required to reoffer that unit at the previous rental rate paid by the formerly evicted rent controlled tenant.
Many Los Angeles, West Hollywood, Beverly Hills and Santa Monica landlords MUST register their rental units with the local housing department. If the landlord fails to register the unit and/or fails to properly serve his/her tenant with a copy of the Certificate of Registration, the Landlord may be precluded from serving a 3 Day Notice and filing an eviction action.
5. Rent Checks.
Make copies of your tenant's rent checks (money orders) and keep them in a file. Why? You may need this information not only for future collection efforts, but also to see what if anything was written on them. If you have been a generous landlord, the tenant may claim that you are asking for more rent than is actually owed. If you have copies of the tenant's checks you will know. Additionally, we typically advise landlords to apply any rent to the furthest back rent owed. But there is a caveat. If a tenant writes in the memo line of the check, or money order, that the rent being paid is for a specified month, California law requires the landlord to adjust his accounting method and apply that payment to that particular month. Just take me at my word and keep a copy of your tenant's rental payments.
CAUTION: Do not offer to pick up the rent from your tenants. Make sure they are required to mail it to you and make doubly sure that you provide your tenants with a mailing address other than a PO Box. In California, if you use a PO Box the Courts will presume that anything the tenant said was mailed to you was in fact mailed to you. So, if you do not want your tenants to have your personal home address, or your work address (both very reasonable), get a private mailbox from a company that will sign for letters.
6. Non-Payment of Rent.
If your tenant fails to pay and you want to evict the tenant, you must start with a proper Three Day Notice to Pay Rent or Quit and proof that it was properly served on the tenant. Most of the free forms available online, believe it or not, will not hold up in Court if the tenant actually challenges it so we strongly suggest you acquire one from an unlawful detainer attorney. If the tenant does not remit payment of the rent within the three day time period (excluding weekends), then the landlord may immediately file an unlawful detainer (eviction) action which requires the preparation of Civil Case Cover Sheets, a Summons, a Complaint with all the appropriate attachments, and a Prejudgment Claim of Right to Possession. The court filing fee is now $245/$270 depending on whether it is fax filed and the service of process fee is typically between $100 and $150.
Now all too often I am seeing California landlords come into my office complaining that their tenant hasn't paid rent for 3 months, 6 months, and sometimes over a year. CAUTION. If you tenant owes more than 1 years' rent you may be precluded from bringing a typical eviction case, and instead be forced to file a superior court action which can be ultra expensive and time consuming.
I am also seeing various situations where the landlord has extended a payment plan to his or her tenants. Again CAUTION is advised -- if you enter into a payment plan, you may be precluded from bringing an eviction proceeding and forced to retrieve your funds in either a Small Claims Court or through a regular civil proceeding in Superior Court which can take years.
7. Serving Notices on Your Tenants.
No you cannot serve a notice by email. Whether you are seeking to enter the rental property to make a quick repair (24 Hour Notice of Entry), or trying to collect past due rent (Three Day Notice to Pay Rent or Quit), or trying to force your tenant to follow the lease terms (Three Day Notice to Cure or Quit), simply seeking to raise the rent up to 10% (30-Day Notice of Change in Terms Of Tenancy), or terminating the lease (30 or 60 Day Notice to Quit), you must properly prepare the Notice to conform with California law and in many cases the local rules of your jurisdiction and you must properly serve your tenants with the Notice. There are only three permissible methods of service in California:
In all cases, it is imperative that you write down the date and time and to whom it was served. If you are posting a copy of the notice, it is prudent to take a photograph showing it posted on the door. If you are mailing a copy of the Notice, it is likewise prudent to make a trip to the local Post Office, stand in line, and get a receipt for the stamp you are placing on the envelope. The photo and receipt is evidence you can later show a judge that you did in fact post the notice and mail a copy (which of course the tenant will deny).
8. Rent Increases.
This is at the discretion of the landlord so long as the property is not under rent control. However, if your property is under rent control, then it is ultra important for the landlord to in fact raise the rent the allowable rate each year. If you are raising the rent less than 10 percent, then you merely need to serve a 30 Day Notice of a Change In Terms of Tenancy. At first, the landlord should attempt to personally serve the tenant with the Notice. If unable to meet with the tenant in person, the landlord should post a copy of the Notice on the front door of the rental. Either way, a duplicate copy should be mailed Certified to the tenant and if possible with another duplicate copy sent via email, stating, "enclosed is a copy of the 30 Day Notice of a Rent Increase that was hand delivered/posted on the door for your convenience."
9. Security Deposits.
First, get a security deposit. Not First Month's Rent, Last Month's Rent, and a Security, but First Month's Rent and preferably a two month Security Deposit. No $200-$500 will typically NOT cover it. A security deposit needs to cover not only damage that the tenant may cause to the rental unit, but it may also be needed to cover lost rent pending an eviction which in Los Angeles County takes an average of 30 to 60 days. At the very least the Security Deposit should never be less than 1 month's rent.
CAUTION: That being said, landlords should NEVER allow their tenants to use the security deposit for payment of rent.
10. Pitfalls is Accepting Late Fees.
Under most circumstances a late fee is allowed so long as: (1) it is set forth in a written lease agreement; and (2) it is reasonable. A late fee of up to 5% is typically held to be valid if that amount reasonably reflects the landlord's out of pocket loss due to the late payment and the cost of processing the late payment. If the late fee is an arbitrary number and/or designed to deter the tenant from making a late payment, a court may find it to be an unlawful liquidated damage provision.
CAUTION: That said, a late fee should never be included in a 3 Day Notice to Pay Rent or Quit. Including a late fee will invalidate the Notice.
If the rental unit is under rent control, the local rent control ordinance may prohibit late fees, and/or the collection of late fees. In such an event, where a tenant has paid a late fee, and is later served with a 3 Day Notice that did not include a request for the payment of a late fee, the Notice may still be deemed invalid as asking for more rent than was due if the amount requested did not deduct the prior late fees previously paid by the tenant.
11. Ending a Fixed Term Lease.
if the tenant remains in possession at the end of a fixed term lease (eg 1 year), the lease can either end, or go month-to-month depending on how the lease is written. In some cases, the tenancy ends unless the tenant pays rent and the landlord accepts it. In such a case the tenancy continues on a month to month basis, with all the terms of the original lease intact. Civil Code § 1945. If, on the other hand, the lease specifically states that the tenancy will end, and the landlord wants it to end, the landlord is entitled to possession at the conclusion of the term and may bring eviction proceedings if the tenant fails to vacate. Code of Civil Procedure §1161. There is one exception. If the unit being rented is under rent control, then a landlord may NOT be allowed to end a fixed term lease-- either the lease will renew for the same term (e.g. 1 year) or the tenant will become a month to month tenant still subject to the terms of the original lease.
© 2013 Melissa C. Marsh. All Rights Reserved.
Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.
Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.