California Rental Agreement FAQ

Overview

 

A rental agreement is a contract that can be made in any one of several forms, including written, verbal, or even implied. If you pay rent for your housing unit, you are considered to have a contract even if your rental agreement is not in written form. If the owner should sell the property, you then have a contract with the new incoming owner. Simply by the act of paying the rent regularly (and the landlord’s act in accepting that rent), a contract is made.

 

When the year of a rental lease expires, you might renew it for another full term, but it is more common to continue on a month-by-month basis. If no other arrangements are made, a rental lease automatically reverts to a month-by-month status (under Civil Code 1945) with all the same conditions and terms.

 

In the same way that you are considered to have a contract if you pay regular rent, you are also considered to have a contract if you cover the rent by performing a service. Said services might include management of the property, maintenance or construction work, property caretaking, or even in-home hospice care.

 

Automatic Legal Lease Terms

 

There are certain terms that are automatically part of any lease, even if they are not specifically laid out in writing in a rental agreement.

 

The first of these deals with your security deposit. Your landlord is required by law to return the deposit to you within three weeks of your vacating the premises. No landlord is permitted to make the security deposit non-refundable, and they can only deduct specified damages from that deposit when the property gets vacated. Even if they use another name (like “last month rent,” “cleaning fee,” or “rental fee”) the law still considers this deposit as a security deposit. (For more information, see the “Security Deposit” section below.)

 

Another legal requirement, known as the “Warranty of Habitability,” specifies that in order to collect rent for the property, your landlord must be providing certain basic commodities. These include functioning doors and locks, electricity, water, and heat. Even if the rental agreement doesn’t specifically list these commodities, your landlord is required to ensure them. (For more information, see the “Repairs” section below.)

 

Additionally, your landlord is required to have a “Certificate of Occupancy” on the rental property in order to legally rent it. The city issues these certificates, ensuring that the property is in compliance with all local zoning and building laws. If any unit does not meet these standards and does not have a Certificate of Occupancy, the landlord cannot legally take rent moneys for that unit.

 

In any city that has rent control, landlords must take certain steps before they even ask a tenant for rent. The rental unit must be registered, and the landlord is only permitted to ask for the amount of rent permitted by law. (For more information, see the “Rent Control” section below.)

 

Finally, there are specific laws that protect against a landlord evicting or prohibiting any licensed Day Care operation run by a tenant in the rental property. This law, Health and Safety Code §1597.40, was enacted in order to encourage the proliferation of day cares, with the idea that parents will be able to seek employment and get off Welfare.

 

Discrimination

 

Although there used to be buildings that would rent to “adults only,” landlords can no longer discriminate against tenants with children. Unless a property is specifically designated as a senior citizen complex, the landlord can no longer exclude children or families from moving in. They can place restrictions on the total number of occupants, but cannot specify the ages of those occupants.

 

Additional protections exist to prevent discrimination on the basis of nationality, gender, religion, race, and other factors. Anyone who feels they have been illegally discriminated against can turn to the Fair Housing Council, which investigates and prosecutes discrimination cases in rental properties.

 

Requirements for the Landlord

 

Before offering a property for rent, a prospective landlord must secure the proper licenses and file requisite governmental paperwork. If any person rents out a property without complying with these requirements, that illegal landlord is prohibited from suing to collect unpaid rents from their tenants. Landlords are also restricted from suing for rent or evicting tenants if they fail to register a unit that is rent-controlled.

 

Many landlords operate under a business name rather than using their personal name on rental agreements or checks. If the landlord is using a DBA (“Doing Business As”) name, they are required to file the requisite documents with the county clerk to make that DBA usable as a legal business name. If they do not do this (and do not keep the DBA renewed), then they are barred from filing any suit demanding back rent. The Business and Professions Code Section 17918 outlines these regulations, and this is another area where tenants have sometimes benefitted from the mismanagement of a landlord. (For more information, see the “Find Your Landlord” page.)

 

The same Business and Professions Code states requirements (section 10131) that property managers be properly licensed. Except in the case of live-in managers, any person handling management of another’s property has to have licensing as a real estate broker. Despite the requirement, there are plenty of people flouting the law to manage real property without the requisite license. They may have a contract with the property owner, and they may even have a signed and notarized Power of Attorney, but neither of these documents is sufficient under the law.

