Simone & Blevins

Category: Leases

  • Property Managers – Q & A

    Q: I recently decided that managing my 15-unit apartment building in Oceanside, California is too difficult. I decided to hire a property management company to take over managing my apartment building. How do I let my tenants know that I will not be managing my apartment building anymore?

    A: You are required to serve your tenants with a notice of change of ownership/management every time ownership or management changes. This notice must include the name, telephone number, and street address for each of the following: 1) authorized manager, 2) agent for service of process of the owner, and 3) the person or entity to make rent checks payable to. The notice must also include the forms in which payments are made, such as by check, money order, cashier’s check, and/or cash. If rent payments are made personally, then the notice must also include the usual days and hours when a tenant may make a payment. Alternatively, the lease or rental agreement may provide information to the tenant to make electronic payment or payment to a bank as long as the bank is located within five miles of the rental unit.

    Q: I recently fired my property manager and am serving my tenants with a notice of change of management. I do not want to give my tenants my home address. Can I use a P.O box as my address in my notice of change of management?

    A: Yes, you can use a P.O. box for your address.  However, if you do not provide an address for personal delivery on your notice of change of ownership/management, then you automatically agree to receive notices from the tenant at your P.O. Box. While this might seem like a convenient way to keep your personal information private, you risk being served with legal notice by your tenants without immediate notification.  The tenant can mail you legal notice and it is deemed received by the owner on the date the mail was posted. The tenant will only have to prove they mailed the notice to you and that they used the name and address you provided. We advise you to provide an address for personal service on all notices of change of management and ownership.

                Q: I just purchased an apartment building. Can I wait to serve a notice of change of ownership/management until I hire a property management company?

    A: It depends. You are required to serve your tenants with a notice of change of ownership/management within 15 days of purchase or change in management. If you fail to provide proper notice to your tenants, then you cannot serve a notice or file an eviction for non-payment of rent that accrued during the period of non-compliance. This also applies to any period of time that the prior owner was not in compliance.

                Q: I have a 10-unit apartment building in Lemon Grove. One of my tenants told me that I was required to have an on-site manager. Is that true?

    A: No, California law requires that every apartment building with 16 or more units have a resident/on-site manager that lives within the apartment building. Since your building has less than 16 units you are not required to have a resident manager.

    Q: I own a duplex and want to hire a property management company to manage my units. Does the new property manager need to have a certificate or license to manage properties?

    A: It depends. Some property managers are not required to have a certificate or license. For example, an owner of a rental property may manage their rental property without any certificate or license.  Further, an on-site property manager does not need a certificate or license to review rental applications, show/lease the property, and collect money for the deposit, rent, and utilities. However, an off-site property manager must be employed and supervised by a licensed California Real Estate Broker to provide these services.

    Q: I recently purchased an apartment building. One of the tenants has been a resident manager for the last ten years. It appears that this tenant has not been paying any rent for the unit they occupy and has not received any wages for the time they work. This does not seem right to me. What are the rules regarding rent payments and wages for resident managers?

    A: California resident manager laws are very complicated because the resident manager is considered an employee. I advise that all landlords with resident managers consult with an attorney yearly to make sure they have the most up to date information on the current laws. Resident managers are required to receive hourly pay pursuant to the city or state minimum wage laws and there is a limit to the amount of their wages that can be applied to their rent.  Also, you cannot apply the resident manager’s wages towards their rent unless you have a signed resident manager agreement.  If you inherit a property with a resident manager, I would advise you to present the situation to your attorney to review if the resident manager is being properly compensated and to review any agreement.

  • Renting During Covid19|FAQ

    Question: I am a landlord and do not want to look for new tenants every year. Should I enter into a long-term lease with my tenants?

