San Francisco Apartment Association

Legal Corner Q & A

Flood and Leak Liabilities

Flood and Leak Liabilities

Q. A tenant in my upper flat recently ran water in the sink for over an hour, flooding the lower flat. The tenant has no renter’s insurance. Can I charge him my $1,000 insurance deductible?

A. 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)” (California Civil Code §1950.5). This would include payment of your $1,000 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 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 Residential Tenancy Agreement, 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) of the money the carrier spent on the repairs from the responsible tenant. The tenant will therefore be facing collection efforts and possibly a lawsuit for this large sum of money. Chances are that he will likely ignore any separate claim you bring for the $1,000 deductible. Note: you cannot force tenants to carry renter’s insurance, but you should make sure to place a provision in your leases warning tenants that they will be liable for any injuries or damages they cause. The PPMA Lease contains such a provision.
–Sally Morin & James M. Millar

Q. A leak caused the ceiling to fall in on a new tenant’s bathroom, and I won’t be able to fix it for a few weeks. He’s claiming that I need to put him up in a hotel until the repairs are finished because of the “implied warranty of habitability.” Is he right?

A. Nowhere is it written that a landlord must put a tenant up in a hotel if there is a problem with the apartment, so he’s not right on that score. On the other hand, it is true that in every residential tenancy agreement, there is an implied warranty of habitability. In the 1974 landmark case, Green v. Superior Court, the California Supreme Court held that the implied warranty of habitability does not require that a landlord ensure that leased premises must be in perfect, aesthetically pleasing condition, but it does mean that bare living requirements must be maintained. In most cases, substantial compliance with building and housing-code standards that materially affect health and safety would suffice to meet the landlord’s obligation. The San Francisco Housing Code requires that a dwelling unit must have a bathroom that is maintained in a safe and sanitary condition and free from any accumulation of debris, as well as well-maintained walls and ceilings in every room. Clearly, a collapsed ceiling does not comport with these requirements. In addition, under California Civil Code §1941.1, a dwelling unit is uninhabitable if it lacks plumbing facilities that conform to applicable law, is not maintained in good order (implicitly, the tenant must be able to use it) and/or has an accumulation of debris.

If the damage to the ceiling has rendered the bathroom substantially unusable, the unit will not be habitable until the repairs are made. You haven’t made it clear why you won’t be able make them for a few weeks. It behooves you to do the work as soon as possible, and if that means using a new contractor or paying a higher price, so be it. The tenant’s remedy, of course, would be to withhold rent. (A tenant could also sue for damages for breach of the warranty of habitability in an extreme case, but this is not that kind of situation.)

As a practical matter, the tenant is certainly not getting the benefit of his rent. The practical solution, unless you want to lodge him at The Palace, is to forgive some, or even all, of the rent until the bathroom is repaired and let the tenant use the savings to find and pay for his own alternate accommodations. There is no precise formula to use in determining the amount to forgive, but a little generosity on your part will go a long way, not only to maintain good relations with a new tenant but also to blunt any action he might bring against you at the Rent Board or elsewhere.
–Saul M. Ferster

Q. I recently purchased a three-unit building through a foreclosure. Unfortunately, a relative of the former owner is living in one of the units and has failed to pay his rent. He claims he can live there, protected by the rent laws. Is that true?

A. Yes, it may be true, but there are several issues raised by this situation. In 1985, the California Court of Appeal ruled, in a case entitled Gross v. Superior Court, that a tenant could not be evicted from a building under rent control by an owner who purchased the building at a foreclosure sale when there was no separate just cause for eviction. In other words, the foreclosure was not a just cause for eviction, so unless the new owner had a lawful just cause like nonpayment of rent or owner move-in, the tenant could remain in possession. The court noted that San Francisco’s rent law does not list, as a ground for eviction, a change of ownership pursuant to either a judicial foreclosure proceeding or a trustee’s sale. Twenty years later, the rent law still does not allow a new owner, who purchased a property through a foreclosure, to evict the tenant unless there is one (or more) of the fourteen just-cause reasons for eviction.

