Legal Corner Q & A

When Can You Pass Through?

by Various Authors

Q. A tenant of two years moved out and left the carpeting, previously in excellent condition, stained and in need of replacement. How much of the cost, if any, can I pass on to the tenant?

A. A landlord can deduct amounts for damage to the rental unit caused by the tenant or her guests/licensees. The security deposit cannot be retained to remedy ordinary wear-and-tear during the tenancy or to repair damage or defective conditions that existed prior to the tenancy.

In this case, if the unit was turned over to the tenant with a new carpet and, at the end of the two-year tenancy, the carpet was in need of replacement, a basis for charging the tenant for the entire replacement cost might exist. However, owners should note that all components of a rental unit have a shelf life. For example, a carpet is only good for a certain period of time, as well as the refrigerator, stove and oven. The lifespan of appliances, carpets and other fixtures may be dependent on the quality of the specific item, as well as the frequency of its use.

The landlord should also attempt to clean the carpet before replacing it. Modern carpet-cleaning techniques often increase the lifespan of a carpet, and the owner can deduct reasonable cleaning costs from the security deposit. In addition, if a piece of the carpet can be replaced without tearing up the entire room, the owner would be wise to pursue this course in order to avoid the argument that the tenant paid for unnecessary improvement work.

The owner also needs to be aware of two new changes to the security-deposit law. The first is the tenant’s right to a predeparture inspection. Within a reasonable time after the tenant or landlord gives notice of the termination of the tenancy, the tenant must be informed, in writing, of her right to have an initial inspection of the unit and the right to be present at this inspection. (This rule does not apply if the tenancy is terminated by way of a three-day notice.) The purpose of the inspection is to afford the tenant the right to fix any deficiencies in the unit that would allow deductions from the security deposit, provided that the tenant complies with the rental agreement. The landlord must, at the inspection, leave a written itemization of possible deductions, unless tenant furnishings hide the damage or dirt. Failure to offer this inspection may waive the owner’s right to deduct after the tenant vacates.

The second issue concerns the proper disposition of the security deposit. After the tenant vacates, the landlord has 21 calendar days to provide the tenant, by personal delivery or postage prepaid first-class mail, with a copy of an itemized statement that indicates the basis for and amount of any security deposit held, and the disposition of that part of the security deposit not being returned. In addition, any refund must be enclosed. The law was recently amended to require the landlord to provide copies of “supporting documents” showing charges incurred and deducted by the landlord for repairing and/or cleaning the unit. The landlord can now even charge for her own time cleaning and repairing at a reasonable rate for those services. The landlord must then provide a statement, describing the work performed and the rate charged. When someone else does the work, a copy of the invoice must be submitted to the tenant, and the invoicing must contain the name and address of the service provider. This itemization requirement applies unless the combined deductions for repair and cleaning do not exceed $125, or the tenant has waived her right to receive documentation in a signed writing.
�David Wasserman

Q. My tenants have refused to pay a rent increase. How can I get them to do so?

A. First you must serve a 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 days if the rent increase exceeds 10%.) Assuming the tenants are under San Francisco rent control (the unit was built prior to 1979 and they are not long-term, pre-1996 tenants 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 all the allowable annual increases together into one larger increase, but you will not receive the benefit of compounding, which you would have had if you had instituted the smaller increases annually. You can find a schedule of the annual allowable increases on page 23. 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 Three-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 three-day notice.

Last, before serving a three-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 three-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 three-day notice. However, prior to serving any eviction notices, you should make sure to consult a qualified landlord-tenant attorney.
�Sally Morin & James M. Millar

Q. The termination clause of the tenancy agreement states that after the expiration of the original terms of the agreement, “owner may terminate the tenancy, in accordance with applicable law.” What conditions have to exist for me to be able to enforce this provision?

A. We assume that the unit is a rental unit covered by the eviction provisions of the San Francisco Rent Ordinance. In San Francisco, even when a fixed-term lease expires, to evict the tenant the owner must have one of the fourteen grounds for eviction. One little-used ground, Section 37.9(a)(5), allows an owner to recover possession when the tenant (who had an oral or written agreement with the landlord, which has terminated) has refused after written request or demand by the landlord to execute a written extension or renewal thereof for a further term of like duration and under such terms that are materially the same as in the previous agreement. If a one-year lease expired, the owner could make a written demand that the tenant sign a one�year extension. If the tenant declines, the owner would have a ground for eviction.
Of course, if the unit is also covered by the rent provisions of the Rent Ordinance (not subject to the state Costa-Hawkins law), rent cannot be raised more than the allowable annual increase and must be done with proper notice.

There may also be a lease provision that affects the rights of the parties. The second paragraph of the PPMA Residential Tenancy Agreement provides that after expiration of the term lease, the term of the rental becomes month-to-month on the same terms and conditions as the original lease, except for changes made pursuant to law. Any owner desiring to utilize Section 37.9(a)5) should consult experienced counsel before expiration of the term to make sure he is in compliance with all requirements and does not waive any “rights.” If the rental unit were outside San Francisco or other rent/eviction control jurisdictions, state law would apply. State law provides that, at the end of a fixed-term lease, the tenancy expires automatically, with no additional legal notice required to terminate the tenancy. If, outside San Francisco, the owner accepts the next month’s rent, then the parties have created a month-to-month tenancy, which, after the first day of the next month, can be terminated using a 30-day notice in all situations.
�Lawrence M. Scancarelli & Jerod Hendrickson

The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of SFAA or the San Francisco 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, 415-567-8230. Sally Morin and James M. Millar can be reached at 415-981-8100. Lawrence M. Scancarelli and Jerod Hendrickson can be reached 415-398-1644. Copyright � 2006 by the San Francisco Apartment Magazine. All rights reserved.