I. INTRODUCTION
California landlord-tenant law has once again been statutorily modified in many ways. This article addresses the most prominent changes in state law which took effect in 2004.

II. SECURITY DEPOSITS FOR RESIDENTIAL TENANCIES
Civil Code section 1950.5 sets forth a landlord’s right and obligations with respect to a tenant’s security deposit for a residential rental unit. The legislature made significant changes to this statute effective January 1, 2004.

A. Pre-Vacancy Inspections
Last year, in 2003, the security deposit statute (Civil Code Section 1950.5) began to require that a landlord notify a departing tenant, in writing, of the tenant’s right to request and be present at a pre-vacancy inspection of the tenant’s rental unit. The purpose of the inspection is to allow the tenant the opportunity to correct any deficiencies found in the rental unit so that the landlord would not deduct the costs from the tenant’s security deposit. In this notice, the landlord is required to give the tenant an itemized statement specifying repairs or cleaning that will be the basis for any deductions from the tenant’s security deposit. The itemized statement must also include specified language from the statute.

Effective January 1, 2004, the statute was limited to exclude from the pre-vacancy inspection requirements situations where the tenancy is terminated pursuant to Code of Civil Procedure section 1161 (2), section 1161(3), or section 1161(4). This means that the tenant will not have the statutory right to a pre-vacancy inspection if the tenant is evicted for any of the following reasons: (1) failure to pay rent, (2) failure to perform other conditions or covenants of the tenant’s lease or rental agreement, (3) assigning or subletting the rental unit in violation of the tenant’s lease or rental agreement, (4) committing waste to the rental unit in violation of the tenant’s lease or rental agreement, (5) maintaining, committing, or permitting the maintenance or commission of a nuisance upon the rental unit, or (6) using the rental unit for an unlawful purpose(including, but not limited to, illegally selling a controlled substance in the rental unit).
The pre-vacancy inspection requirements still apply to termination of tenancies under Civil Code section 1946 (termination of a month-to-month tenancy) or termination of a fixed term lease. These terminations still require pre-vacancy inspection notifications by landlords.

B. Documenting Landlord’s Deductions From Tenant’s Security Deposits
For years, the security deposit statute required that a landlord who retains a portion of the tenant’s deposit provide the tenant, within 21 days of the tenant’s vacancy, an itemized statement setting forth the basis for, and amount of, any security deposit received and the disposition of the security deposit. The statute requires the landlord to return to the tenant any remaining portion of the security deposit within 21-day period.
Effective January 1, 2004, the statute was amended to add a new burden on the landlord: the duty to provide the tenant with documentation of the actual charges incurred by the landlord to repair or clean the rental unit. Without providing such documentation, a landlord may not legally retain any portion of the deposit. The landlord is exempt from this documentation requirement if the deductions are $125 or less or if the tenant waived in writing his or her right to receive the supporting documentation. The tenant has the right to rescind his or her waiver within 14 days of receiving the itemized statement from the landlord.

If the landlord or the landlord’s employee performed the repair or cleaning work, the itemized statement must reasonably describe the work performed, must itemize the time spent, and must include the hourly rate charge for the work. The hourly rate charged must be “reasonable.”
If the landlord or the landlord’s employee did not perform the work, the landlord must provide the tenant a copy of the bill, invoice, or receipt from the person or entity that performed the work. If that bill, invoice, or receipt does not include information identifying the person who performed the work (i.e., name, address, and telephone number), then the landlord’s itemized statement must set forth that information.

The landlord must provide the tenant copies of bills, invoices, receipts, vendor price lists, or other vendor documents supporting any deductions made for materials or supplies.

If a repair cannot reasonably be completed within 21 days of the tenant’s vacancy, or if the landlord does not have in his or her possession documentation supporting the proposed deductions within the 21-day period, the landlord may deduct the amount of a good faith estimate of the charges that will be incurred and provide the estimate to the tenant in the itemized statement. If the reason for giving such a good faith estimate is because the landlord does not have in his or her possession the necessary supporting documentation, the landlord’s itemized statement must include the name, address, and telephone number of the person or entity who performed the work. Within 14 days of completion of the repairs or receiving the supporting documentation, the landlord must provide the tenant with an updated itemization, supporting documentation, and any remaining portion of the security deposit.