 

The reason this requirement is of particular interest to tenants is the fact that managing without a license renders rental agreements unenforceable. If the unlicensed manager is a party to your rental agreement, the landlord is unable to evict you and cannot demand rent from you.

 

All of the above examples should serve to illustrate that you have more rights, as a tenant, than those laid out on the paper of your rental agreement. If you find yourself in a jam regarding a rental, a lawyer may be able to advise you on legal details that apply to you and aid your case.

 

Privacy

 

When you occupy a rental unit, you are essentially purchasing the possession of that unit, and the right of possession is exclusive to you. The landlord is opting for the rent money instead of keeping their own rights of possession, just as if the unit were sold to someone else. (A rental agreement doesn’t give you deed or title to that unit, but for the period of time for which the rental agreement is in effect, you have many of the same rights as owners.)

 

With that rule in mind, you should know that your landlord would actually be considered a trespasser if they entered your rental unit without permission. There is, however, one important exception to that rule. The exception is stated in Civil Code Section 1954, and it lays out the circumstances in which a landlord IS permitted to enter your rental unit without your explicit permission.

 

The first exception is the case of emergency, such as a broken pipe or a fire or another state of emergency involving the property requiring immediate and present attention. The second exception is that the landlord is permitted to show, repair, or inspect the apartment while you live there; however, the landlord must give you advance written notice, and can only insist on entry at the notified time and for the allowed purposes.

 

In such a case, the landlord may enter your rental unit without you being home, but note that they are entirely liable for any damage or theft that might occur during the entry.

 

If the manager of your rental unit is abusing the fact that they’re in possession of a key, snooping or otherwise entering at times they shouldn’t, you should take steps to protect yourself from the ongoing burglary. Compose a letter of complaint to the owner, and file a copy with the police department. You can also restrict their access by adding or changing locks.

 

Current law (Civil Code Section 1941.4) requires your landlord to provide adequate window locks as well as dead bolts for the doors on any rental unit that is considered residential. If your landlord refuses, the “Warranty of habitability” is considered violated, and you have several remedy options legally available to you. You can move out, repair the issue yourself and deduct the cost from rent you pay, or even withhold your payment of rent.

 

Late Fees and Grace Periods

 

A late fee is a fine that is assessed when a tenant is past due on paying the rent. It is usually a flat fee or percentage of the rent, and such a fee is often built into a rental agreement to encourage or ensure timely rent payment. However, the Legislature has recently passed an amendment to the existing law, prohibiting the assessment of late fees in rental agreements for residential units.

 

In legal terms, a late fee is considered a form of “provision for liquidated damages,” which essentially means that is an amount arbitrarily set as a punishment for missing timely payment of the rent. The new Civil Code Section 1671 now states that a rental agreement for a residential unit is now permitted to contain liquidated damages provision. Exceptions to this ruling are only offered if it is prohibitively difficult to determine the precise amount of damages incurred by the contract breach (meaning the late payment).

 

Because the “liquidated damages provision” (i.e. the late fee) is no longer permitted in residential rental agreements, any clause adding late fees to such an agreement is automatically null and void. A landlord is permitted to charge interest, accrued daily, but the interest amount must be stated in the contract.

 

Landlords make many arguments in favor of charging a late fee. They point to the administrative time and costs of phone calls, bank visits, and other inconveniences that may be caused by a tenant’s late payment. However, the truth is that the manager’s pay is not changed when payments are late, and the “extra work” is exaggerated in such accounts. In actual fact, the law clearly states what the permissible charge actually is; Civil Code Section 3302 states that the “penalty” for late payment is the actual owed amount, plus the legal rate of interest on that owed amount.

 

In actual practice, you might face a tactical decision when it comes time to addressing this issue with a landlord. If you choose to sign a rental agreement that includes a provision for late fees, you have not waived any of your own rights. (The late fee provision is illegal, so it is automatically void and that fact does not change by your signing the lease.)

 

If you find yourself facing a demand to pay rent that you don’t think is actually owed, you have several choices. You can pay the rent but register a protest. You can designate the funds as a payment of advance rent, if you don’t want to cause a hassle at the moment. Then, if you are later served an eviction notice for nonpayment, you can point to the rent which the landlord called “late fee,” but which you designated as rent. Because late fees are illegal, they have to credit you the amount as payment toward your rent. On this technicality you can win the case, or at least position yourself for negotiating a favorable settlement.

