Duringer-Legal Corner

Crime, Retail and Skipping Out

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Q: I own a small apartment building in a “rough” area. Seems like a day doesn’t go by without some sort of violent crime in the neighborhood. I have a vacancy now, and I don’t know if I have to tell them about all the stuff going on. If I did no one would rent, what do I do?

A:
In many areas throughout Southern California, crime is a fact of life. When asked by the prospective resident about crime in the area, refer them to the local sheriff or police department for statistics. Be careful not to portray your building as a “security” building or advertise it in any way that may create a false sense of security or safety. If your property presents an increased risk of harm, or has had a recent rash of criminal conduct, you may have a duty to disclose this fact to the prospective resident, even if not asked.

Q: Most of my rental properties are residential multifamily, but I have one small retail strip center in Los Angeles that I own as well. I’ve never had a problem with my commercial ten ants, but I have one who hasn’t paid rent this month. Can I use the same three-day notice to pay rent or quit that I use for my residential properties?

A:
Commercial and residential landlord tenant laws differ in many ways. One major difference between the two is the ability to accept partial rent payments after service of a notice to pay rent or quit for a commercial property, and not for a residential property.

Provided the necessary lan guage is included in the commercial notice, you may accept a partial payment without waiving your notice, and may proceed with an unlawful detainer action without having to re-serve a new notice. For that reason, all commercial notices to pay rent or quit should contain language stating that in the event a partial payment is made, it will not act as a waiver of your right to commence an unlawful detainer action. If you have served a notice that does not contain the proper language and your tenant tenders a partial payment, you may im me diately provide the tenant with a letter acknowledging the partial payment, but also stating that the partial payment will not act as a waiver of your right to proceed with an unlawful detainer action.

Other than that, review the cure periods stated in the default portion of your lease. Typically, the cure period for non-payment of rent or other monetary sums due is three days. Failure to provide proof of insurance is typically three days as well. Most commercial leases will allow ten or 30 days to cure a non-monetary breach. Ensure that the forms you intend to use are consistent with the terms you have negotiated in your lease agreement, as the terms of your lease will control.

Q: I’m in escrow to purchase a small regional shopping center and am in the middle of conducting my due diligence. I’ve gone through the leases and am having some difficulty verifying the terms of some of the tenants’ obligations. My agent, nice guy but a bit green, isn’t much help. He just wants escrow to close so that he can get paid. The seller appears to be disorganized, but not sure if he is giving me the full story. How can I be sure I’m getting the straight story?

A:
Thorough due diligence is absolutely critical to ensuring that the deal is one that makes sense to you. A good real estate agent and his broker will actively assist you in ensuring that your requests for information are properly responded to and will assist you in conducting your due diligence. Contact your broker and request that he assign a more seasoned commercial agent or broker to assist you in the transaction.

Depending on the size and complexity of the transaction, you may wish to retain the services of a real estate forensic accounting firm to verify the financials. Ensure that you have complete copies of all existing tenants’ leases as well as all addenda. Estoppel agreements signed by each of the tenants as well as the owner, affirming all of the terms of the tenancy including any options, are a must. A site visit and individual meetings with each of the tenants is advisable as well. It’s amazing what a five minute conversation with each of your soon-to-be tenants will reveal.

Q: I have a tenant who just skipped out last weekend. He’s been behind in his rent, but I was working with him and he was catching up. I got an email from him this morning confirming that he was out and that he left the keys in the unit. Guess I’m kind of glad he’s gone as I won’t have to go through the eviction process; but now what? He’s only six months into a one-year lease, and I don’t have any prospects. What is my next step?

A:
First thing is to confirm he’s out—pick up the keys and change the locks. Document the condition the unit was left in by taking several pictures of the premises. If there is damage, take detailed pictures of the damage. You will need to provide an accounting of his security deposit within 21 days if the property is residential, 30 days if it is commercial.

Now that you have possession of the premises, you have an obligation to mitigate your damages; that is, to attempt to re-let to minimize the loss that you are sure to incur. Ensure that you maintain a log and document your actions in attempting to re-let the premises. If you retain the services of a broker, ensure that he or she does the same. Your former tenant is responsible for the remaining term of the lease as well as any costs that you will incur in reletting the unit. These additional costs might include advertising fees, signage, broker’s commissions, tenant improvements for the replacement tenant, and the difference in rent for the remainder of the term in the event the replacement rent schedule is less than your existing rent schedule.

 

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, and has collected over $155,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Please visit www.DuringerLaw.com for more information and to sign up for our periodic newsletter.

