Legal Corner Q&A

by Various Authors

Q. My mother lives in one of the units in my building. Recently, she has needed more help, and I would like to vacate one of the units so that I can stay over on nights when she needs me. I don’t plan to make the unit my primary residence; I just want to sleep over occasionally. How can I get my unit back for this purpose?

A. This question highlights one of biggest shortcomings of the rent law. While rent control was enacted almost 30 years ago to safeguard safe, decent and affordable housing, it often creates glaring injustices for honest rental housing providers. In this case, the owner, who legitimately needs a unit for part-time use in order to care for his mother, cannot compel any tenant in the building to vacate.

The owner move-in (OMI) law mandates that an owner may recover possession of a rental unit in order to owner occupy it if that unit becomes the primary residence for a period of at least 36 consecutive months after the tenant vacates.

Specifically, the owner can only have one principal place of residence in the world, and there are a series of tests to determine whether or not the unit is being used as such. The owner’s driver’s license, vehicle registration and tax returns must reflect that the unit is the owner’s home. Most importantly, the unit must be the place of return absent excused departures for work, education, military service, hospitalization or the like.

The penalties for violating this law are severe: the owner can be sued by the tenant and the city in civil court, and the district attorney’s office may also institute criminal proceedings. Thus, a landlord should never even consider doing an OMI unless the unit will be used as a principal place of residence.

In this instance, if there are no available units in the building, the owner has two choices. First, the building’s rental units could be withdrawn under the Ellis Act. This state law allows a landlord to take all of the units off of the rental market for a five-year period; unfortunately, invoking the Ellis Act requires every tenant to vacate, which often leaves dwellings empty and unused. The second option is to approach the tenants with an offer to be “bought out” of their tenancy. While tenants cannot waive their rent control rights, tenants who voluntarily elect to leave for a sum of money may do so, and if there is no coercion or underhanded tactics, most landlord and tenant legal professionals believe that a mutually desired buy-out is legitimate and cannot become the basis of a lawsuit once the tenant leaves. However, because buy-outs are strictly voluntary and rescindable until the tenant actually vacates, there is absolutely no certainty that a buy-out can occur.

In sum, this owner faces a difficult dilemma, and should consult a qualified attorney before initiating an OMI, Ellis Act, or buy-out negotiations. The altruistic desire to care for a parent is not a ground to terminate someone’s tenancy, so the options discussed here provide, at this time, the only potential of using a unit as a part-time abode.

-David Wasserman

Q. I inherited a single-family home with a long-time tenant who has no lease agreement. I recently notified the tenant of my intention to sell the property. Now I’m trying to get realtors in to see the place and hold open houses, but the tenant will not even return my calls about setting up these appointments. What should I do?

A. It is definitely best to attempt to work things out cooperatively with the tenant, as you have done. In the ideal situation, you would hire an experienced real-estate broker who knows the law about the right of entry and can effectively negotiate a mutually acceptable schedule directly with the tenant. Any such agreement should be confirmed in writing.
But, since the tenant has been unresponsive, you should start giving notices in writing. You have the lawful right under California Civil Code section 1954, to enter the home to show it to your prospective realtors, prospective purchasers, contractors, workers, appraisers and lenders. But you must first give reasonable advance written notice of your purpose in entering and the date and approximate time. Twenty-four hours advance notice is considered reasonable if you have the notice delivered by hand. If delivered by hand, you may leave the notice with anyone of suitable age and discretion, put it under the door, on the door or near the door in a place where it is likely to be seen. If you mail it, you must do so six days in advance.

Unless the tenant agrees otherwise, you may only enter the home during “normal business hours.” The meaning of “normal business hours” is often disputed, but the tenant could not reasonably dispute your entry during the hours from 8 a.m. to 5 p.m., Monday through Friday.

Since you intend to show the unit to prospective purchasers, you should notify the tenant in writing that the house is for sale and that you or your agent intends to contact the tenant orally to give notice. In that event, you or your agent may give oral notice 24 hours in advance, and then leave written evidence of the visit within the home. The right to enter based on oral notice continues for 120 days after the above-described initial written notice.

The law states that you may not abuse the right of entry or use it to harass the tenant. The tenant might have a legitimate complaint if you attempt to enter very frequently or without giving sufficient advance notice. If the tenant remains uncommunicative or refuses to allow entry after you have given lawful notice, then you may force the issue through legal means. I have found it effective to serve a written demand to provide access, informing the tenant that a continued refusal to allow access would constitute grounds for eviction under San Francisco Administrative Code section 37.9(a)(6), which provides that you may lawfully terminate the tenancy if the tenant has, after written notice to cease, refused the landlord access to the rental unit as required by state or local law.

