SF Apartment : March 2018

LEGAL Q&A

A FedEx Flood

by Various Authors

Q.  I have several tenants who seem to receive multiple packages a day. They only pick up the packages from the lobby every few days, which leads to a clogged entry area and a possible theft risk. What should I do?

A. As we all know, daily deliveries of packages and boxes have become more prevalent. What did we all do before Amazon?

In response to the immediate question, I suggest you notify the specific, habitually offending tenants in a positive and professional manner that the lobby area may not to be used to “store” their packages, and that packages must be retrieved daily. If your first notice goes unheeded, you may want to remind them that storage outside the unit and/or in violation of the SFAA Storage Agreement, for example, may result in a Notice to Cure or Quit the premises due to the breach of a lawful covenant of the lease.

More generally, I suggest implementing a house rules-type policy, following written notice to all tenants, implementing clear rules regarding packages, warning tenants you are not responsible for any theft or tampering of same, and any additional restrictions and requirements as are appropriate to your specific circumstance.

If there are assigned drivers to your building from a delivery service (UPS, USPS, FedEx, etc.), I suggest you arrange to meet with each of them and provide information regarding your requirements and expectations of the drivers when packages are delivered and the recipients are not home to accept same. You may also suggest the tenants use an alternative, local address for receipt of packages, such as a neighbor in the building, a person in the neighborhood that is willing to accept packages, or delivering such packages to their work address. (I have heard that some of the city’s ubiquitous corner stores have begun offering a service whereby they allow neighbors, for a fee, to use the store address for delivery of packages. This provides your tenants with the ability to pick up packages conveniently, and in the very early morning and late evening hours of the day. You may want to confirm this service with a nearby corner store owner and suggest that your tenants contact the store owner directly to implement same.)

While it may be a bit of an expense, you may also wish to consider the installation of a security camera (whether hidden or conspicuous), trained on the area of the lobby that you designate for the delivery of packages when no tenant is available at the unit to receive same. You may want to post a sign stating that the area is “under video surveillance” to reduce possible theft attempts. This camera could assist in protecting you against claims of liability from tenants for lost, stolen or damaged packages.

One last thought: you may also consider monitoring the delivery of packages for a period of time as new and/or unfamiliar names may indicate that there are unknown occupants/subtenants in a unit and/or that a business is being run from a unit, which may be a violation of San Francisco zoning laws. Many times, delivery of mail addressed to persons not on the lease/rental agreement is the first indication that a tenant has vacated and their “roommates” are in sole possession.

I do not mean to target the true home office situation, but rather an actual business—with employees, clientele, and/or customers coming in and out of the premises—which may be in operation from your property. Since most recently prepared residential leases negate commercial use of apartments, numerous packages and/or packages coming to or from a unit on a daily basis may indicate that an illegal commercial enterprise is operating in the unit.

Take a look at your building and the lobby area. Consider all of your options. Be creative in solving the issue. Having a workable and thoughtful program in place to address this issue may significantly reduce management time and future tenant claims or disputes.

—Denise Leadbetter

Q.  We bought a tenant-occupied duplex and didn’t revise the lease at the time of purchase. The same tenant is still there, and there are some changes we’d like to make to the lease, including use of common areas. Can we change the lease now?

A. You must first serve a 30-day written notice of change of terms of tenancy. Depending on what other changes you intend to make, you may modify or expand upon the terms of the lease to take effect at the expiration of not less than 30 days. Note that you must serve your notice identifying the changed or new lease terms by personal service or substituted service, or by posting and mailing a copy the same day.

However, being able to notice changes to your lease is easy, enforcing them may be much more difficult. Under the San Francisco Rent Board’s Rules and Regulations Section 12.20, you cannot evict someone for violation of any such change of terms of your lease if you have unilaterally imposed them and they are not agreed to by the tenant. The exceptions to this rule are: if your change is one authorized by the San Francisco Rent Ordinance (such as an annual allowable rent increase), or federal, state or local law; or if the tenants agree to the change in writing after being informed in writing that they need not accept such new terms.

