SB 985 CHANGES THE LAW

Well, these are the changes in the law, starting January 1, 2002, which have been brought about by Senator Sheila Kuehl’s SB 985.

NOTICE TO TERMINATE TENANCY
Applies to rent controlled and non-rent controlled units. In Santa Monica, West Hollywood and Los Angeles, an owner will have to give a 60-day notice to terminate tenancy instead of the old 30-day notice. This applies to all rental units whether rent controlled or not. An owner of a rent controlled unit can normally not give a notice to quit to owner’s tenant. The only effect in rent controlled units will be in owner occupancy evictions. There is a small exception for condos and single-family homes, where a new owner (must be an individual and not a legal entity) can give a 30-day notice to vacate if it is given within 30-days of the purchasing of the home/condo by the new owner.

RENT INCREASES TO EXISTING TENANTS
IN CERTAIN CONDOMINIUM UNITS
(Applies only to rent controlled property). In California, an owner of any rent controlled condo unit cannot raise rents of the existing tenants after Jan 1, 2002 if the original developer has not sold the condo. In those cases where the existing Jan 1, 2002 tenant lived in the unit on May 7, 2001, then that tenant’s rent needs to be rolled back to the rent existing on May 7, 2001. There is a small exception to this rule, which is too ridiculous to mention.

DISCLOSURES TO TENANTS
Applies to rent controlled and non-rent controlled units. The owner is required to disclose to the tenant (in the rental agreement— and if an existing tenant then in an amended rental agreement) the following information:
  A. Name, Telephone number, Street Address of each person who is
     1. Authorized to manage the property
     2. Authorized to accept service of lawsuit (or notices) for the owner
     3. Authorized to accept rent payments for the owner (including the times and days that the person will be at the address to accept rent payments).
  B. In what form the rent is to be paid (i.e. cash, check, or money order)
  C. A location where rent may be deposited in a rent lock box

The owner is required to update this info if changes and give the tenant a copy of the rental agreement within fifteen days of tenant’s signing it, and within fifteen days of the tenant requesting another copy of it (Tenant may only request a copy once each year). The owner has the right to change the form of rent payment which is stated in the rental agreement, upon written notice to the tenant (i.e. amended rental agreement). If the rental agreement does not provide for personal delivery of rent or notices, and if the tenant can show proof of mailing to the owner, then the tenant is conclusively deemed to have paid the rent or given notice to the owner, on the date of said alleged mailing.

If owner fails to give the required disclosures herein, the owner is punished as follows: service of any lawsuit shall be effective if the tenant mails the lawsuit registered mail to the same address as the tenant sends rent.

THREE-DAY NOTICE TO PAY OR QUIT
(Applies to rent controlled and non rent controlled units). A three-day notice to pay rent or quit must now contain the following additional information:
  A. The name, telephone number and address of the person to whom the rent payment shall be made either by mail or in person)
  B. If rent is to be made personally, then the usual days and hours that the person will be available to accept the rent
  C. Owner has option of giving bank wiring instructions (with address of bank).

DISCLOSURES
This is very dangerous territory. Be careful. Comply exactly with these requirements. Note that the owner need not disclose who he/she is, as long as an owner’s manager and representative to accept service of lawsuit is identified. When a property is held in an owner’s name, there is no reason not to disclose, since the title company will readily have that owner’s name for all to know. However, when there is an LLC (or other corporate entity that holds title to the property) only the LLC’s name needs to be disclosed and not the members of the LLC (or stockholders). Even the LLC’s named manager need not be disclosed. Again, only the property manager (if there is one) and / or the person authorized to accept lawsuits and notices on behalf of the LLC need be disclosed. It is unclear as to what additional information need be given to the tenant if the rent is to be deposited into a rent box on the property. To be safe, the owner should disclose to the tenant the name, address and telephone number of the person or entity to whom the rent check is made payable. Thus if there were an LLC, then a telephone number and address should be created for that LLC. If the rent were being paid to a property manager’s account then that property manager’s telephone number, address, and name should be disclosed to the tenant in the rental agreement.

It is also not clear what the owner should do with existing tenants who already have written rental agreements which do not contain the required information in these rental agreements. The safest course for the owners to follow is that prior to January 1, 2002 the owner (or representative) should send an amendment/ addendum to the rental agreement, which contains all the information, requested.

ACTION will have an updated Amendment/Addendum shortly. Or, you can write your own amendment which can be a single sheet of paper which recites wording like:

Amendment To Existing Rental Agreement Dated ______ between Owner ____________ and Tenant_____________ to comply with Civil Code 1962.

Owner hereby amends the existing rental agreement between the parties to add to the existing rental agreement the following paragraphs. Said paragraphs shall become part of the rental agreement to the same extent as if they were originally written when the agreement was signed. Tenant’s continued possession after the required notice period expires, is Tenant’s acceptance of these provisions, whether or not tenant signs this addendum and/or returns a signed copy of this addendum to Owner:
The required information under Civil Code 1962 is as follows:
(1) Tenant shall pay rent with check or money order and deposit said check or money order in the Rent Box located at the property, further described as __________. Said rent may be deposited in said Rent Box on any day and at any time, without restriction. However, this paragraph shall not be construed to give tenant any additional time to pay said rent, beyond that allowed by law. Rent is due on the first day of each month and late on the 2nd day of each month, regardless of any late fee that may apply.
(2) Owner shall not accept cash for rent or for any other purpose, nor allow any rent to be mailed to any address. The Rent Drop box does not have a mail address.

Dated: ______ Owner: ___________ Tenant: ___________

NOTICES TO QUIT
Note that in usual owner occupancy evictions, the notice requirement will now be extended to 60 days.

RENT PAYMENTS
As ACTION has been suggesting, it is best for the owner to have a drop box for mail located at the property. This drop box can be a slot in the manager’s door or a locked metal box located somewhere on the property. If an owner allows the rent to be mailed to a post office box then the tenant has ability to allege he/she mailed the rent to the PO box (shows a copy of the letter which allegedly contains the rent check) and the owner cannot contest the fact that the tenant paid the rent on the date that the tenant claims he/she mailed the rent check. This is disastrous for the owner, since the owner will never win a UD for non-payment of rent. Even if the tenant honestly mails the rent to the PO box, the tenant has the right to mail the rent within the three-day notice period. The rent check does not have to be received within that three-day period.