-Michael C. Hall

Q. I am a landlord with two commercial units on the ground floor and two residential tenants upstairs. Recently, a commercial tenant told me that he is feeling harassed by the upstairs tenants (they’ve called the police and the San Francisco Department of Building Inspection to say they suspected electrical code violations). The owner has asked me for help. What should I do?

A. A conflict between tenants in the same building is always a precarious situation for the landlord, as the landlord has a duty to ensure the quiet enjoyment of all tenants. It is therefore important, in an intertenant conflict, to gather as much information as possible, from all tenants concerned, before “taking anyone’s side,” or, for that matter, before deciding whether the situation warrants any affirmative action by the landlord at all. While landlords should always address legitimate concerns/complaints from their tenants, landlords should also avoid getting sucked into becoming “conduct police” for their tenants—that is neither an appropriate nor a desirable role for the landlord.

Another factor for the landlord to keep in mind is that residential tenants have more protections under the law than commercial tenants. It is only a slight exaggeration to say that a landlord has no duty toward a commercial tenant that is not explicitly stated in the lease. Residential tenants, on the other hand, always have an implied warranty of habitability in their lease, whether written or oral, and in San Francisco the added protection of the San Francisco Rent Ordinance and the availability of the San Francisco Rent Board. This is not to say that the landlord should automatically side with a residential tenant, just that the landlord should be mindful of the greater possibility of liability should a residential tenant’s rights be deemed to have been violated due to an intertenant conflict.

With the above in mind, the landlord in the situation here should start by getting as much specific information from the commercial tenant as possible. Are the residential tenants really just harassing the commercial tenant, or do they have valid concerns? If it appears that the residential tenants may have valid concerns/complaints, the commercial tenants should be apprised of this and encouraged to try to resolve the issues directly with the residential tenants. It is also a good idea to confirm this in a letter to the residential tenants.

If it appears that the residential tenants’ complaints may be unfounded, or at least that the conduct of the commercial tenant is not unlawful or inappropriate (remember, it is not always that one party is “right” and the other is “wrong”; oftentimes, both sides have legitimate, but conflicting, concerns), the landlord should contact the residential tenants to get their side of the story. After talking to both sides, and hopefully getting the full picture, the landlord can determine whether any affirmative action is required, such as a letter to one or both sets of tenants. However, the tenants should always be encouraged to communicate directly with each other.

-Fredrik Emilson

Q. A tenant recently signed a lease and paid first and last month’s rent. We gave him the keys. Two weeks later, he told us that he cannot afford the rent and that he wants his money back. Are we obligated to return all or part of his payment?

A. In order to have a binding contract, the document must be signed and delivered to the other party. Your question doesn’t indicate whether or not you executed the lease and gave a copy to the tenant. Nevertheless, even without having done so, if you began performance under the contract, it is binding on both parties. The tenant received the keys, and therefore you have a completed contract for rental of your property. Whether the tenant moved in or not, he has a contractual right to the property for the lease term, and you have a contractual right to receive the rent. The tenant is now asking to break the contract.

Legally, as the wronged party, you have an obligation to mitigate the damages that you suffer as a result of the breach. This means that you must make all reasonable attempts to rerent the property to someone else at a rent you can reasonably get so as to prevent any loss, or at least achieve a minimal loss, as a result of the tenant’s failure to carry out his contractual responsibility. You are holding two months’ rent, first and last. Until you make an effort to rerent the property, it is impossible to know how much of that you may retain, because we don’t know when the property will be rented or for what amount. If, after rerental and costs of rerental, including commissions, advertising, etc., you have a net loss from the combined transactions, you may deduct that net loss from the deposits you hold and return any balance to the departing tenant. Since the tenant technically took possession by receipt of the keys, even though he never moved in, you would need to account for any retention of deposit made within 21 days after the tenant surrenders the keys to you. You should do this so as not to risk waiver of your right to retain it.

You indicate that when the tenant moved in, he paid a first and last month’s rent. You should not collect a “last month’s rent,” but rather a “security deposit.” You may use a security deposit for any deficiency that occurs during the lease term, and the tenant is still obligated to pay the last month’s rent when that last month rolls around. There is no benefit to holding a last month’s rent, which may limit your right to use of the funds for rent only. By labeling the whole deposit collected a “security deposit,” you designate it as a general guarantee against tenant obligations, such as repair of damage to the unit, as well as unpaid rent.

- Saul M. Ferster

 

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The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of SFAA or SF 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 and can be reached at 415-567-9600. Michael C. Hall can be reached at 415-512-9865. Fredrik Emilson is a principal with Cornerstone Law Group and can be reached at 415-357-2099. Saul M. Ferster can be reached at 415-863-2678. Copyright © 2008 SF Apartment Magazine. All rights reserved.