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Landlord Law: part 2 - Tough Calls
by Saul M. Ferster
The first part of this article, which looked at basic landlord-tenant issues, was published in the November 2009 edition of this magazine. The second part is intended to touch on just a few more of the typical issues confronted by the San Francisco landlord. In particular, this article will discuss some landlord-tenant issues that are less cut and dried and require more thought and decisonmaking on the part of the landlord.
Security Deposits
The San Francisco Administrative Code requires landlords to pay interest annually on deposits held on all residential property for tenancies of one year or longer, except where the rent is assisted or subsidized by a governmental agency. The interest must be paid on the annual anniversary of the date the landlord first received the deposit. (If the deposit was paid before September 1, 1983, the annual due date is September 1.) If the tenant vacates before one full year of occupancy, no interest is due. Where a tenant vacates after one year but before the next annual due date, the interest payment must be pro-rated using the rate in effect on the date the tenant vacates. The interest rates can be obtained from the San Francisco Rent Board, and they are published each month in SF Apartment Magazine.
Generally, the tenant is owed simple interest at the rate in effect when the security deposit interest payment is due. Special rules apply if the tenant’s annual due date fell between August 4, 2002, and June 14, 2003. For units that are covered by the Rent Ordinance, the landlord may deduct 50% of the annual Rent Board fee from the interest payment. Frequently, this is the only realistic way to get the tenant’s portion of the Rent Board fee paid.
Although there is no penalty for late payment of the security deposit interest, and many landlords wrongly let the interest accumulate until the tenant vacates, this is not a good practice and can cause complications when disputes arise with a tenant and the tenant wants to assert that the landlord is someone who disregards tenants’ rights. (Much of the foregoing information on security deposit interest was obtained directly from the website of the San Francisco Residential Rent Stabilization and Arbitration Board, which is an excellent source of information: www.sfgov.org/site/rentboard_index.asp.)
Some landlords take a “last month’s rent” and a “security deposit” at the start of tenancy. There is absolutely no reason why you should ever take a last month’s rent. By so doing, you may limit your use of the deposit to that purpose only, and you create questions about whether the tenant need pay you the difference between the last month’s rent already taken and the current rent. No matter what you call the deposit, under California law, the total amount may not exceed two months rent for an unfurnished apartment and three months for a furnished apartment, and will accrue interest under the San Francisco Administrative Code.
So, why not call the whole thing a security deposit when you rent the unit? That way, the tenant will still have to pay you a last month’s rent when that first day of his last month arrives, and you will have the entire deposit available when he vacates to eliminate the purple and green paint he’s slathered all over your walls without permission.
Keys and Locks
As surprising as it may seem, unless your lease or rental agreement has language that prohibits the tenant from changing the lock or refusing to provide you with a key, you have no ability to force the tenant to provide one. Most leases have provisions prohibiting the tenant from altering or modifying the premises without the landlord’s prior consent. Certainly, changing the locks is an alteration to the premises and the landlord would be entitled to give a three-day notice to cure or quit if the tenant did not reinstall the original lock, or at least provide you with a key. The San Francisco Apartment Association lease specifically provides that the tenant may not change the locks without prior written authorization and, if the lock is changed, a key must be provided to the landlord. Most often, the tenant will see the clear violation involved and provide the key. Again, if the key is not provided, the landlord would be entitled to serve a three-day notice to cure or quit.
Rent Reductions
In this down market, many tenants have been requesting rent reductions. If this happens to you, first, you must decide whether or not you want to give the rent reduction. If you do not, the answer is simply to say no. Nothing compels you at any time to give a rent reduction, other than the possibility of losing the tenant. On the other hand, if you wish to grant a rent reduction, be aware that in many cases, if not most, the rent reduction will become permanent, no matter what agreement you and the tenant may reach to restore the rent to its prior level in the future.
