A NEW YEARS T0P-10
By Rosario Perry, Esq.

Well, well, well… we are beginning another year under the repressive yoke of a rent controlled jurisdiction. How we long for freedom, and how we just don’t want to fight for it. However, politics aside, and economics in stride, to stay in business a Housing Provider must look smart and work smart. To help with this smartness thing, we have set out the top 10 issues for the Housing Provider to accomplish in the coming year.

Number 10:
Excess Rent Sinks Wallets
The HP must check all tenant rents against the Rent Board’s web site to be sure that the HP is not collecting excess rents. The problem is that over the years, the HP may have made errors in writing up rent increase notices. Remember, when taking the various property tax pass-throughs, the HP must send the tenant a redacted copy of the HP’s tax bill showing the property tax charges which are being passed along to the tenant. Also remember to keep heads up when cashing a tenant check. If the tenant sends you a dollar or two too much, and you accept it, that can be excess rent.

Number 9:
Utilities Savings Are Disguised Rent Increases
Fixtures, water loss, car washing. Be sure that any utilities the HP is paying for are not being wasted or misused by the tenants. This means installing low flow toilets and low flow shower heads. It also means not allowing the tenants to water the lawn, grow potted plants and potted pot, and wash cars at the property. (The city has outlawed the washing of cars at residential properties in any event). There are new toilets which have dual flush levers, one for solids and one for liquids. Waste not, want not. Common area lights can be replaced with energy saving fixtures and bulbs. All common area water heaters and related pipes should be insulated. If the HP is providing hot water via an old fashion boiler with recirculating pumps, they should consider flash water heaters in each individual unit. Solar panels and hot water exchangers should be investigated. Government is coming at the HP with a vengeance this year, intending to increase water and energy costs.

Number 8:
A Stitch in Time Saves Nine
The HP should conduct thorough inspections of every room of every apartment every 6 months. The HP is responsible for the condition of the property at all times. The HP is required to know what needs repair. It is not a defense for the HP to say that they did not know that something needed repair, because the tenant did not tell them. Therefore, it is important for the HP to inspect. If the Tenant does not allow the HP to enter, then the HP should serve the tenant with a 3-day notice to cure or quit. Un-repaired water leaks lead to terribly expensive mold repairs.

Number 7:
Give Ellis A Chance
Many HP’s reject out of hand the Ellising of their property (Gov. Code 7060 et.Seq.). There are many factors which may make an Ellis advantageous to the HP. Does the HP have family members who need housing, are these family members paying more for rent than the HP is getting in rent from the apartment building? Is the apartment building in a commercial zoned area where commercial rents will be higher than the current residential rents? Are there long term tenants who will never leave? Don’t forget that an owner can revert into the residential rental market two years after the date of withdrawal. Ellis opportunities should always be examined. Especially where the HP is fried with the operation of a rent controlled building.

Number 6:
Don’t Forget Costa Hawkins Rent Increases
Many HP are unaware of the various uses of the Costa Hawkins law (Civil Code 1954.52 et.Seq.) If you are renting out a condominium (as opposed to an apartment building unit) and the tenant has moved into the unit on or after January 1, 1996 (yes 12 years ago) you can raise the rent to that tenant at any time (absent a fixed term lease). This is in contrast to a tenant in an apartment building, whose rent cannot be raised while in possession. However, if a tenant in an apartment building brings in a subtenant and the original tenant does not live at the apartment as the tenant’s primary residence, then the HP can raise the rent to any amount the HP wants, even though the tenant is still technically the tenant at that unit. Many times tenants move out of city, and subrent their units. They then come and stay in the old unit from time to time to keep the tenancy alive. Under rent control law, the tenant is still allowed to keep possession, however the HP is allowed an unrestricted rent increase.

Number 5:
Security First
With crime on the rise, the HP should seriously consider installing video cameras to protect the common areas of the property. This will enable the HP to view the property from the internet, and also, record all events that take place at the property (and all events that don’t happen at the property). The HP should also consider installing fences and locking pedestrian gates so access to the property is restricted. All subterranean garages should be enclosed with locked gates, and locked pedestrian exists. Not only are gated apartment complexes easier to manage, but the tenants prefer them and will be willing to pay for the added costs. The new video cameras are highly evolved. They record only when someone walks into their line of sight, and they publish the picture to the internet so that the HP can view the property at any time of the day or night.

Number 4:
Love and Marriage—
Spouses, domestic partners and the children
Government is busy at work passing laws that prohibit the HP from evicting tenants for subrenting their apartments to newly acquired spouses, domestic partners, and children, even though the rental agreement prohibits subrenting. However, even if said designated person moves in, the HP is NOT required to accept the designated person as a subtenant. So while the HP cannot evict the tenant for subrenting to a protected person, the HP does not and should not accept rent from these subtenants, nor recognize them as lawful tenants or subtenants. The HP should send a letter to the tenant and the designated subtenant stating that just because the law allows them to live at the property, does not mean that they are either tenants or subtenants. Also, the letter should state that the HP is not going to accept rent from the subtenant, and if the tenant vacates the subtenant must leave as well. Remember under Costa Hawkins, if the tenant sublets to a designated individual and then stops living at the property as the tenant’s primary residence, the HP can raise the rent to the tenant (and thus the subtenant) without restrictions.