So in this case, the new owner needs to consider the landlord-tenant relationship that existed between the tenant-relative and the prior owner. If there was a written or oral rental agreement that required this tenant to pay rent, then he may be in breach of the lease, thereby allowing an eviction action to be commenced for the just cause of nonpayment of rent. Likewise, if the new ownership satisfies all of the requirements to recover this unit for owner- or relative-occupancy, then those proceedings could also be initiated. And if the new landlord wants to remove this entire building from rental use, an Ellis-Act eviction could be used.

But what if there is no just cause for eviction and this tenant wants to stay, claiming that his relative allowed him to live in the unit for free (or for some ridiculously low rent)? The rent law has a remedy: the new landlord may file a “special circumstances” petition with the San Francisco Rent Board. Under Rent Board Rules and Regulations Section 6.11, a one-time rent increase may be allowed if, because of a special relationship between the landlord and tenant, the initial rent on a unit was waived or set very low. At the Rent Board hearing, the new owner must present evidence of what comparable units rented for at the time the tenant moved in so as to guide the administrative law judge in setting a fair rental amount.

Some have argued that if a person is living for free in a unit, presumably because of a special relationship with the prior or current owner, then there is no landlord-tenant relationship, and the occupant is not subject to protection under the rent law. I disagree with that analysis. A “tenant” is broadly defined as “[a] person entitled by written or oral agreement, sub-tenancy approved by the landlord, or by sufferance, to occupy a residential dwelling to the exclusion of others.” There is no requirement that the person is obligated to pay rent. Therefore, when acquiring a building, either through foreclosure or a normal purchase, assume that the tenants in occupancy—even if friends or relatives of the prior owner—have full tenancy rights. Do not attempt to evict them or to raise their rents unless you do so in accordance with the rent laws.
–David Wasserman

Q. My tenant is complaining that the windows in her apartment don’t keep heat well and that they should be replaced. Her apartment has a heating unit in the hallway but no central heat. Do I have a legal obligation to replace the windows?

A. You may have a legal obligation to repair or replace the windows.

A landlord is obligated to maintain the dwelling unit in a safe and habitable condition. Under Civil Code §1941.1 (a) you must provide windows that provide weather protection from the cold and elements. Under 1941.1 (d), the heating system must conform to applicable law at the time of installation, and it must be maintained in good working order. You are under no obligation to install central heating, but must make sure that the existing heating system functions properly.

If the unit’s windows are in bad repair and let in an inordinate amount of cold air, then you would be under an obligation to repair or replace the windows to correct the problem. Whether the defect is substantial depends on how bad the problem is. After proper notice to the tenant, you should inspect the unit and windows with a qualified tradesperson.

San Francisco’s Housing Code requires that, if the owner controls the heat source (a central boiler, for example), the owner must provide 13 hours of heat at a minimum of 68 degrees from 5 a.m. to 11 a.m. and also from 3 p.m. to 10 p.m. each day in all habitable rooms (not including bathrooms or halls). If the tenant controls the heat source (a space heater, for example), then the appliance must be capable of maintaining a temperature of at least 68 degrees in all habitable rooms.

Substantially defective windows and/or an inadequate heating system could provide your tenant with a warranty-of-habitability defense to a nonpayment-of-rent eviction action. Further, your tenant could file a reduction in housing services petition at the San Francisco Rent Board. Finally, the San Francisco Department of Building Inspection could cite the building for a violation.
–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. Sally Morin and James M. Millar can be reached at 415-981-8100. Saul M. Ferster can be reached at 415-863-2678. David Wasserman is with Wasserman-Stern, 415-567-9600. Lawrence M. Scancarelli and Jerod Hendrickson can be reached at 415-398-1644. Copyright © 2006 by the San Francisco Apartment Magazine. All rights reserved.