 

There is not a legally designated “grace period” allowing for late rent payments. It is typical for rental agreements to state that a late fee will be applied if rent goes unpaid for five days past the due date. Once again, the landlord is in a bind, legally speaking, because they cannot raise an illegal penalty action for late rent.

 

There is a three-day notice required before the landlord can move to evict, so those three days could functionally be considered the grace period. Additionally, you may have extra days due to holidays or bank holidays, or even weekends, which are never considered banking days.

 

If you foresee having difficulties with the payment due date relative to your paycheck, you might add a month’s rent up front to your security deposit. In that case, you will actually be a month ahead on your rent payments, so your landlord can’t hold you accountable for late rent even if you don’t hit the exact due date with your payments.

 

Breaking the Lease

 

Sometimes it happens that you have to break your lease. You may have had a change in your job, like a layoff or transfer, or you might have to move due to a family situation. In such an event, you want to leave with as clean a break as possible.

 

If your lease is month to month, you don’t have a problem, because either party (landlord or tenant) can terminate the lease simply by giving thirty days’ notice in writing.

 

If it is the landlord who is terminating the tenancy, they are required to give you a full sixty days’ notice if you have been renting the unit for a year or more. (The exception to this case is if a new buyer is moving in to a condo or house, in which case only 30 days are needed, according to Civil Code 1946.1).

 

If your lease is for a longer period, like a rental agreement with a yearlong term, the situation is different. Generally speaking, you are responsible to pay the entire year’s rent, regardless of whether you continue living there. Look closely at your rental agreement to determine what the details indicate. Some month-to-month agreements appear like leases in the sense that they make the security deposit non-refundable if you leave before a year is up; however, these may be simply month-to-month agreements with an illegal clause for nonrefundable deposit tacked on.

 

If you don’t have any legally valid reason for why you are going to break the lease, your landlord is still legally required to make every effort to minimize the financial impact of your breach of lease, re-renting the unit rather than letting it sit empty. This is referred to as “mitigating damages,” and it lessens the amount of owed rent you would be responsible for paying. 

 

To see how this works, imagine for a moment that you break your yearlong lease by leaving after four months. You could potentially owe the remaining eight months’ rent, but the landlord is required to try to re-rent the unit. Say they find a new tenant, paying the same rent, in the sixth month. In this case you would owe the rent from months the unit sat empty, but your obligation ends at the point when the new tenant begins paying. The landlord is not allowed to make a duplicate collection.

 

Another scenario is an apartment which you were renting for $1000 per month, but which the landlord rents out the next day at the lower rate of $900 per month. In this case, you would owe the difference of $100 per month for the eight months remaining on your lease.

 

In contrast to these scenarios, imagine a landlord has not re-rented the unit at all, and wants to collect the missed rent from you for the months remaining on your lease. If you can show that the landlord did not attempt to re-lease the unit, you do not owe anything, because the landlord failed to mitigate damages. In cases where the landlord has only made minimal attempts to re-rent the unit, or rented it at a different rate than you paid, a judge can determine whether a mitigation of damages has been met.

 

If you have reason to terminate your lease that does not meet the test of being “legally valid,” your best bet is to give your landlord written notice, and state in the notice that your unit is going to be open for prospective tenants to view it with reasonable notice, in accordance with Civil Code 1954. You can actually take additional steps by advertising yourself in free circulars like the Recycler. Have prospective renters call you, and forward their contact information to the landlord as possible replacements for you. Document all of this, and then you will have legal ammunition if the landlord later claims they could not lease the space.

 

“Legally valid” reasons for your termination of the lease are those that have to do with the rental unit itself. (In other words, it doesn’t legally matter if you have had a life change, if your roommate has moved out, or if your financial situation has changed.) If your unit burns down, or merits a yellow tag following earthquake damage, those are obvious situations where you have legally valid reasons to terminate. However, there are a number of other situations where a rental unit becomes uninhabitable, rendering a legally valid reason for you to leave.

 

In cases where the unit has become uninhabitable, you are permitted under Civil Code 1942 to quit the unit without notice. These conditions do not have to be so severe as the conditions under which you are entitled to withhold rent. They fall in the same category (and under the same statute) as remedies for which you can repair yourself and deduct rent. In other words, you have a choice; you can repair the damage and deduct the repair-cost from the rent you pay or you can simply leave the apartment.