Number 3:
No Phone, No Food, No pets
Clean up the property. No pots, or other personal property allowed in the common areas. One of the biggest dangers at the property is potted plants sitting in the common areas (trip hazard). Especially dangerous are potted plants on stairs, within walkways, or by door ways. Do not allow tenants to place any potted plants on the common area or on decks, patios, or rooftops. The problem with potted plants is that they rot out the floor or deck underneath the potted plant. This allows moisture to seep into the building, causing mold and other repair conditions.

Pets are another thing. If the HP is going to prohibit pets, they must keep a sharp eye out for tenants who try to sneak one into their unit. After awhile the tenant will argue that the HP has waived the no pet rule, by allowing the tenant to have a pet and accepting rent. The new tenant scam to get around the no pet rule is for the tenant to claim they NEED a pet for psychological help. It used to be the “service animal” exception, for under federal law (the Americans with Disabilities Act) an HP could not prohibit a tenant from having a pet that was specifically trained to provide assistance to an individual with a disability. As the Federal law stated service animals were not pets. That was all well and good. However most tenants were not disabled and did not need service animals, and did not want to pay for a specifically trained pet. So here’s the new scam.

A state law was passed by Sheila Kuehl to redefine “disability.” Thus under state law anyone can qualify as “disabled.” It is very risky to dispute the tenant’s assertion. A tenant who wants to scam the HP can insist on a service animal by getting a letter from any health care provider or social worker that the tenant needs the pet for psychological reasons. Gone are the Federal restrictions which require the service animal to be trained. If this scam gets more widespread the HP should consider opening up the entire building to pets and charging more money for rent. It is common knowledge that tenants will pay more rent for an apartment if they can have their own pet. Instead of a no-pet policy, the HP would have a pet’s only policy.

Are outdoor barbecues going to be allowed? If so, where are they going to be stored when not in use, and where are they going to be allowed when in use. Remember there are gas, charcoal, smokers, and deep oil fryers. Each brings their own problems. The ACTION rental agreement outlaws all of them. Before allowing a tenant to have one, a detailed written provision in the lease should be included to establish rules to prevent these outdoor cookers from becoming a nuisance and fire danger.

Number 2:
Yes, We have No Insurance Today
Are you covered? The greatest danger in owning an apartment building is not having insurance coverage for a loss suffered or a lawsuit filed against you. There are many types of losses and lawsuits from which an HP can suffer. The worst type of lawsuit involves fair housing law violations. One of the hardest jobs an HP has is to rent empty units. Many times in trying to be prudent, the HP is accused of discriminating against a prospective applicant (no job, no money, no shoes-- why should that matter). When an HP gets sued, the HP wants to be sure that they have insurance coverage. Many times the attorney’s fees in defending against a lawsuit are more than the actual damages claimed. That’s why it is important to have insurance coverage. However, not all insurance policies are equal. The HP should check with their insurance broker to see that they have coverage (usually an endorsement), and that not only the owner of the property is covered, but all related persons (officers and members of the owner) and the managers as well. Do not take a verbal reply from your insurance agent. Insist that the insurance agent send you a letter telling you that you have the requested coverage. If the agent fails to do so, the HP should send a confirming letter instead. While some types of coverage cannot be obtained (such as protection for mold) there are plenty of companies that provide a wide range of coverage. The worst type of loss involves substantial damage or loss to the structures. The HP should find out how much money will be paid in case there is a structural loss (such as from fire or earthquake). Many policies do not provide full replacement value for the damaged structure. These inferior policies only cover the value of the existing structure (as depreciated for age). This is very little help when the HP is expected to pay current prices, and repair to current building codes. The governments now require the HP to repair a building to the current building code, if there is substantial damage. Most buildings are not built to current code since the building code changes every two to four years. Thus to bring a building up to code will require more work, and thus more money, than repairing under an older code. This increased cost of construction is a recognized factor in the insurance industry. The polices are there, but the companies would rather write the policies that provide less protection, because the additional premiums are not much more than for the basic coverage. The HP should purchase the policy with the greatest coverage and greatest protection.

and...
Number 1:
An Oral Contract Is Not Worth The Paper It Is Written On
The HP must have a written rental agreement. The smart HP will use the updated ACTION rental agreement from. Many tenants only have an oral rental agreement. This should not be allowed to continue. All tenants who have oral agreements should be sent a new rental agreement pursuant to a 30-day notice of change in terms of tenancy. If the tenant has a written rental agreement, but one which is poorly written, then the HP must decide whether to send a new rental agreement or not (consult your attorney). However, in the situation where the tenant has only an oral agreement (i.e., there is nothing in writing) the answer is clear: Send a new written rental agreement pursuant to a 30-day notice of change of terms under Civil Code 827. The tenant does not need to sign the new rental agreement for it to be enforceable under Civil Code 827.