SF Apartment : September 2016


Don’t Stop Estoppels

by Various Authors

Q. I’m selling my property and a couple of tenants refuse to fill out their estoppels. What should I do?

A. Estoppel certificates are useful to both you and the potential buyer, because the tenant commits him/herself to various important terms of the tenant’s rental agreement and rent history, as well as discloses whether the tenant claims to belong to a class of individuals protected from no-fault evictions, such as owner or relative move-in. Many tenants will willingly complete the estoppels and, hopefully, truthfully. Estoppels are particularly helpful where the landlord is unable to provide the potential buyer with information on the individual tenancies, as in a probate sale where the prior owner is no longer available for obvious reasons. Estoppels may show the current rent, the rent increase history—necessary to know what rent increases can be imposed or if an illegal rent increase has occurred—and items that may not appear in the written rental agreement, such as storage space or parking outside the premises. Storage, in particular, can be a particularly vexing problem, since many tenants will squat in common areas or empty storage bins without the consent of the landlord, and then claim that the storage is part of their rental agreement and has been since the inception of the tenancy. Information is also available on the move-in dates of the individual occupants, so that if a master tenant vacates and leaves a subtenant in place, the new owner will have the information necessary to obtain a Costa Hawkins rent increase. All of this is useful information for the buyer, and its absence may create difficulties for him/her.

Unfortunately, there is almost nothing that a landlord can compel a tenant to do, unless the duty is set forth in a provision of the rental agreement. In the absence of a provision requiring the tenant to provide an estoppel certificate on the landlord’s request, the landlord has no ability to compel its completion, and many tenant lawyers will advise their clients not to execute estoppels because they may be used to limit rights later claimed by the tenant. The SFAA Residential Tenancy Agreement, however, does have a clause that requires the tenant to complete estoppel certificates. Should the tenant refuse to do so, this would constitute a breach of the rental agreement and could result in service on the tenant of a three-day notice to cure the breach by providing the requested estoppel or vacate the premises. While it may be argued by the tenant that the breach is not sufficiently material to justify eviction, I think the landlord could easily argue that the estoppel is very important for purposes of sale, and there is no valid reason why the tenant should refuse, the burden of completing these documents provided by the landlord being so slight.

So the first thing to do is check your lease or rental agreement and see if the applicable provision is there. If it is, enforce it. If it is not, you may be stuck. Of course, you are always free to offer some incentive (money talks) to the tenant to complete the estoppel, but it’s anyone’s guess how successful such a tactic might be.

—Saul M. Ferster

Q. What is a landlord’s obligation to a tenant who is displaced from a rental unit because of a fire or other disaster?

A. Many tenants have been displaced recently because of building fires. Undoubtedly, there will be a major earthquake someday that could potentially displace thousands of tenants. The Rent Board’s Rules and Regulations, Section 12.19, speaks to the landlord’s obligations when such displacements occur. The highlights of this law are as follows:

If the tenant is displaced due to a fire or other disaster, the landlord must, within 30 days of completion of repairs to the unit, offer that same unit to that tenant under the same terms and conditions that existed prior to the displacement.
The tenant has 30 days from receipt of the landlord’s offer to notify the landlord of acceptance or rejection of the right to return. If the tenant rejects the offer, then the owner can re-rent the unit to someone else and begin a new tenancy. If accepted, the tenant must re-occupy the repaired unit within 45 days of receipt of the landlord’s offer.

The “offer to re-occupy” shall be sent to the tenant to any forwarding address provided by the tenant. If the tenant has not provided an address, the offer shall be sent to the unit from which the tenant was displaced and to any other address of the tenant of which the landlord has actual knowledge, including email addresses. A failure to so notify a displaced tenant and to properly communicate this offer to re-occupy to the appropriate address shall subject the landlord to wrongful eviction liability under the Rent Ordinance.

In recent years, litigation has erupted over the interpretation and enforcement of this regulation. First, some landlords do not re-build the same building. The statute requires a re-offer of the “same unit,” but there have been some court cases against owners for not re-offering the same unit because the same unit was never re-built. Indeed, in one case a landlord had to pay the tenant because the tenant’s unit was not re-built as the building’s new reconfiguration contained smaller-sized rental units, one of which was timely offered to the tenant. Other landlords have faced litigation because the tenant was not notified at their current address, even though the landlord asserted that notification was sent to the last known residence. Tenant attorneys have argued that the owner has a heightened duty to track down displaced tenants, especially when the period of displacement has been for lengthy periods of time (for example, one or two years).

Lastly, owners sometimes get into trouble when the offer is made before the repairs are completed or well after the building is ready for occupancy. The statute states that a re-occupancy offer must be given within 30 days of “completion of repairs,” not before or after this period.