    Answer: A lease can be beneficial or disastrous for a landlord. It is beneficial to keep a tenant for multiple years, so you do not lose time and rent trying to find a new tenant. However, it is my experience that in tight rental markets most tenants do not like to move because of the time and expense it takes to move.  Therefore, under the current rental market, it may not benefit you to have a long-term lease with your tenants.  For example, a long-fixed term lease could prevent a landlord from taking back possession of their property from a problem tenant. Under such a lease, if the tenant becomes a problem a few months into the lease, you will not be able to give them a 30 or 60-day notice to quit. You may only evict the tenant if they are clearly breaking a term in the lease or committed some illegal act or nuisance.  Additionally, the COVID-19 Tenant Relief Act of 2020 created additional hurdles to terminate tenancies. For this reason, I recommend a month-to-month agreement or a short term lease.  By keeping the term short, it gives the landlord greater flexibility to remove problem tenants if the need arises. 

    Question: My property is vacant and I am worried about renting it out because of the uncertainty caused by COVID-19.  I need the rental income and would like to rent out my property as soon as possible. Can I ask for a higher security deposit or prepaid rent to reassure that I receive the rent?

    Answer: Yes, you can ask for a higher deposit or prepaid rent under certain circumstances. If the property is unfurnished, then you may require a security deposit equal to two times the monthly rent. If the property is furnished, then you may require a security deposit equal to three times the monthly rent.  In order to  require prepaid rent, the term of the lease must be at least six-months and the amount of prepaid rent cannot exceed the term of the lease. For example, you may demand six months of prepaid rent if you enter into a six-month lease or longer. You may also require an increased security deposit in addition to the prepaid rent (two times the rent for unfurnished, three times the rent for furnished).  If the rent is $2,000 for an unfurnished property and you enter into a six-month term, then you may require the tenant to pay up to $12,000 in prepaid rent and $4,000 for a security deposit.

    Question: I am accepting applications for my rental property and want to make sure that I have a strong tenant due to COVID-19.  What should I look for in a new tenant and can I increase my income requirements for applicants?

    Answer:  Yes, you may increase your income requirements for new tenants as long as you apply the same requirements to all applicants and do not use the requirement as a way to discriminate against certain applicants.  For example, if you normally require an applicant to make at least three times of the rent per month, then you may increase the income requirement so that the applicant must make four times the monthly rent.  Thus, if the rent is $2,000 per month, then the applicant must make at least $8,000 per month to qualify for the rental.  You may also require a higher credit score to qualify for the rental. Besides strong financials and credit, you should also verify any references provided by the applicant.

    Question: I am a landlord and renting out an apartment building.  I am concerned about my tenants following the rules for COVID-19.  Can I require my tenants to follow house rules about COVID-19 that are posted at my property?

    Answer: Yes, if your rental agreement incorporates house rules, then you may require the tenants to follow house rules that are posted at the property. You should provide the tenant with a copy of the house rules when they sign the rental agreement and have the tenant sign the house rules stating that they agree to the rules. For any tenants on a month-to-month agreement, you may have the tenants sign the house rules or provide them with a 30-day notice in change of terms of tenancy.

    Question: I am a landlord and want my tenants to use email and communicate electronically due to COVID-19. Can they sign their lease or month-to-month agreement with an electronic signature?

    Answer: Yes, if your tenant agrees to sign electronically, then you may use an electronic signature on the lease or rental agreement. If you and your tenant prefer to communicate by email only or sign other documents electronically, then you may sign an agreement with your tenant authorizing electronic communications and signatures. If you choose to sign the agreement in this manner, you should choose to use a well-known and reputable program.

    Question: I am a landlord and want to make sure I am entitled to attorney’s fees if I have to evict my tenant. Do I have to make the attorney’s fees clause mutual where the tenant is entitled to fees if they win and I lose?