III. SECURITY DEPOSITS FOR COMMERCIAL TENANCIES
Civil Code section 1950.7 sets forth a landlord’s right and obligations with respect to disposition of a commercial tenant’s security.
Prior to January 1, 2004, this statute required that any unused portion of a tenant’s security deposit be returned to the tenant within two weeks after the landlord receives possession of the rental unit from the tenant, so long as the landlord’s only claim of the deposit was for unpaid rent. If the landlord had claims other than for unpaid rent, then the landlord had 30 days to refund any unused portion of the tenant’s security deposit to the tenant.

Effective January 1, 2004, the time within which a landlord must return any unused portion of a commercial tenant’s security deposit held solely for a default in rent was extended to 30 days. However, if the security deposit exceeds the amount of one month’s rent plus a deposit amount clearly described as “last month’s rent,” then any remaining portion of the payment or deposit in excess of an amount equal to one month’s rent must be returned to the tenant or accounted for within 30 days.

IV. LANDLORD LIABILITY FOR UNTENANTABLE BUILDINGS
A. Civil Penalties Increase and Extent, Statutory Deadline Decreases, and Substandard Conditions Broaden
Prior to January 1, 2004, Civil Code section 1942.4 provided a statutory penalty of up to $1,000.00, plus reasonable attorney’s fees and costs of suit, whenever a landlord demanded or collected rent from a tenant if: (1) the rental unit was untenantable (i.e., substantially violated Civil Code section 1941.1), (2) a housing official had issued to the landlord a Notice to Abate a Nuisance following inspection of the rental unit, (3) the uninhabitable conditions continued without good cause for 60 days following issuance of the notice, and (4) the conditions were not caused by the tenant.

Effective January 1, 2004, the statute increases the civil penalty to a maximum of $5,000, and shortens the duration period for habitability conditions from 60 days to 35 days.
In addition, the revised statute broadens the range of substandard conditions for which a landlord may be held liable to include certain health and safety violations described in Health and Safety Code sections 17920.3 and 17920.10.

The revised statute also now penalizes a landlord for issuing a rent increase notice or a three day notice to pay rent or quit, in addition to penalizing a landlord for demanding or collecting rent under the circumstances described above.

B. New Statute Allows Award of Attorney’s Fees in Unlawful Detainer Actions
The legislature added Code of Civil Procedure section 1174.21 effective January 1, 2004. This new statute provides that a landlord who institutes an unlawful detainer action against a tenant for nonpayment of rent is liable to the tenant for reasonable attorney’s fees and costs of suit if the landlord is in violation of Civil Code section 1942.4 with respect to the tenant’s rental unit.

If the tenant asserts as a defense to an unlawful detainer action the landlord’s breach of the warranty of habitability, and the tenant prevails on that defense, then the landlord will be liable to the tenant for his or her reasonable attorney’s fees and costs of suit (regardless whether there is a rental agreement providing for such fees).

V. LANDLORD ENTRY TO RESIDENTIAL UNITS
Civil Code section 1954 regulates the time and circumstances under which a landlord (or a landlord’s agent) may enter a residential rental unit.
Effective January 1, 2004, the statute modifies the requirements for Notices to Enter. Now, the notice must specify the date, approximate time, and purpose of the entry. In addition, the amended statute expressly states that a written notice is not necessary if the landlord and tenant orally agree to an entry to perform agreed-upon repairs or to supply agreed-upon services. Any such oral agreement to enter must include the date and approximate time of the entry, which must be within one week of the oral agreement.

VI. RESTRICTIONS ON PUBLIC ACCESS TO COURT’S EVICTION FILES
Code of Civil Procedure section 1161.2 prohibits a court clerks from providing access to certain court records and files relating to unlawful detainer proceedings for 60 days after the complaint is filed, subject to specified exceptions. Prior to January 1, 2004, a court could exempt itself from this prohibition upon a finding that unscrupulous eviction defense services are not a substantial problem in the applicable judicial district. In addition, prior to January 1, 2004, the statute imposed on the Judicial Council the duty to examine the extent to which requests for access to files pursuant to an ex parte order under the statute are granted or denied, and if denied, the reason for denial of access.

Effective January 1, 2004, this statute was modified to prohibit access to the court’s eviction case files and records at any time if the defendant prevails in the lawful detainer action. The amended statute also eliminates a court’s right to exempt itself from the provisions of the statute, and it eliminates the duty placed on the Judicial Council with respect to requests for court records.