ADA Requirements and Paying Tenants

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Q: One of my elderly residents recently fell and broke her hip, and it looks like she won’t be getting around very well ever again. She has been living in our building for many years and I would hate to see her move, everyone loves her. Her daughter asked if I would install grab bars in the shower and in the bathroom, and kind of implied that I must do it at my expense because of the ADA requirements, whatever they are. Now this resident is very sweet, but I just cannot afford to spend the money; my husband and I are barely making it as it is. Do I have to allow my resident to install the grab bars and do I have to pay for the cost?

A:
A landlord must allow a disabled tenant to make reasonable modifications to the rental unit to the extent necessary to allow the tenant full enjoyment of the premises. The tenant, not the landlord, must pay for the modifications. As a condition of making the modifications, you may require the tenant to enter into an agreement to restore the premises to their original condition upon termination of the tenancy. You cannot require an additional security deposit in this situation, but you can require the tenant to pay a reasonable estimate of the restoration cost into an escrow account to ensure that the property is returned to its original condition.

Q: My tenants and I have had a very good relationship. They have been paying the rent on time and they don’t disturb any of their neighbors. In the past, I‘ve hired them to take care of various projects around the complex. The work done has been satisfactory. Until recently, I would either pay them in cash, or simply drop off a check in their mailbox. Now, the tenants are asking me to offset their payment from their rent. I told them I’d think about it and get back to them. If I accept their request to just offset the value of their repair work from the rent, am I asking for trouble?

A:
You should never mix your tenancy relationship with the work performed by your tenants. Keep the relationships separate and distinct. Not only is it good business practice, but it also prevents many legal issues from arising. If you mix the issues of services performed in exchange for payment of the rent, you have now expanded your tenant’s potential defenses as to why he or she should not pay the rent. If the rent is a separate transaction, the tenant will have no claim that he is entitled to a reduction or a credit for work performed but not paid. Also, if you have problems with the tenant’s work product, you can hash out those work-related issues while the tenant continues to pay rent. Be very cautious when allowing your tenants to perform work on your building. The benefits may seem great, but the pitfalls are many.

 

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, and has collected over $155,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Please visit www.DuringerLaw.com for more information and to sign up for our periodic newsletter.

Small Claims

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Q: I recently had the pleasure of spending my entire morning watching small claims cases come and go, while waiting for my own. The more I watched, the more I realized that it is a highly “subjective” area, and prone to a lot of “creative” testimony. Needless to say, by the time my case was called my confidence level had been reduced several notches. I guess I did ok, at least better than most, but I’m not sure what I could have done that would have helped. Can you give me some pointers that will help me out next time?

A:
If landlords and tenants are meeting in small claims court, it usually is because the tenant is suing the landlord over a security deposit, or the landlord is suing the tenant over damages done to the unit over and above the security deposit, or some combination of the two. Whatever the underlying cause of action, there are many things a landlord should do that would greatly reduce the chances of being brought into a suit or if a suit is brought, will greatly increase the landlord’s chance of prevailing. Proper tenant screening at the inception of the tenancy will effectively weed out the “habitual” litigant. By verifying past tenancies, many former landlords will volunteer past disputes and their outcome with you.

Using the proper rental agreement will also aid you in a future lawsuit, by clearly identifying rights and duties of all parties during the tenancy. A properly completed move-in inspection form signed by the tenant establishes a baseline in which to determine future damage. Proper documentation recording requests for repairs, actual repairs made, defining the cause of the needed repair, and correspondence documenting any alleged breach by the tenant, such as over-crowding, failure to clean or maintain or other misuse of the premises. Upon the tenants moving out of the unit, it is important to carefully prepare a move-out checklist detailing any and all damage to the unit such as excessive damage to walls or carpets covered with pet stains or ground-in dirt and oil.

Remember that you are required to properly account for the security deposit within 21 days of receiving possession, charging the tenant only for damages and cleaning in excess of ordinary wear and tear. Stay away from any “standard cleaning fee”, only pass on proper deductions. If the tenant damaged it, don’t be afraid to charge him for it; conversely, if the tenant left the premises in the same condition as when he got it, then refund the deposit. Make sure that you attach copies of all receipts including the name, address and phone number of the vendor doing the repairs to the security deposit disposition statement. One last thing, if you go to court, be prepared, be organized and be truthful.

 

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, and has collected over $155,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Please visit www.DuringerLaw.com for more information and to sign up for our periodic newsletter.