    Answer: Yes. You should have a reciprocal attorney’s fees clause. Further, the tenant may be entitled to attorney fees if he/she prevails in a landlord-tenant dispute even if the attorney’s fees clause only allows the landlord to collect attorney fees. If you wish to have an attorney’s fees clause in your rental agreement, I strongly recommend that you cap the amount of attorney’s fees and costs that can be awarded.  For example, the clause should state that the prevailing party is entitled to attorney fees and costs, however, such fees and costs are capped at $1,000 (or some other similar amount).  A cap on attorney’s fees may deter tenants and tenants’ attorneys from filing lawsuits against you.

  • Tips and Tricks – Leases

    Question: I am a landlord and do not want to look for new tenants every year. How many years should I make my lease for?

    Answer: A lease can be beneficial or disastrous for a landlord. It is beneficial to keep a tenant for multiple years, so you do not lose time and rent trying to find a new tenant. However, it is my experience that in tight rental markets most tenants do not like to move because of the time and expense it takes to move.  Therefore, under the current rental market, it may not benefit you to have a long-term lease with your tenants.  For example, a long-fixed term lease could prevent a landlord from taking back possession of their property from a problem tenant. Under such a lease, if the tenant becomes a problem a few months into the lease, you will not be able to give them a 30 or 60-day notice to quit. You may only evict the tenant if they are clearly breaking a term in the lease or committed some illegal act or nuisance. Thus, for this reason many landlords choose to execute a one-year lease or a month to month agreement with their tenants. By keeping the term of the lease to one year or less, it gives the landlord greater flexibility to remove problem tenants if the need arises.

    Question: I am a landlord and want my tenants to use email and communicate electronically. Can they sign their lease or month-to-month agreement with an electronic signature?

    Answer: Yes, if your tenant agrees to sign electronically, then you may use an electronic signature on the lease or rental agreement. If you and your tenant prefer to communicate by email only or sign other documents electronically, then you may sign an agreement with your tenant authorizing electronic communications and signatures. If you choose to sign the agreement in this manner, you should choose to use a well-known and reputable program.

    Question: I am a landlord and want to make sure I am entitled to attorney’s fees if I have to evict my tenant. Do I have to make the attorney’s fees clause mutual where the tenant is entitled to fees if they win and I lose?

    Answer: Yes. You should have a reciprocal attorney’s fees clause. Further, the tenant may be entitled to attorney fees if he/she prevails in a landlord-tenant dispute even if the attorney’s fees clause only allows the landlord to collect attorney fees. If you wish to have an attorney’s fees clause in your rental agreement, I strongly recommend that you cap the amount of attorney’s fees and costs that can be awarded.  For example, the clause should state that the prevailing party is entitled to attorney fees and costs however such fees and costs are capped at $1,000 (or some other similar amount).  A cap on attorney’s fees may deter tenants and tenants’ attorneys from filing lawsuits against you.

    Question: I am filling out the lease for my new tenants and do not want to provide my address for the ‘Service of Notice’ section. Can I leave this section blank?

    Answer: No, you must provide the tenant with a mailing address where the tenant can serve you with notice. If you are concerned about giving the tenant your personal address, then you may want to get a post office box. This allows you to receive rent and notices from the tenant in the mail without giving the tenant your personal address.

    Question: I have a lease with a late fee clause that has a penalty that increases on a daily basis.  How much can I charge the tenant per day?

    Answer: As a general rule, the late fee should not be more than six percent of the monthly rent. If the landlord gives a daily late fee charge that exceeds six percent of the monthly rent, then the tenant is entitled to a refund of the overpayments of late fees. To avoid overcharging, it is best to charge a flat rate late fee equal to or less than six percent of the monthly rent. For example, if the rent is $1,200 per month, then six percent of $1,200 is $72, therefore the late fee may not exceed $72. If you decide to proceed with the daily late fee, you must be sure that the tenant does not pay more than six percent of the rent per month as a late fee.

  • How to Properly Screen Your Tenant

    The primary goal of the screening process is to find a desirable tenant, typically a stable occupant who is a good credit risk and will not damage the premises or disturb other tenants.

    [slideshare id=88357808&doc=howtoproperlyscreenyourtenant2017-final-180220063133]