Some practitioners and managers believe that most tenants will adhere to the changes if they are reasonable. However, severing the ability to enjoy a housing service, such as the use of a backyard or deck, is not reasonable and is a violation of the rent law. Conversely, imposing a “no smoking” rule in common areas or limiting use of a noisy laundry machine to daytime and early evening hours is reasonable. As such, you are encouraged to impose reasonable house rules subject to the admonitions of this article.

One notable exception to this Section 12.20 rule is the “attorney fee” clause in many older lease agreements. This provision, used commonly in commercial leases, requires that the loser in any eviction action pay the winner’s legal fees and court costs. Years ago, SFAA struck this clause from the SFAA lease agreement because tenants are almost always judgment proof, meaning you cannot collect fees from them, whereas landlords almost always have deeper pockets; in essence, this clause raised the stakes and stress level for landlords. Unilaterally striking this clause is advised and doing so does not violate Section 12.20, as a tenant cannot “violate” a new “each side bears their own legal fees and costs” lease covenant.

So, unless your tenant agrees to the change in terms of the tenancy in writing, your tenant is not obligated to accept any of your new terms of tenancy. If your tenant violates any of your new lease terms not previously in effect at the inception of tenancy, like the use of common areas, you will be unable to enforce those rules through the eviction process. Without the threat of an eviction, there is no real motivation for the tenant to agree to the change.

—David Wasserman & Elizabeth Kershaw

Q.  I recently purchased a duplex with the intention of living in one unit and renting out the other unit using a one-year lease. As a new landlord, do I need to obtain a business license or register with the city before moving forward?

A. No. The Business Registration Ordinance (Section 851 of the San Francisco Business and Tax Regulations Code) provides that “no person may engage in business within the City unless the person has obtained a current registration certificate,” and this is the case “regardless of whether such person is subject to tax” under the ordinance. The business operator must obtain the certificate within 15 days of commencing business within the city and must pay a scaled registration fee based on the business’ gross receipts. (The city previously based business registration fees and taxes on payroll expense until the passing of Prop. E in 2012, which is responsible for the phasing in of a “gross receipts” system.)

You, as an owner-occupier of a duplex who is renting out the other unit, do not need a registration certificate because the ordinance exempts persons receiving rental income from “one residential structure consisting of fewer than four units or one residential condominium.” For this reason, you are also considered a “small business enterprise” under the ordinance and you are exempt from gross receipt taxes.

On the other hand, readers with four or more units are required to register and pay taxes, except that “a lessor of residential real estate is treated as a separate person with respect to each individual building in which it leases residential real estate units.” In other words, if you also bought a triplex full of residential tenants, you would still be exempt from both requirements, even though you receive rental income from four units total.

However, “the Tax Collector is authorized to determine what constitutes a separate building and the number of units in a building,” and this could lead to interesting outcomes in our current regulatory regime, which urges the city’s building and planning departments to identify (and often make you legalize) “units,” whether or not they are permitted separately. (Think of the typical “in-law” unit in the city’s western neighborhoods.) Given this new push, renting a built-out garage to a residential tenant in that triplex might make the owner a “large” business enterprise. Finally, in a rare moment of rent ordinance empathy, 50 percent of the total amount received from leasing rent-controlled units may actually be excluded from gross receipts.

Landlords who are covered by the ordinance and will need to create a business license can get started at sftreasurer.org/registration. Since you appear to be exempt, the best advice I can give you for now is to use the current “SFAA Residential Tenancy Agreement” for any new tenancies.

—Justin A. Goodman

The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Denise Leadbetter is with the Law Offices of Denise A. Leadbetter and can be reached at 415-713-8680. David Wasserman is with Wasserman-Stern Law Offices and can be reached at 415-567-9600. Elizabeth Kershaw is the Director of Legal Affairs at Parkmerced and can be reached at 415-405-4600. Justin A. Goodman is with Zacks, Freedman & Patterson, P.C. and can be reached at 415-956-8100.