SF Apartment : June 2017

LEGAL Q&A

Waiver Wary

Q.  I have served a three-day notice to perform covenants and my tenant has failed to comply. Am I still able to collect rent? If not, what are my options?

A. In general, you should not demand, accept or deposit rent when you have served a “three-day notice to perform covenant or quit” and the tenant has failed to cure the breach of the lease covenant. Cases going back to the 1890s have held that by accepting rent under this circumstance creates a “waiver.” The term waiver is defined as the intentional relinquishment of a known right with knowledge of the facts. Acceptance of rent when you know that your tenant is in breach of the lease creates waiver, and if the tenant proves waiver during the eviction proceeding, then you likely lose the right to terminate the tenancy.

For example, the tenant is in breach of a lease rule prohibiting storage of personal items in common areas. On June 3, you discover this breach and serve a “three-day notice” demanding that the stored property be removed within three days. On June 6, while the items remain in plain sight and unmoved, you receive and deposit June rent. On June 7, you file the eviction action because the tenant is still in breach. In court, the tenant will argue that a waiver occurred because rent was accepted during the breach period, and in all probability this defense will vitiate the ability to end the tenancy.

Indeed, landlords should never accept rent when there is knowledge of a lease breach, even if the three-day has yet to be served. Often owners will be informed of a violation and then wait a few months before objecting, all while accepting rental payments. By doing so, the ability to enforce the breach through an eviction action may be permanently impaired.

Good lease agreements, such as the SFAA 2017 Lease, contain what are known as “anti-waiver” clauses that state that the landlord’s acceptance of rent with knowledge that the tenant is in breach of the lease shall not operate as a waiver. Courts are split on whether or not such clauses are in fact effective. Therefore, do not take the chance that a judge will look the other way when you knowingly deposited rent with knowledge of a lease breach, simply because the lease contains an anti-waiver provision.

Section 8 tenancies are a different story. The courts have held that the payment subsidy from the Housing Authority is not rent and can be accepted during a legal proceeding; however, the tenant’s portion of the rent payment should not be processed as that is rent. Thus, one advantage of Section 8 tenancies is that the landlord receives the bulk of the housing payment during a legal proceeding, whereas for all other tenancies rent should be rejected and returned to the tenant until the matter is concluded.

Returning the rent during an eviction does not mean that the landlord will never see this money. A properly pled eviction action asks the court to award “daily damages” for each day after the expiration of the three-day notice period, meaning any judgment would include rental damages until the date of judgment. Daily damages are usually computed by dividing the monthly rent by 30 to determine daily value of the premises. Moreover, if the case is settled shy of trial and the tenant remains in possession, the settlement agreement usually requires the tenant to pay back all returned or unpaid rent.

In sum, do not deposit rental payments when you have knowledge of a breach of any material lease rule. Instruct your attorney to promptly issue a three-day notice requiring compliance. If the breach is not rectified after the three-day period, instruct your attorney to begin the unlawful detainer proceedings. Avoid the waiver defense by acting expeditiously and by returning rent until the matter is satisfactorily resolved.

—David Wasserman

Q.  The new fire legislation refers to both “residents” and “occupants” interchangeably. If landlords are required to notify all “occupants,” would this create a tenancy with a subtenant? Can I legally send the newly required forms and maps to only the master tenant?

A. . In 2016, San Francisco enacted a comprehensive update to the SF Fire Code. Section 409 of the Fire Code now requires landlords to conspicuously post fire safety notifications (including floor plans identifying fire extinguishers, alarms, exits and fire escapes) in all residential buildings of “three or more dwelling units.” (The city counts the number of dwelling units it has on record for a property, regardless of whether the units are permitted, are owner/relative occupied, are used for short-term rentals, etc.) Landlords are also required to provide “Disclosure Information” (including the above floor plans, as well as the location of smoke and carbon monoxide detectors in a particular unit) directly to “residents.” This is the “waiver trap” you are worried about, as certain conduct orcommunication by a landlord can elevate a “subsequent occupant” to the status of “original occupant” for the purposes of maintaining rent control.

While building managers are finding some of the new fire safety compliance requirements onerous (like the need to draw up floor plans for each dwelling unit), you can incorporate the Disclosure Information into your existing practices in a way that will minimize the risk of waiving your right to a Costa-Hawkins market rate increase when the last “original occupant” vacates.

You must provide the Disclosure Information to residents (1) orally before they commence occupancy, (2) in writing before they commence occupancy, and (3) in writing every following year before January 31. You can include that first written copy in your lease disclosures, and you can provide the annually updated Disclosure Information before the tenants’ “anniversary date,” when you serve your rent increase notice and return interest on security deposit.

