11 April 2011
Assembly Member Tom Ammiano (San Francisco) recently proposed a new piece of legislation—AB 265—to extend the standard 3-day notice requirements to 14 days.
Ammiano believes that the law should be changed to protect tenants who have fallen on hard times—giving them longer grace periods to pay their rent. Consequently, it also would universally extend the grace period for all tenants, regardless of economic situation, when rent is not paid on time.
The proposal also ignores the other side of the story—the unintended consequences of such a law.
- Landlords and property managers will be forced to tighten their credit requirements when renting to new tenants. Failure on their part to do so, could lead to prolonged delay in rent payments and further delay in the eviction process. The longer an eviction takes, the more money a landlord can lose.
- With tighter screening requirements, households with lower incomes, new renters, and those who have recently faced foreclosure, will find an increasing difficulty in renting an apartment. This affects the precise group of renters Ammiano has set out to protect.
- Some landlords may decide to increase security deposits as an added protection. High security deposits make it difficult to rent vacant units as many renters (even those with excellent credit) find high security deposits difficult to afford.
- Landlords who enter into payment plans (periodically) with tenants, will be less inclined to do so. This will adversely affect the struggling tenants who are supposed to be protected by this bill.
Proponents of AB 265 argue that laws mandating grace periods for consumers paying off certain debts (mortgages, credit cards, etc.) should be extended to tenants in the paying of their rent.
These mandates apply to payments that are generally sent through the mail after such creditors mail the statements of account to the debtors. Delays in the postal system made it clear that grace periods in such cases were necessary.
In the case of rental housing, however, tenants are always aware of, and are responsible for knowing, their rent amount, as well as when it is due. Renters have also (usually) signed a rental agreement stating when, where, and to whom their rent is due.
With the availability of paying by check, cash, cashiers check, credit card, money order, or electronic funds transfer (EFT), and the option to pay by mail or in person, there is no need to place a mandated grace period on late rental payments.
Landlords have many expenses, just as renters do, and they depend on the timely payments from their tenants to pay their own bills. It can be hardship enough to serve a 3-day notice, but with the proposed change to a 14-day notice, landlords will face further struggles to pay mortgages, employees, and other bills (such as for the gardening service).
AB 265 is clearly bad news, but there is another bill proposal that may pique your interest.
Assembly Member Paul Fong has reintroduced a "water conservation" bill this year that is sponsored by the Sierra Club. Last year, AACSC was the key player in causing the demise of an identical bill, AB 1975.
This year, Fong is carrying AB 19. The bill would permit the state to require separate water meters for each newly constructed dwelling. This would result in a substantial increase in the cost of construction of each dwelling unit, instead of allowing the developer the choice to install either separate water meters or submeters.
When new service is required, whether it is for new construction or for existing dwellings or commercial properties when sold or re-rented, the water purveyor could decide to require a new meter installed in every unit. Landlords, in this case, could be confronted with paying an astronomical bill to accommodate the edict of the water purveyor.
The bill also requires real property owners who install or cause to install the meters or submeters to assure the government that all laws are being followed including maintenance, testing and billing. This may be difficult to do when a unit is rented or leased.
There are scores of bills this year that directly affect landlords and managers. This article features just two of the most egregious. Stay tuned.