VII. UNLAWFUL DETAINER COMPLAINTS, VERIFICATIONS, AND ATTACHEMENTS
Prior to January 1, 2004, Code of Civil Procedure section 1166 required that landlords include certain information in verified unlawful detainer complaints. The legislature substantially broadened these requirements through Senate Bill 345. The legislature, however, inadvertently repealed Code of Civil Procedure section 1166 as of January 1, 2004, and it failed to make the new version of Code of Civil Procedure section 1166 operative until January 1, 2005.

Effective January 1, 2005, a landlord’s complaint for unlawful detainer must: (1) be verified and include the typed or printed name of the person verifying the complaint, (2) set forth the facts on which the landlord seeks to recover, (3) described the rental unit with reasonable certainty, (4) state the amount of rent in default (if applicable), and (5) describe how the eviction notice was served. A landlord may satisfy item (5) by properly completing Judicial Council form complaint, or by attaching to the complaint a copy of the proof of service relating to service of the eviction notice. In addition, a landlord in a residential eviction case must attach to the complaint a copy of the eviction notice and a copy of the applicable lease or rental agreement (if one exists), and any addenda or attachments to the lease or rental agreement (if any such documents exists).

A landlord is exempt from the requirement to attach the specified the attached documents if: (1) the lease or rental agreement is oral, (2) the landlord does not have in his or her possession the written lease or rental agreement, or (3) the eviction is based solely on the tenant’s failure to pay rent. A court must grant the landlord five days to amend the complaint if the landlord fails to attach the specified documents.

VIII. PUNITIVE DAMAGES IMPOSED ON LANDLORDS

A. Prohibited Acts by Landlords
Effective January 1, 2004, it became statutorily unlawful for a landlord to try to influence a tenant to vacate a rental unit by: (1) engaging in conduct which amounts to the crime of theft under Penal Code section 484; (2) engaging in conduct which amounts of extortion under Penal Code Section 518; (3) using, or threatening to use, force, willful threats, or menacing conduct which interferes with the tenant’s quiet enjoyment of the rental unit (i.e., a violation of the Implied Warranty of Quiet Possession under Civil Code section 1927) that would create an apprehension of harm in a reasonable person; or (4) committing a significant and intentional violation of applicable law governing a landlord’s right to enter residential rental units set forth in Civil Code section 1954. (See Cal. Civil Code § 1940.2). The new statute provides that a tenant may recover up to $2,000.00 for each violation of the statute by a landlord.

Excluded from the purview of this statute are: (1) oral or written warning notices, given in good faith, regarding conduct by a tenant, occupant, or guest that violates, may violate, or violated the applicable rental agreement, rules, regulations, lease, or other applicable laws, and (2) oral written explanations of the applicable rental agreement, rules, regulations, lease, or other applicable laws given in the normal course of business.
The statute expressly states that it does not enlarge or diminish a landlord’s right to terminate a tenancy pursuant to existing state or local law, and that it does not enlarge or diminish a local government’s ability to regulate or enforce a prohibition against a landlord’s harassment of a tenant.

B. $2,000 Penalty for Each Act of Retaliation
Prior to January 1, 2004, under Civil Code section 1942.5, a landlord who engaged in an illegal retaliation against a tenant faced liability to a tenant for punitive damages of up to $1,000 for each act. Effective January 1, 2004, this statute was modified to increase a landlord’s punitive damages liability exposure from $1,000 to $2,000 for the commission of prohibited retaliatory acts against a tenant.

IX. ANNUAL REPORTS REGARDING EVICTIONS OF DOMESTIC VIOLENCE VICTIMS
Health and Safety Code section 34328.1 requires every local housing authority within a city or country to file with the State Department of Housing and Community Development, on October 1 of each year, a complete report of its activities during the previous fiscal year, with specified recommendations.

Effective January 1, 2004, this statute was modified to require that the annual report include specified information on terminations of tenancies of domestic violence victims in housing authority units, and terminations of Section 8 vouchers of domestic violence victims. The specified information must be included in the annual report for all cases where a notice of termination was given, regardless of the reason for such a notice.
The specified information includes: (1) the steps taken, if any, by the authority to address the situation or assist the victim prior to the termination, or an explanation of why no such steps were taken; (2) the subsequent housing obtained by the victim, if known; (3) information regarding whether an arrest was made or any report (i.g., police department incident report) was filed; and, (4) any other information deemed relevant to the authority.