The bottom line is be careful and diligent if your tenants are displaced by a fire or other disaster. One, keep track of their whereabouts. Especially since email is now a recognized address, keep their email addresses handy. Two, never play around with the timeline. Make the offer within 30 days upon completion of repairs, not two months before the unit is ready to be occupied or six months after the building is done. Three, use good faith diligence in trying to communicate the re-offer to the displaced tenant. While you do not have to employ a private investigator, you should do some basic research to find the tenant’s current physical and email addresses. Finally, do not even think about ignoring your obligations under this law. The penalties for noncompliance are substantial, and tenants will easily be able to ascertain when the property is re-built and re-rented.

—David Wasserman

Q. Our lease discloses lead paint in the unit, but we don’t mention possible lead from old cast-iron baths or lead from old faucets. Do we need a separate disclosure? Do we need to update these items?

A. In 1992, Congress passed laws to protect families from exposure to lead from paint, dust, and soil. These laws require the disclosure of certain information before selling or leasing real property built before 1978. California has similar disclosure laws that supplement the Federal laws.

To comply with lead-based paint disclosure requirements, before executing a rental agreement, a landlord must (1) provide the tenant with an Environmental Protection Agency (EPA) approved pamphlet on lead poisoning prevention, (2) disclose to the tenant any known information concerning lead-based paint or lead-based paint hazards, (3) provide the tenant with any reports on lead-based paint or lead-based paint hazards at the property, and (4) include in the rental agreement a lead warning statement. There are forms and materials provided by the San Francisco Apartment Association and the California Apartment Association to help you comply with these requirements.

These laws primarily regulate the disclosure of lead-based paint. However, sometimes there may be other objects or fixtures in a rental unit that may contain lead. For instance, older cast-iron tubs may contain lead materials, which in some rare circumstances may seep into bathwater over time. Because such objects or fixtures may not contain lead-based paint, they may not be subject to the lead-based paint disclosure laws.

Nevertheless, there are other applicable laws and duties that may require disclosure. For example, a landlord owes a duty to disclose to prospective tenants any characteristics or conditions of the rental unit known to the landlord that materially affect the value or desirability of the rental unit. The presence of any such object or fixture that may result in the seepage of lead into bath or drinking water, even if it is rare or unlikely, may be a condition that would materially affect the desirability of the rental unit. Accordingly, if you know or have reason to believe that there are objects or fixtures in or about a rental unit that contain hazardous materials that might adversely affect a tenant, such as lead, then it would be advisable to disclose your knowledge or belief to the prospective tenant.

—Steve C. Williams

Q. After our tenant had officially moved out, there was still a considerable amount of his belongings in the unit. Can I still take possession of the unit? Is it legal for me to donate his belongings?

A. Yes, you can still take possession of the unit, and yes, it is legal for you to donate his belongings—but only after you comply with certain legal requirements. The disposition of personal property left behind after a tenancy has terminated and the premises have been vacated is governed by Code of Civil Procedure sections 1980 through 1991.

You can take possession of the unit when you have a reasonable belief that the former tenant has vacated. After taking possession of the unit, you must give written notice to the tenant and anyone else you believe is an owner of the personal belongings left in the unit. The written notice must describe the belongings in sufficient detail to permit the owner of the belongings to identify them—but you do not have to describe belongings to which you do not have access, such as anything stored in a locked or fasted trunk, box, or other container.

You must store the belongings with reasonable care but are not liable for any loss not caused by your deliberate or negligent act. The written notice must advise the former tenant or other owner of the belongings that storage costs may be charged before the belongings are recovered, the address where the belongings may be claimed, and the last date for claiming the belongings. The last date must be 15 or more days after the notice is personally delivered to the former tenant or other owner, or at least 18 days after the notice is mailed to the person’s last known address. If the notice is mailed to the former tenant, one copy must be sent to the premises vacated by the tenant or, if the former tenant provided an email address, the landlord may also send the notice by email. Code of Civil Procedure section 1984 provides a form designed to meet the requirements of the written notice.

If the belongings are claimed by the deadline, you must release them to the former tenant or owner if they pay the reasonable cost of storage. You cannot charge for storage if the belongings remained in the dwelling and were claimed within two days of the vacate date.

If the belongings are not claimed by the deadline and are believed to be worth less than $700, they may be kept, sold, or destroyed without further notice. Donating them is presumed acceptable as well. If the belongings are worth $700 or more and the notice stated they would be sold at a public sale, you must still release them to the tenant in exchange for the storage cost if they are claimed before the sale. Otherwise, the belongings shall be sold at a public sale by competitive bidding, with notice published in a general circulation newspaper. The proceedings after deducting storage and sale costs shall be paid to the county treasurer and may be claimed by the former tenant or owner within one year of the date of payment to the county.

The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Saul M. Ferster can be reached at 415-863-2678. David Wasserman is with Wasserman-Stern Law Offices and can be reached at 415-567-9600. Steven Williams and David Semel are with Fried & Williams, LLP and can be reached at 415-421-0100.