Printable Lesson Materials Print these materials as a study guide These printable materials allow you to study away from your computer, which many students find beneficial. These materials consist of two parts: graphic summaries of the content and a multiple choice quiz. Graphic Summaries This portion of your printable materials consists of dozens of frames that summarize the content in this lesson. The frames are arranged on the page to make it easy for you to study the material and add your own notes from your textbook or the online course. Quizzes Many students learn best from sets of questions, and this multiple choice quiz allows you to focus your review of the material to important topics. 2009 Rockwell Institute 13218 NE 20th Street Bellevue, WA 98005 425-747-7272 800-221-9347 www.rockwellinstitute.com
California Real Estate Law Lesson 20: Landlord-Tenant Law Introduction This lesson will discuss: leasehold interests the lease agreement payment of rent security deposits use and condition of premises transferring a tenancy termination of a tenancy Leasehold Interests Lease is: contract between landlord and tenant conveyance of real property interest
Leasehold Interests Leasehold: property interest conveyed by lease also known as leasehold estate or tenancy Leasehold Interests Term tenancy: fixed-length term, usually a certain number of months or years also known as estate for years, but term may be for any period (including less than one year) provisions of lease (such as rent amount) cannot be changed during term Example: lease specifying term from January 1 to June 30 is term tenancy Leasehold Interests Periodic tenancy: no fixed term; tenancy continues from week-to week, month-to-month, or year-to-year lasts until landlord or tenant gives proper notice of termination provisions of lease (such as rent amount) can be changed with proper notice may be arranged at start of lease or may arise after term tenancy ends
Leasehold Interests Example: Term tenancy expires and tenant holds over. If landlord accepts rent payments, periodic tenancy is established. Leasehold Interests Tenancy at will: tenant is in possession of property with landlord s consent, but neither a term tenancy nor a periodic tenancy exists most commonly occurs when tenant holds over after term tenancy ends and no new lease has been agreed upon once landlord accepts rent, periodic tenancy is created Leasehold Interests Tenancy at sufferance: tenant holds over without landlord s express or implied consent not really a tenancy at all tenant no longer has right of possession tenant has less protection under the law
Summary Leasehold Interests Leasehold Term tenancy Periodic tenancy Tenancy at will Tenancy at sufferance The Lease Agreement Lease agreement: contract between landlord and tenant also known as rental agreement all contract rules apply (capacity, consideration) For lease terms longer than one year, statute of frauds applies. must be in writing The Lease Agreement Written lease: must contain adequate description of property must be signed by landlord signature by tenant not required (payment of rent = consent) For residential lease, tenant must be given copy within 15 days.
Summary The Lease Agreement Lease agreement Writing requirement Payment of Rent Lease should state: rent amount when rent is due how and where rent should be paid Payment of Rent Residential lease must contain name, address, and telephone number of: property owner property manager (if there is one) person receiving rent (if not owner or manager) Residential lease must also state any restrictions on how and when rent is to be paid.
Payment of Rent If residential lease with no written agreement: landlord has 15 days to provide the leaserelated information in writing alternatively, landlord may post information in public place (such as elevator) Landlord must give tenant receipt for rent upon request. Payment of Rent Cash payments Under California law, landlord can t require tenant to pay rent in cash. Exception: if tenant s rent check has been returned: for insufficient funds, or because tenant stopped payment Payment of Rent Cash payments To require cash in such situations, landlord must give tenant: written notice of the cash requirement, with attached copy of bad check can only require cash payments for 3 months
Payment of Rent Late fees Landlord can require late fee only if: authorized by lease reasonable Payment of Rent Rent increases Term tenancy rent increases: landlord can t increase rent during term, unless specifically permitted by lease residential leases: rare commercial leases: sometimes Payment of Rent Rent increases Periodic tenancy rent increases: state law doesn t limit increases (but local rent control laws may apply) requires advance written notice generally, month-to-month tenancy requires 30 days notice
Payment of Rent Rent increases In residential month-to-month tenancy: if rent has risen more than 10% in last 12 months, 60 days notice required Rent Increases Rent control laws Rent increases not limited by the state. Some local governments have rent control ordinances. strictly limit size of rent increases 15 cities in California have rent control laws 100 cities in California provide rent control for mobile homes Rent Increases Rent control laws Costa-Hawkins Rental Housing Act: state law passed in 1990 that places restrictions on rent control laws restricts any locality from enacting new rent control ordinances no rent control in buildings built after 1995 no rent control in single-family home or condo tenancy that began after January 1, 1996 (regardless of building age)
Rent Increases Rent control laws In buildings that are still rent-controlled, if tenant moves through no fault of landlord: rent control no longer applies to that unit Rent Increases Rent control laws Ellis Act: discourages landlord from trying to escape rent control by demolishing structure and putting up new building if owner demolishes and replaces within 5 years, rent control restrictions continue Summary Payment of Rent Cash payments Late fees Rent increases Costa-Hawkins Rental Housing Act Ellis Act
Security Deposits Most residential lease agreements require security deposit. Provides some protection for landlord against: damages rent default Security Deposits California law: limits size of security deposits regulates refunds and deductions Security Deposits Size of deposit For residential tenancies, total amount of security deposit cannot exceed: two months rent for unfinished units three months rent for finished units
Security Deposits Size of deposit Exception: deposit may be designated as advance payment of rent if rent term 6 months or longer landlord can require deposit of 6 times monthly payment as advance payment of rent Security Deposits Size of deposit State law doesn t require landlord to pay interest on security deposits. some local areas do (San Francisco) Size of Deposit Increasing deposit during tenancy Tenant with fixed-term lease can t be forced to add to deposit amount. unless lease agreement provides for increase Tenant with periodic tenancy can be required to increase deposit amount.
