Palo Alto Weekly

Real Estate - September 23, 2011

RentWatch

How does one handle a renter who won't pay rent?

by edited Martin Eichner

Q I have owned a building with three apartments for many years. I have always had good tenants until four months ago when I allowed a young woman to move in without giving me a security deposit or the first month's rent. I felt sorry for her because she told me that she had just left an abusive boyfriend.

For the first couple of months she was late with the rent but she eventually caught up. In the last several months she has not paid at all. Every time I ask her for the rent, she promises to pay but then doesn't. Lately she just ducks me altogether. What can I do?

A Once you make the decision to be a residential rental property landlord, you need to accept that you are operating a business and should act accordingly. No matter how many "good" tenants have rented from you in the past, sooner or later you will encounter a troublesome tenant, just like every other landlord. You need to apply a business model approach to your decision to rent to new tenants.

In this case it appears that you allowed your sympathies to overrule your business sense. A business approach means screening tenants in advance to ensure their financial capacity to pay rent. A business approach also means collecting the first month's rent and the maximum security deposit of two months' additional rent before allowing a move-in.

Market conditions may not permit you to impose strict financial obligations, but whenever possible you should require them. A tenant who is unable to meet these initial financial requirements is a strong candidate to leave you in the situation you are currently experiencing.

Now you need to take effective action to remedy this mistake, which will probably mean pursuing the eviction process to remove this tenant. Since you didn't collect a full security deposit, you have no tenant funds for the rent that hasn't been paid. If you delay further because of new promises or excuses, your ultimate losses will mount. You should "bite the bullet" now and start the process.

The eviction process begins with serving a "Three-Day Notice to Pay Rent or Quit." There are very specific requirements for the content and service of a proper Three-Day Notice. If the tenant fails to pay the full rent due or fails to vacate, you will need to file a lawsuit in the Superior Court called an "Unlawful Detainer."

We recommend you hire an attorney who specializes in eviction cases, before you even serve the Three-Day Notice. The attorney will charge a fee to complete the eviction, but the case is more likely to be completed correctly and quickly. Inexperienced landlords who try to process unlawful detainer actions without an attorney often make a mistake that results in the case being dismissed. They lose their court filing fees and additional rent, and are forced to start the process over.

Q I moved out of an apartment more than three years ago. I knew that I didn't leave the place in perfect condition, but I figured I would call it "even" if my landlord kept my security deposit. Instead, I received a letter from him telling me that he was keeping my security deposit and that I owed him another $800 for additional damage to the property. I thought that claim was totally unfair so I didn't respond.

Now, three years later, that landlord has served me with a small claims court lawsuit for $1,000 in damages. Isn't this lawsuit too late?

A In order to give you accurate advice, some questions need to be answered. First, was your rental agreement with this landlord in writing or was it oral? The statute of limitations to enforce the terms of a written agreement is four years, which means this lawsuit is still timely if you had a written agreement.

On the other hand, a claim based on an oral agreement must be brought within two years. Another question is whether the original letter from your landlord was timely. California Civil Code Section 19505.5 requires a landlord to provide a written accounting of a tenant's security deposit to the tenant within 21 days after the tenant vacates. Did your former landlord meet this requirement?

If not, you have a strong argument that the entire deposit should be refunded. If the judge feels that landlord's delay was in bad faith, there is an additional penalty that you could claim equal to twice the deposit amount, in addition to refund of the deposit itself.

Did the landlord's letter include documentation of the amount of damages claimed? Under Section 1950.5, any deductions for repairs or damages or cleaning that total more than $125 must be accompanied by receipts or invoices supporting them. In addition to these issues, you also have the right to attack whether the claimed damages were reasonable, since you felt there was no significant damage to the property when you left. In this type of case, the landlord has the burden of proving that the damages were justified.

If you have any photos or other documentation of the conditions when you left, your case will be stronger. Depending on the answers to these questions, your local mediation program might be able to help you negotiate a compromise settlement of these claims. There is no "open-and-shut" case in the small claims court because the procedure is informal and the parties represent themselves. Both sides have an incentive to settle prior to the court date to save the time and stress of a trial. In addition, the party winning at trial will have to collect the judgment awarded, which can often prove more difficult than winning the case at trial.

Martin Eichner edits RentWatch for Project Sentinel, an organization founded in 1974 that provides landlord tenant dispute resolution and fair housing services in Northern California and administers rental-housing mediation programs in Palo Alto, Los Altos and Mountain View. Call 650-856-4062 for dispute resolution or 650-321-6291 for fair housing or e-mail mediate4us@housing.org.

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