Legal Corner

By stePhen C. duringer, esq.

I own a four-plex in Glendale. Each unit is metered separately and each household pays their own utility bills. My question relates to the lighting in the pathways and parking area. There is no separate meter for these. The lighting seems to be wired to the closest apartment unit, so the residents are paying for these “common area” lighting fixtures. Is that a problem?

Well, it might be, but it can be easily remedied. CC §1940.9 requires you to disclose this fact to the residents “prior to the inception of the tenancy” or “upon discovery.” Additionally you should “execute a mutual written agreement with the tenant for payment by the tenant of the cost of the gas or electric service provided through the tenant’s meter to serve areas outside the tenant’s dwelling unit.” This can be done by a lease addendum or amendment advising each resident of the issue and affirming that the resident is aware that his separate utility bill includes charges for lighting of a portion of the common areas. Communication and disclosures are an important tool in dealing with residents, most appreciate the information and will have absolutely no trouble at all signing such an agreement. In the event that a resident refuses to execute such an agreement, then provided your tenancies are month-to-month tenancies, a thirty-day notice of change of terms may be prepared and served

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affirming that each unit will be responsible for a portion of the electric charges for the common areas and that amount is included in each unit’s utility bill.

I understand that SB 91 passed recently and extends AB 3088. What exactly does SB 91 do?

Just when we were getting used to the mandates of The Tenant Protection Act of 2019, AB 1482, which brought us Just Cause Eviction and Rent Controls throughout California, and the COVID19 Tenant Relief Act of 2020, AB 3088, Governor Newsom has now brought us SB 91, now titled simply the COVID-19 Tenant Relief Act, which extends the mandates of AB 3088. Signed into law on January 29, 2021, the new law took effect immediately. As did AB 1482 and AB 3088, SB 91 will continue to wreak havoc on us as housing providers, making it ever more difficult to continue to provide housing to our fellow Californians.

SB 91, like AB 3088 before it, limits a housing provider’s ability to evict a resident for non-payment of rent or other financial obligations (“COVID-19 Rental Debt”) that came due or will come due between March 1, 2020 and June 30, 2021, the “Covered Time Period.” Although it is intended to protect those residents who have experienced “COVID-19 related financial distress,” there are few if any safeguards that would prevent the abuse of these new protections. The new laws create two time periods within the Covered Time Period and establish different rules for each: i) March 1, 2020 through August 31, 2020, is the “Protected Time Period,” and ii) September 1, 2020 through June 30, 2021, is the “Transition Time Period.”

Additionally, SB 91 provides $1,500,000,000 in much needed rental assistance and funds to be allocated to tenants and housing providers to be administered by the Department of

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Housing and Community Development (HCD). 10% to be used to administer the program. The remaining funds to be allocated by block grants to localities based upon population, and directly to landlord and tenant by way of direct application to start on or before March 15, 2021.

SB 91 increases and extends penalties for interrupting or disconnecting utilities with intent to terminate tenancy if tenant has provided a Declaration of COVID-19 Related Financial Distress. The tenant can recover actual damages, plus $100 per day, plus an additional $1,000 to $2,500 in penalties. It prohibits using unpaid COVID-19 Rental Debt as a negative factor when screening a prospective resident and restricts the sale or assignment of COVID-19 Rental Debt.

It prohibits the charging or collecting of late fees, and the charging or increasing of fees for services previously provided without charge, if tenant provides the Declaration of COVID-19 Related Financial Distress.

It provides a safe harbor to housing providers who had to close amenities due to government or health agency directive or guidelines. It prohibits using the security deposit to cover COVID-19 Rental Debt during the tenancy or applying rent payment to a previous period without written consent of tenant.

SB 91 increases small claims court jurisdiction to handle COVID-19 Rental Debt. Cannot file until August 1, 2021. May alternatively file in general civil court. Caps attorney fees at $500 if uncontested and $1000 if contested, in most cases. Requires declaration by Plaintiff affirming attempts to secure financial assistance, allows court ability to reduce award if Plaintiff does not cooperate and assist in securing financial assistance, if available, and if tenant qualifies. And it requires a new notice to be served by February 28, 2021 to all tenants who, as of February 1, 2021, have not paid one or more rental payments that came due during the covered time period of March 1, 2020 through June 30, 2021. The mandatory notice form is available from your local apartment association or by contacting the firm.

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I’m looking at a single-family residence to purchase. It’s a pocket listing, no signage, not on the MLS or even Zillow. The agent claims it’s a great deal because the seller needs cash quickly, wants a quick escrow, and is willing to let it go for under market. The only catch is, the tenant doesn’t know the house is for sale, and the owner doesn’t want the tenant to know. He says that when I close escrow, I can serve my own notice to have the tenant leave, but he doesn’t want the tenant getting nervous and moving out if the deal doesn’t go through. Seems like a really good deal, I know the house, I’ve peeked in the windows, and it’s in incredibly great shape. What am I missing, what can go wrong?

Lots. You have actual notice of a tenant in possession. That means that you are bound by whatever rental agreement, or contract, exists between the owner and the existing resident. The tenancy agreement may turn out to be a fixed term lease for a long period of time at less than market rent. The resident may have a lease with an option to purchase the house for a fixed sum, possibly less than what you are paying for it. There may be litigation between the parties relating to the premises, possibly mold or some other contamination issue that you may not be aware of. If the deal really is as described, then prepare a purchase agreement providing a due diligence period allowing you a brief time period to check title, condition and other issues. Once escrow is open, and you are satisfied with title, and the condition of the premises, contact the resident, confirm the terms of his tenancy, get a copy of his rental agreement, and prepare an estoppel certificate for both the resident and the owner to sign, affirming the terms of the tenancy agreement, the amount of deposit, and affirming that he has no equitable or legal interest in the property.

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a specific situation should be addressed to your attorney. Stephen C. Duringer is the founder of The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms in the country. The firm has successfully handled over 300,000 landlord tenant matters throughout California and has collected over $300,000,000 in debt since 1988. The firm may be reached at 714.279.1100 or 800.829.6994. Please visit www.DuringerLaw.com for more information.

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