Security Deposits Refunds and deductions Landlord must fully refund deposit, unless tenant breaches lease agreement. Security Deposits Refunds and deductions Landlord may deduct for losses caused by tenant s breach, including: back rent and fees cleaning unit (to its original state) repairing damage to unit (not including normal wear and tear) repairing items in furnished unit (if lease allows) Security Deposits Refunds and deductions After tenant vacates, landlord has 21 calendar days to return deposit. less any lawful deductions deductions must be itemized in writing If repairs and cleaning total more than $125, landlord must provide copies of receipts or invoices.
Security Deposits Refunds and deductions If landlord withholds deposit in bad faith, tenant entitled to: actual damages penalty damages up to twice amount of deposit Security Deposits Refunds and deductions If landlord is selling or transferring leased premises, landlord may either: return security deposits to tenant, or give security deposits to new owner Security Deposits Inspection of the premises In some states, landlord and tenant are required to inventory premises at beginning of tenancy. not required in California In California: If tenant requests, landlord must inspect unit shortly before end of tenancy. gives tenant time to correct any problems must occur no longer than two weeks before end of tenancy
Security Deposits Inspection of the premises Landlord must notify tenant of right to inspection, in writing, either: before lease term expires, OR after either party has given notice of termination Security Deposits Inspection of the premises After inspection: landlord must give tenant written list of charges landlord cannot deduct for items not on list doesn t apply if tenant tries to hide damage Summary Security Deposits Size of deposit Increasing deposit during tenancy Refunding deposit Normal wear and tear Inspection
Use and Condition of the Premises Law imposes duties on both tenants and landlords: landlord disclosures tenant s responsibilities landlord s responsibilities Use and Condition of the Premises Landlord s disclosures Landlord can t hide material facts about premises from potential tenant. Under federal and state law, specific disclosures are required, including: lead paint drug manufacturing death of occupant Use and Condition of the Premises Landlord s disclosures Before tenant signs lease for dwelling built before 1978, landlord must disclose presence of leadbased paint hazards by: including a Lead Warning Statement in the lease giving tenant pamphlet on lead hazards giving tenant completed lead hazard disclosure form Required by federal law.