Pools and Utilities

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Q: I just put my single-family house on the rental market and have agreed to rent it to a nice family of four: mom, dad and two kids, ages two and five. The parents seem responsible enough and I’m sure they’ll make great tenants, but I am concerned because the house has a pool. Is there anything I can do to protect myself from liability should one of the children fall in and drown?

A:
The short answer is yes. There are several measures you can, and should, take to protect yourself. First and foremost, ensure that the pool and the gate/enclosure conform to all state and local codes and ordinances. The gate should be self latching and should be checked to ensure that it closes properly. Review your insurance policy with your broker to ensure that your coverage is adequate; consider an umbrella policy as well. Your broker can counsel you on coverage limits; consider $3,000,000 as a minimum.

Finally, you should include as part of your rental documents an addendum to the lease in which the tenant acknowledges the dangers of the pool, agrees to ensure that all gates are kept closed, and agrees to periodically verify that the self-latching gate functions properly. Consider requiring that your tenants procure renters’ liability insurance as well. These requirements should be a part of your rental policies for a property with a pool, regardless of whether or not your tenants have children.

Q: My new tenants just moved in a month and a half ago. The lease requires that the tenant pays for all utilities, and must put the utilities in their own name prior to moving in. Well, I just received the electric bill, and it’s still in my name. I’m thinking about not paying it, just letting it get shut off. Maybe when the lights go out, they’ll take care of it. Can I do that?

A:
No, you cannot let the utilities be shut off. Your tenant’s actions are a breach of the rental agreement and must be addressed in compliance with California law. You should immediately prepare and serve a Notice to Perform or Quit—Breach of Covenant notice. The notice should identify the specific breaches, the failure to place the electric utility in their own name, and their failure to pay the utility charges incurred since taking pos session. The notice should be specific as to how they must cure the breach; namely, they must put the utilities in their name, and reimburse you for the amount of utility changes that have been billed and incurred post tenancy.

Note that some jurisdictions may require that you include a statement identifying a witness who observed the breach, as well as the date and time of the breach. In such jurisdiction, you or your manager would suffice as the witness, and the breach would be considered “ongoing” as it continues to occur. In the event of non-compliance, you would be entitled to file an unlawful detainer action to recover possession of the premises. Rarely though is that necessary, as the vast majority of residents will immediately comply.

 

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, and has collected over $155,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Please visit www.DuringerLaw.com for more information and to sign up for our periodic newsletter.

A Strange Letter

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Q: I just received a very strange letter. Seems my local police department has identified one of my residents as an undesirable; they say he’s suspected of being a gang banger and is dealing drugs and tagging the neighborhood. They say that if I don’t evict him, the police will prosecute me for allowing a criminal to operate on my property. I may even lose my property! The family has been there for several years, and other than a couple of bounced checks, they have been model tenants. This is the first I’ve heard of this, no one has ever complained before, no complaints, no drugs, no graffiti or tagging around my building, Help! I can’t afford a vacancy right now, and I think that the police might be wrong, what do I do?

A:
In this upside down and crazy world we live in today, this actually is a growing trend in law enforcement. With a judicial system acting more like a “catch and release” fishing excursion than one that metes out consequences for truly bad behavior, law enforcement is focusing on the easier prey—landlords—in controlling crime in their jurisdictions. Rather than prosecute the criminal, many law enforcement agencies are taking the lazy way out and threatening the law abiding landlord, forcing them to evict the resident. Rather than locking up the bad guys, seems like the current trend is to simply shuffle them off to another community. If the police are certain he is dealing drugs and tagging, seems like the right thing to do would be to arrest him, prosecute him fully and send him off to the “gray bar hotel.”

If the letter you received is inconsistent with your experience with your resident, follow up with the police department by asking for documentation supporting their claim. Ask them to provide specific incidents, dates and times of wrongdoing. Have there been arrests on the property? Have illegal drugs been found there? Ask the office to identify any witnesses that would be willing to testify in court, if necessary. Ask other residents in the building, gather independent information. If the information you gather supports your resident’s involvement in criminal activity, take action immediately. Consult your attorney to determine if you have enough facts to support a three-day nuisance notice, or if a 30-day or a 60-day notice is appropriate. Remember, a letter from the police department is not sufficient evidence in court to base a nuisance notice on; testimony from percipient witnesses will be required in the event the resident contests the unlawful detainer action.

 

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms, and has collected over $155,000,000.00 in debt since 1988. The firm may be reached at 714.279.1100, toll free at 800.829.6994 or 877.387.4643. Please visit www.DuringerLaw.com for more information and to sign up for our periodic newsletter.

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