Section 409 requires you to maintain records of Disclosure Information compliance by serving a “Resident’s Statement,” which asks the tenants to provide date of receipt, to sign and return the form within 20 business days. Just like the annual allowable rent increase notice, you need only list the authorized, original occupants on your Resident’s Statement.

If you receive an executed form back from anyone else, this is your notice to act and preserve your rights—just like if you received a rent check from an unknown subsequent occupant. Serve your “Jane Kim ten-day notice to cure” and your Rent Board “Rule 6.14 Notice” to maintain your right to a future market rate increase and/or enforce your subletting/occupancy limit provisions as necessary. (Also note that, if the tenant does not respond in a timely manner with an executed Resident’s Statement, you have to serve an “Owner’s Statement” within five business days to prove your compliance. Section 409 specifically states that a tenant’s non-compliance is not “just cause for eviction,” and either way, you need to maintain these records for two years.)

This answer should help you hazard the rent control waiver problems with Section 409, but its purpose is fire safety. If you have any difficulty with the substantive notification requirements, the SFFD Bureau of Fire Prevention holds classes to train building owners and managers. You can call 415-558-3363 for registration information or email Inspector De Bella at [email protected] to be placed on the waiting list. You can also visit sf-fire.org/new-fire-safety-requirements-building-owners for more information and sample forms.

—Justin Goodman

Q.  There is an elderly woman who has dementia living in one of the units in my four-unit building. She has accidentally started two minor fires in her unit this year. I am sympathetic to her condition, but I am worried for the safety of the other tenants. How should I handle this situation?

A. Ordinarily, a tenant starting a fire inside their unit would be guilty of intentional damage or causing a nuisance, and could be evicted under State and local law. In addition, the potential catastrophic liability to other tenants for loss of life and property from an uncontrolled blaze demands a response from the landlord. However, the circumstance of mental illness warrants a careful and delicate approach.

Other than providing safe and habitable housing (and other housing services), a landlord has no other duty for the welfare of their tenants. A landlord might reasonably expect that an elderly tenant suffering from dementia would receive the support and intervention from the tenant’s family or social community. However, the responsibility for handling the tenant’s housing may still fall on the landlord if nobody else is authorized to intervene, because of the fact of the tenant’s presence in the premises and the dangers they may impose on themselves or others (e.g. fire.)

A landlord should move quickly to connect the tenant with appropriate social services to look after the tenant’s safety and welfare. Adult Protective Services (http://www.sfdaas.org/DAAS.htm) is a good place to start. Cooperate with caregivers and case workers as much as possible, and document your efforts.

Landlords should resort to litigation only as a last result, if nobody else can be found to intervene, or if the fires or other dangers recur. Although a landlord may be frustrated by the lack of support from other sources, a senior with dementia will be a sympathetic litigant. Ensure that each instance of fire or other dangerous incident is thoroughly documented. Do not attempt an eviction without the assistance of an attorney. Because of the inherent uncertainty associated with litigation, be prepared to consider settlements that permit the tenant to remain in possession while they receive care.

At the same time, take the opportunity to make sure that your insurance is up-to-date, since a fire may originate from any unit. If the worst occurs, you should have the security that you are covered for the loss, and the evidence to demonstrate that you were actively working to prevent the disaster to the extent you were able.

—Matthew Quiring

Q.  Do landlords have any power over what kind of service dog tenants acquire? The units in my building are very small, and I’d prefer if all service animals were under 25 pounds.

A. A service animal is generally trained to do work or perform tasks for people with disabilities. Under the Americans with Disabilities Act (“ADA”), the Fair Housing Act (“FHA”), and Federal HUD regulations, breed, size, and weight limitations may not be applied to service animals.

However, a specific service animal may be restricted if the animal creates an unreasonable risk to the landlord or other residents. An example would be a dog that had previously bitten a neighbor. In such individual cases, the landlord may order the removal of the animal but would not be able to bar an even larger replacement dog so long as the replacement animal had no history of dangerous behavior.

Please note that comfort or emotional support animals are not the same as service animals. A comfort animal is not specifically trained to assist the disabled but its presence provides emotional benefits to its owner. The landlord’s duty to provide accommodations for a comfort animal follows a more broadly interpreted reasonableness test weighing the detrimental effects of the animal against the benefit to the tenant.

—Frank Kim

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 Law Offices and can be reached at 415-567-9600. Matthew P. Quiring is with Fried & Williams, LLP and can be reached at 415-421-0100. Frank Kim is with Eviction Assistance/Law Offices of Frank Kim and can be reached at 415-752-6070. Justin Goodman is with Zacks, Freedman & Patterson, PC and can be reached at 415-956-8100.