Use and Condition of the Premises Landlord s disclosures Landlord must inform prospective tenants if: methamphetamine or other illegal drugs manufactured on premises if occupant died on premises within preceding 3 years (including manner of death) Exception: occupant died of or was ill with AIDS or HIV Use and Condition of the Premises Tenant s responsibility Tenant s responsibilities come from: common law statutory law provisions in leases Use and Condition of the Premises Tenant s responsibility Under Civil Code, tenants must: refrain from damaging premises or allowing guests to do so keep dwelling unit clean and sanitary use gas, electrical, plumbing fixtures properly use various parts of premises as intended
Tenant s Responsibility Alterations Most residential leases: tenant can t alter premises without landlord s consent Exception: alterations needed for disabilities landlord can require tenant to pay for alterations landlord can require tenant to restore premises at end of term Use and Condition of the Premises Landlord s responsibility Every lease includes two implied warranties (promises) by landlord: covenant of quiet enjoyment warranty of habitability Use and Condition of the Premises Landlord s responsibility Warranties: originated in common law since codified in statutory law apply even if not stated in lease cannot be waived
Landlord s Responsibility Covenant of quiet enjoyment Covenant of quiet enjoyment: landlord can t enter premises without good reason Civil Code allows entry only to: make repairs or agreed alterations investigate tenant s abandonment of premises show apartment to prospective tenants, purchasers, or lenders investigate or remedy an emergency inspect a waterbed installation Landlord s Responsibility Covenant of quiet enjoyment Entry must take place between 8:00 AM and 5:00 PM on weekdays unless emergency, abandonment, or agreement between parties Landlord s Responsibility Covenant of quiet enjoyment Landlord must give tenant written, advance notice of planned entry. Notice must contain: date of entry approximate time of entry reason for entry
Landlord s Responsibility Covenant of quiet enjoyment Notice must be delivered to one of following: tenant someone at unit of reasonable age Method of delivery: posting it at entry to unit, or mailing it to tenant at least 6 days prior Landlord s Responsibility Covenant of quiet enjoyment Exceptions to written notice requirement: oral notice of plans to show to potential renter or purchaser oral permission from tenant when responding to an emergency when tenant abandons premises tenant waives by inviting landlord entry Landlord s Responsibility Warranty of habitability Warranty of habitability: residential landlord s implied promise to provide dwelling that is weatherproof, pest-free, reasonably safe, and served by standard utilities
Landlord s Responsibility Warranty of habitability California laws contain requirements: effective waterproofing and weather protection from roof and walls plumbing in good working order; hot and cold running water heating facilities and electric lighting deadbolts and smoke detectors window locks etc. Warranty of Habitability Constructive eviction Constructive eviction: occurs when landlord interferes so thoroughly with tenant s quiet enjoyment of premises, or allows them to become so uninhabitable, that tenant is effectively forced to move out Warranty of Habitability Constructive eviction If landlord makes or allows premises to become unusable, tenant is no longer obligated to pay rent.
Warranty of Habitability Constructive eviction To claim constructive eviction: commercial tenants must physically abandon premises residential tenants may remain Warranty of Habitability Injuries to tenants and guests In general, property owners are liable for injuries caused by unsafe property conditions resulting from their negligence. includes rental property may include liability for assaults by other tenants Landlords potentially liable for injuries suffered by: tenants tenants guests Warranty of Habitability Remedies for landlord s violations If landlord fails to provide habitable premises or unreasonably interferes with tenant s quiet enjoyment, tenant must give landlord: notice of problem opportunity to correct problem
Warranty of Habitability Remedies for landlord s violations After receiving notice, landlord has a reasonable time to remedy problem. usually 30 days less time for emergencies (lack of heat in winter) Warranty of Habitability Remedies for landlord s violations If landlord fails to remedy, tenant has three remedies: repair and deduct rent withholding lawsuit for damages Remedies for Landlord s Violations Repair and deduct Repair and deduct: tenant may perform repair and deduct expense from rent Tenant can t use repair and deduct remedy if: tenant (or tenant s guest) caused damage repair costs more than one month s rent Tenant can only use remedy twice in any 12-month period.
Remedies for Landlord s Violations Rent withholding Rent withholding: tenant withholds rent (or portion of rent) until landlord fixes problem amount withheld should reflect degree to which premises are unusable habitability defect must be serious (directly affecting health/safety) Remedies for Landlord s Violations Lawsuit for damages Tenant may sue: to enforce repair to seek damages Remedies for Landlord s Violations Lawsuit for damages Civil Code requires tenant to prove several elements: defect is substantial problem wasn t caused by tenant or tenant s guest housing inspector gave landlord written notice to repair problem at least 35 days have passed since inspector mailed notice landlord continues to collect or demand rent
Remedies for Landlord s Violations Lawsuit for damages If tenant wins: actual damages plus up to $5,000 in special damages reasonable attorney s fees If landlord acted willfully or maliciously to force tenant out subject to civil penalties. Warranty of Habitability Retaliatory acts Civil Code prohibits landlord from raising rent or starting eviction process against tenant in retaliation for making habitability claim. Warranty of Habitability Retaliatory acts Court will presume rent increase or eviction is retaliatory if it occurred within 180 days after tenant: complains about condition of premises causes public agency to inspect property or issue citation starts lawsuit or arbitration based on condition of premises claims civil rights violation by landlord participates in forming tenants union
Summary Use and Condition of the Premises Landlord s disclosures Covenant of quiet enjoyment Warranty of habitability Constructive eviction Repair and deduct Rent withholding Retaliatory acts Transferring a Tenancy To grant another person all or part of leasehold interest, parties use: assignment sublease Transferring a Tenancy Assignment vs. subleasing Assignment: original tenant (assignor) transfers entire leasehold to new tenant (assignee) Assignee: takes over lease responsible for making payments to landlord
Transferring a Tenancy Assignment vs. subleasing Subleasing: original tenant (sublessor) transfers part of lease term, or part of premises, to new tenant (sublessee) Sublessee: pays rent to original tenant original tenant then pays landlord Transferring a Tenancy Assignor and sublessor liability Despite transfer, assignor and sublessor: still liable to landlord if new tenant fails to pay rent or damages premises, original tenant is liable Transferring a Tenancy Assignor and sublessor liability Only way for original tenant to avoid liability for lease is through novation. Novation: new party steps into shoes of one of the original parties to the contract, and the other original party releases the withdrawing party from the obligation Landlord usually won t agree to novation unless original party pays some consideration.