There is one exception. The Rent Board has recognized a temporary rent reduction based upon tenant hardship, such as loss of employment or burdensome medical bills. In such cases, the landlord can reduce the tenant’s rent for a limited period of time pursuant to a written agreement and will be able to increase the rent back to its former level by giving the appropriate 30- or 60-day notice of rent increase at a later date. However, the reason for the decrease must be entirely a burden sustained by the tenant and not simply market conditions. If the tenant’s request for a rent reduction is based on the fact that rents have decreased, and the tenant is suggesting that without the rent reduction the tenant will move to a different place for less rent or a better unit for the same rent, any decrease you give will be permanent.
Tenant-Tenant Conflicts
As far as I am concerned, the landlord’s worst nightmare is being placed in the middle of a squabble between two tenants. It is not unusual for each of the tenants to demand that the landlord take some action with regard to the other, and to threaten the landlord with liability for breach of the covenant of quiet enjoyment. The landlord frequently has no personal knowledge of the merits of either tenant’s case (although there may be suspicions).
In such situations, I recommend sending the tenants to some sort of dispute resolution service, such as the Community Boards. The landlord should write to each tenant about complaints received from the other and urge remedial action. However, both tenants must be advised that the landlord has no personal basis for knowledge of the merits of a complaint, and therefore can take no action. The San Francisco Apartment Association lease specifically states that the landlord cannot be held accountable in these situations for failing to take action against any tenant because the landlord is simply not in the position to know whether such action should be taken.
Occasionally, where you have one tenant in opposition to many others, such as several units complaining about music coming from one unit, you are in a better position because of independent corroboration of the complaints. In such cases, you can serve a Three-Day Notice to Cure or Quit to the offending tenant, after taking less aggressive steps to alleviate the problem by letters or emails. In those cases, an eviction is possible so long as the complaining tenants are willing to appear in court and testify, if necessary.
Finally, occasionally a landlord is requested by two tenants who are roommates to intervene in a dispute between them. This is virtually impossible, and I would suggest staying out of those disputes completely. A landlord cannot evict one tenant from a unit and leave another in place, and no attempt to do so should ever be made. The California laws of unlawful detainer simply provide for recovery of a unit and not the eviction of a particular tenant from it.
Mold Complaints
Mold complaints should be responded to quickly and aggressively. Most often, insurance policies do not cover claims against the landlord based on mold. Because it goes to a habitability condition, the presence of mold is something the landlord needs to resolve, whether it was the tenant or the landlord who was at fault in the creation of the problem initially.
Certainly, if the tenant is engaging in practices that are inimical to mold prevention or remediation, the landlord should give the tenant, in writing, specific instructions on how to prevent such a problem. This San Francisco Apartment Association lease has a mold addendum that does just that. Once the mold problem occurs, the landlord should check with the Apartment Association or with a mold remediation company to determine what needs to be done to eliminate it. In some cases, cleaning with specified substances may be enough. In others, it may be necessary to bring in a mold remediation company. This can be quite expensive, but the potential liability if it is not done can be even more costly. Remediation may involve cleaning or destruction of tenant possessions.
Ultimately, if the dispute goes to court, it may be necessary for the court to decide who was responsible for creating the mold problem to begin with. The landlord is not strictly liable for the presence of mold, and if caused by the tenant, could at least theoretically recover damages from the tenant. However, such disputes are very costly and generally some resolution by settlement is preferable.
No matter what the issue, if things get complicated, it’s best to get advice from the Rent Board or a landlord attorney. One basic that must be kept in mind is that the landlord and tenant cannot enter into any agreement that violates the provisions of the Rent Ordinance. Doing so, even if the tenant completely consents, in writing or in blood, can come back to haunt you years down the line.
The opinions expressed in this article are those of the author, and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. Saul M. Ferster is an attorney specializing in landlord-tenant law; he has been representing San Francisco landlords since 1990. He can be contacted at 415-863-2678. Copyright © 2010 by Black Point Press. All rights reserved.