 

Most rental units actually have some kind of problem that might fit this category. If the deadbolt lock is missing from your front door, if screens are missing, if the unit doesn’t have adequate trash receptacles, if electrical outlets are defective, if bathroom drains are slow—any of these conditions can be considered habitability issues. If you are looking to leave a lease, any of these reasons can give you legal reason to terminate the lease. You can’t just quit your lease because you just got transferred to Chicago, but you can decide at that time that you can’t live anymore without a deadbolt.

 

You are required to give a reasonable amount of advance notice, but that doesn’t have to be in writing. If you have mentioned the problems to a manager the previous month, be sure to say so when you submit your written notice of termination, thereby creating a record of your “advance notice” that the issue was a problem. If a landlord fails to correct an uninhabitable condition within a reasonable amount of time, you have valid legal reason to terminate your lease. If you have photos and witnesses, all the better just in case it goes to court.

 

In some cases, your landlord will be agreeable to the termination, but they may want to charge you a price. Pay close attention to the terms. An acceptable release clause would be along the lines of paying one month’s rent in exchange for being released from the remainder of the lease. 

 

Be wary of a management company making this kind of deal with the added-on requirement that you would owe rent money for the time the unit remains vacant. In such a case, your “release” payment would be wasted, and the landlord would be double dipping. Make certain, too, that you are not forfeiting your security deposit. And be sure to get the release agreement in writing so they don’t go back on a statement that you “don’t have to worry” about the lease.

 

Another option is for you to sub-let the apartment to another party. This can cause you problems if your existing lease prohibits sub-leasing, but in some cases it’s a good option. And even in a case where the landlord prohibits sub-letting, they would have trouble justifying the eviction of a paying sub-tenant when they are required to mitigate damages by filling the lease.

 

Miscellaneous Special Laws

 

The Hide-and-Seek Landlord

 

A landlord is required by law to identify to you who is managing the property, who owns the property, and how and where you are to pay rent. If this information is not in the lease, it must be posted. If rent can’t be delivered in person (meaning there is no physical address for rent payment), you can mail your rent, and you are considered to have paid on the date that the rent check is postmarked, even though it is delivered later. In such a case, you want to be able to prove that you have mailed the rent, so you might choose to use registered or certified mail. Under Civil Code 1962, you may want to call the landlord to remind him that the check is, indeed, in the mail.

 

In cases of a lawsuit where a landlord refuses to identify the full name and contact information of their agent, you can send the complaint and summons by certified or registered mail to the same address where you send rent. This is especially important in small claims, like suing for the return of your security deposit. You don’t need to pay a sheriff to serve the landlord; you just need to mail the Plaintiff’s Claim ten days or more before the date of the trial.

 

According to Civil Code 1962, there is also a requirement of adding this information to any three days’ notice to pay or quit.  Such a notice must contain the name, phone, address and available hours of the person who can receive payment, or else the banking information. Many landlords don’t know they have to include this information, which means their forms don’t include it. Courts will have to decide whether the missing information renders the notice invalid.

 

Landlord Liability

 

A landlord can be held liable for and be sued over crimes that are committed on the property, in cases where the landlord is considered to have been negligent. Examples would be thefts from tenants’ cars in a case where the landlord had failed to repair a security gate on the garage.

 

Landlords often claim they are not liable (that wording may even be in your lease) but such a claim does not automatically render them blameless. Additionally, the landlord is directly responsible for any negligent behavior by a property manager or employee, just as if the landlord himself had been negligent. Crime also falls under the category of habitability issues.

 

Landlords may try to dodge liability by stating that their insurance won’t cover the crime. However, just because their insurance won’t pay doesn’t mean they aren’t liable. (Think about it; nobody would buy insurance if lack of coverage exempted you from liability.) Also note that if you don’t have renter’s insurance, that does not excuse the landlord from liability either. This is a matter you should see a lawyer about.

 

Shared Utilities

 

Some rental units get the utility bill for more utilities than those used by the rental alone. If your unit’s utility bill covers services to any other unit, or a garage or laundry room or common area, your landlord is required by Civil Code Section 1940.9 to tell you about the shared utilities.