Transferring a Tenancy Landlord s consent If lease says nothing about transfer rights, tenant may freely sublet or assign lease. However, most leases limit or prohibit transfer. Summary Transferring a Tenancy Assignment Sublease Novation Termination of a Tenancy Four ways a lease can terminate: expiration notice abandonment eviction
Termination of a Tenancy Expiration of lease If lease is for fixed term: lease expires on date agreed to in contract holdover tenant may be subject to eviction Termination of a Tenancy Notice of termination In periodic tenancy, landlord or tenant can terminate tenancy by giving other party advance written notice. Termination of a Tenancy Notice of termination Required notice period is usually same as lease period. Exception: residential landlords must give 60 days notice if tenant has lived on property for one year or more
Notice of Termination Just cause exception In some cases, landlord s power to terminate tenancy is limited. in certain forms of housing (governmentassisted) in cities with just cause eviction ordinances Just cause ordinance: prevents landlord from terminating periodic tenancy unless tenant has materially breached leasehold agreement Notice of Termination Just cause exception Material breach: failure to pay rent material damage to rental property substantial interference with another tenant s quiet enjoyment illegal use of premises Termination of a Tenancy Abandonment Abandonment: tenant leaves premises before a fixed lease term expires, or departs without giving the 30-day notice required to end a month-to-month tenancy
Termination of a Tenancy Abandonment Tenant who breaches without good cause remains liable for remaining rent. But landlord has duty to mitigate (lessen) damages by re-renting property as soon as possible. Landlord must start trying to re-rent property as soon as it s clear tenant has abandoned. Termination of a Tenancy Abandonment Landlord can presume abandonment if: rent overdue by 14 days, and landlord reasonably suspects tenant has abandoned Landlord must follow statutory abandonment confirmation process. Termination of a Tenancy Abandonment If tenant leaves personal property behind: landlord must store it safely landlord must deliver notice to tenant after notice is delivered, tenant has 15 days (18 days if mailed) to reclaim property
Termination of a Tenancy Abandonment If tenant fails to reclaim property: landlord can freely dispose of remaining property if it s worth less than $300 if more than $300, must hold public auction After auction, landlord can reimburse herself for storage costs, but must forward remaining proceeds to tenant or county. Termination of a Tenancy Eviction Eviction: legal process to force tenant out of premises Used for: just cause termination tenant holdover after lease expires Eviction Notice to quit Landlord begins eviction process by serving tenant with three-day notice to quit (vacate) the premises. Landlord must attempt to serve tenant personally. if tenant evades service, notice may be mailed and posted in conspicuous location (like tenant s door)
Eviction Notice to quit If notice to quit is served for breaching lease terms, tenant has right to cure (fix) the default. Example: Tenant can cure failure to pay rent by paying any overdue rent. Eviction Notice to quit Curing the default: stops eviction process allows tenant to remain in possession Eviction Notice to quit Three types of default landlord doesn t have to let tenant cure: damage to premises (waste) substantial interference with another tenant s enjoyment illegal use of premises (such as for drug manufacturing)
Eviction Notice to quit If tenant fails to cure (or has no right to cure) default must leave premises by end of third day. If tenant ignores three-day notice to quit, landlord must file lawsuit called unlawful detainer action. Eviction Unlawful detainer action Unlawful detainer action: plaintiff (landlord) alleges that defendant (tenant) has illegally detained (remained on) premises without right to be there tenant has 5 days to respond cases usually decided quickly Eviction Writ of possession Writ of possession: pre-printed form stating that tenant has 5 days to leave premises; used when tenant refuses to move after losing an unlawful detainer action judge must sign sheriff must serve After 5 days, sheriff can physically remove tenant and his belongings.
Summary Termination of a Tenancy Expiration Notice of termination Abandonment Eviction Notice to quit Unlawful detainer action Writ of possession
Legal Aspects of Real Estate Lesson 20 Cumulative Quiz 1. To change the terms of a periodic tenancy, a landlord must: A. offer to compensate the tenants for any losses B. give the tenants advance notice of the change C. waive the rent for one month after the change D. bring an unlawful detainer action 2. A residential lease must state the: A. name, address, and telephone number of the landlord B. name, address, and telephone number of the tenant C. emergency contact person for the tenant D. due date for rental payments 3. An apartment building will not be subject to rent control if: A. it was built before 1995 B. it was built after 1995 C. the landlord demolishes the building and constructs a new one within five years D. the rent control law allows the landlord a reasonable return on investment 4. A security deposit: A. must be the same whether the unit is furnished or unfurnished B. may be labeled a nonrefundable cleaning fee C. may be kept by the landlord to cover unpaid rent D. can be an amount up to six months' rent 5. A tenant may make alterations to the property: A. and require the landlord to pay for the alterations B. and leave the landlord to cover the cost of restoring its original condition when the tenancy ends C. if the tenant is disabled and the modifications are necessary to accommodate the disability D. unless the lease states otherwise 6. For residential tenants, a requirement for claiming constructive eviction is that: A. the landlord's neglect substantially interferes with the use or enjoyment of the premises B. the tenant moves out of the property C. the tenant continues to pay rent D. the landlord brings an unlawful detainer action 2009 Rockwell Publishing 1
7. A tenant who transfers an entire leasehold estate to another party is a/an: A. sublessee B. sublessor C. assignee D. assignor 8. One of the tenant's responsibilities for a leased property is: A. the covenant of quiet enjoyment B. to use the various parts of the premises as intended C. the warranty of habitability D. to repair significant defects with the property 9. If one tenant is substituted for another in the novation of a lease, the novation: A. releases the new tenant from liability to the landlord B. releases the new tenant from liability to the old tenant C. releases the old tenant from liability to the landlord D. releases the landlord from liability to the new tenant 10. Which of the following does not meet the criteria for a just cause eviction? A. Participation in formation of a tenants' union B. Failure to pay rent C. Using the premises illegally D. Substantially interfering with another tenant's quiet enjoyment 11. Nina, who has been living in her apartment for two years, decides to move to a new place. She is in a month-to-month tenancy, so how much notice does she need to give her landlord? A. 7 days B. 15 days C. 30 days D. 60 days 12. A sublease is a transfer of: A. a rental unit to a new tenant for only part of the lease term B. only part of the rental unit to a new tenant C. the entire tenancy for the remaining lease term D. A or B 2009 Rockwell Publishing 2
13. A tenant notifies his landlord of a serious problem with the property, which will cost about $10,000 to repair, and the landlord fails to fix it. The tenant can: A. waive the warranty of habitability B. withhold rent until the landlord fixes the problem C. claim retaliatory eviction D. refuse to allow the landlord to enter the property 14. A rent increase is presumed to be retaliatory if it occurs within six months after: A. a previous rent increase B. the passage of a rent control ordinance C. the tenant has a public agency inspect the property D. a guest of the tenant is injured on the property 15. A tenant abandons a lease, leaving behind some personal belongings on the premises. If the tenant does not claim this personal property, it must be: A. sold at a public auction if the property is worth $300 or more B. given to the next tenant to occupy the property C. taken to a landfill D. left on the premises until the tenant returns 16. When a landlord fails to fix problems with the property, in order to win a lawsuit for damages a tenant must show that: A. the landlord has stopped collecting rent B. the problem was not caused by the tenant or one of her guests C. the tenant first tried to fix the problem herself D. a guest of the tenant suffered injuries 17. After the tenant vacates a residential unit, the landlord must return the tenant's security deposit within: A. 7 days B. 14 days C. 21 days D. 28 days 18. The warranty of habitability requires that: A. floors, stairways, and railings be maintained in good repair B. the tenant waive his right to notice before entry by the landlord C. the landlord not alter the property D. there are undisclosed material facts about the property 2009 Rockwell Publishing 3
19. The landlord has an obligation to disclose: A. the race of the previous tenant B. how much rent the last tenant was paying C. how many previous tenants have claimed constructive eviction D. if another tenant died on the property within the preceding three years 20. If a landlord sells his property to a third party: A. the tenant's security deposit must always be returned to the tenant B. the tenant must give the new landlord an additional security deposit C. the landlord usually transfers the tenant's security deposit to the new owner D. the former landlord is allowed to keep the tenant's security deposit 2009 Rockwell Publishing 4