 

They are required to tell you all about it when you rent the unit and have some agreement in place about dividing the expenses of that service, like you paying a certain percentage. If the landlord has not done so, you can sue in a small claims court to get reimbursed for the utilities used outside your unit and billed to you. (Civil Code Section 1940.9(b)(2))

 

Pesticide and Toxic Mold Report

 

If your landlord makes use of a pest control service, you must receive notice (or notice must be posted) about any pesticides being used. The notice should include what active ingredients are in the pesticides, and what the possible adverse health effects could be. (Civil Code Section 1940.8)

 

Toxic mold is an increasingly worrisome problem, because it can lead to serious health issues. Mold often results from the neglect of leaking pipes, leaky roofs, unsealed walls, or water-damaged areas.

 

The new Health and Safety Code 26147 mandates that a landlord tells all tenants (and prospective renters) about the presence of mold. They must also take active measures to address this habitability issue. If you have mold in your rental unit, go on record with a written letter demanding that the mold be cleaned up.

 

Fumigation

 

In the event that your rental unit needs to be fumigated for termites, the process requires two to three days with the building tented and the occupants absent. Although this situation is considerably common, there is surprisingly no current law dealing with this event.

 

Leaving the apartment costs tenants for lodging and meals, not to mention replacing food in the apartment, moving clothes and essentials to a hotel, rerouting mail and phone calls, setting up alternative child care and transportation, and other hassles.

 

Fumigation can become an issue when city inspectors require it (a rare situation) or (more commonly) when the landlord is refinancing or selling the building. Buyers and lenders want to see a termite report, so landlords are likely to have the property tented if termites are a problem. Given that the tenting is most often an optional procedure being undertaken for the landlord’s benefit (buying or selling), it is reasonable to ask the landlord to cover some of the expenses you will incur in such a situation.

 

Foreclosure

 

Just because you’ve been on time paying your rent, doesn’t guarantee that your landlord has been doing the same with their mortgage. It is not unheard of for rental properties to go into foreclosure, and you can find yourself being turned out of the apartment through no fault of your own.

 

Following the Trustee’s Sale, which finishes up the foreclosure proceedings, the new owner (most often the bank that foreclosed) can’t take legal possession until they have gone through the legal procedure for evicting tenants. This gives you a little time to sort out your options and find new housing. The former owner (presumably your landlord) is given a three-day notice, and their tenants (you) are entitled to a longer notice of thirty days before an eviction lawsuit can be filed.

 

Apartment Manager Minimum Wages

 

A typical contract for resident property managers is to have reduced or free rent on an apartment in exchange for the services involved in managing that building. Many landlords expect unlimited hours of work in exchange for the living space, but California’s labor department (the California Industrial Welfare Commission, or IWC) actually requires that apartment managers be paid at least minimum wage for the hours they work. This includes time spent on chores and maintenance, as well as dealing with other tenants and their issues.

 

The minimum wage requirement, laid out in IWC Order 5-2001, comes as a surprise to most landlords. There is an exemption for managers and administrators, but this exemption hardly ever applies to apartment managers, unless they are paid at least double the minimum wage for a forty-hour work week. (With minimum wage now at eight dollars per hour, that means being paid at least $640 per week.)

 

Additionally, if the manager puts in more than forty hours in a week, the standard rule of time-and-a-half pay will apply. Weighed against the minimum wage requirement, the landlord is able to deduct as much as two-thirds of the market value of the manager’s apartment rent. However, that deduction cannot be more than $381.20 for a solo manager, or $563.90 for a couple, and the deduction is only allowed if the manager and landlord have a written agreement. Unless the manager volunteers (in writing) to pay rent, their apartment must be given to them for free, AND they must be paid.

 

If an apartment manager has been overpaying rent, or not being paid for the work they do in managing the property, they can sue the landlord for those wages. The law also allows them to sue for a penalty of a month’s “waiting time,” as well as interest, not to mention costs and attorney’s fees. If a manager has been threatened with eviction for demanding their due, they will be able to counter-sue for a noteworthy amount. It is remarkably common for landlords to owe their managers in excess of twenty thousand dollars in back wages that have gone unpaid.

 

As a manager, your only requirement is to track the hours you spend on management tasks, or do your best to reconstruct how much time your job has taken over the course of your term as a manager. If you are a manager now, be sure to keep a time log!

 

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