Spring Real Estate 2009

Publication Date: Friday, April 24, 2009

Rent Watch
Can a landlord refuse to rent to a home day-care center?

Q- I own a house that I am trying to rent out. The previous owner rented to very large families, and the neighbors had voiced their complaints that there were always too many children running around. When I acquired the home, its interior was in really bad condition and had to be completely redone. So, I am determined to rent to a family that will take care of the property.

Recently, a couple that runs a licensed home day care applied to rent the house. I have concerns about using the house for a commercial purpose and the liability that comes with that. Also, I am worried about damage that may be caused by having too many children in the house. Can I deny them based on these concerns?

A- As a general rule, a landlord can prohibit business activities in a rental unit if that prohibition is an explicit condition in the rental agreement. In addition, some type of business activities might violate local zoning ordinances or other local laws.

However, state law creates an exception for the operation of a licensed day-care business in a rental property, home or apartment. The law requires landlords to allow this type of business. California has a licensing system for operators of family child-care homes.

Operators of family child-care businesses can be licensed to provide child care in their own homes, including rental units, for up to 14 children. It is the public policy of this state to provide children in a family care home the same home environment as provided in a traditional home setting. The applicable laws require the provider either to carry liability insurance, post an equivalent bond or have the parents sign an affidavit acknowledging their understanding that the provider does not have insurance. You can certainly urge the provider to protect everyone by choosing to carry insurance and to place your name on the policy as an additional insured.

Q- After an exhaustive search for a single-family home to rent for my family, I thought I had found the ideal property, so I happily signed a one-year lease. Then when I showed up at the house on move-in day, I was shocked to discover a Notice of Default taped to the front door. I can't endure another move so soon if the landlord loses this property. Can I cancel the lease without penalty?

A- Unfortunately, renters are often innocent victims of the mortgage foreclosure crisis. Despite laws requiring otherwise, owners facing foreclosure are not likely to maintain rental properties and often use the tenant's security deposit on mortgage payments, leaving nothing to refund to the tenant. In some cases, unscrupulous persons who no longer own the property, or never owned it, try to collect rent from unsuspecting tenants.

The Notice of Default taped to your door is the first formal step towards foreclosure. The owner has 90 days to bring the mortgage current or negotiate some other "work out" with the lender. Current law does not require that you as the tenant be served with the Notice, so in a way you have been luckier than others.

The next step in the foreclosure process is the trustee sale, at least 20 days after the initial 90 day period has expired. The owner loses title to the property at the trustee sale. Some safeguards for tenants were recently enacted by the state legislature, but they apply only at the trustee sale stage. You are required to receive notice of the sale date, and if the owner loses possession to the lender or a new purchaser, you are entitled to 60 days notice to vacate, whether you are renting pursuant to a new lease or a month-to-month agreement. Your current lease remains valid until the trustee sale, and since there is a possibility that the current owner may negotiate a work out or a freeze prior to the sale, you are not legally entitled to treat the lease as void until the trustee sale.

However, if the property is sold, the bank or other new owner may offer you "cash for keys" in exchange for your agreement to vacate voluntarily. While you remain in the property, all requirements of providing habitable premises continue to apply and the owners must maintain the utilities.

Q- I am a legally blind tenant in a very large complex. Recently I got a notice from the management that stated they would be conducting safety inspections in all apartments. The notice gave a very broad range of dates, and no specific times for when the inspection would be conducted.

Because I am blind I cannot verify that individuals coming to my door are indeed who they say they are. May I ask that the management make an appointment with me for a specific date and time, so that I can arrange for someone to be here with me, when the inspection takes place?

A- Yes, you may. California Civil Code Section 1954 protects every tenant by requiring landlords to give 24-hours written notice before entering a rental unit. The notice must state the approximate time of entry and must be limited to normal business hours. Once a landlord meets these requirements the tenant does not have the right to insist on being present at the time of entry.

However, since you are disabled, you may be able to request what federal and state laws call a "reasonable accommodation" to allow you to set an exact appointment and to have a companion present. A reasonable accommodation is a change in rules, policies and practices that may be necessary to afford a disabled person an equal opportunity to use and enjoy a dwelling. In this case since your disability prevents you from identifying members of the inspection team, it is reasonable for you to request that the management allows you to make an appointment for a specific date and time, so that you can make the proper arrangements.

In cases where a disability is not readily apparent or visible, housing providers may request reliable disability-related information to verify that the person meets the Fair Housing Act's definition of disability and demonstrates the necessary relationship between the individual's disability and the need for the requested accommodation. A refusal to make a reasonable accommodation for a person with a disability is considered discrimination under the Federal Fair Housing Act.

Q- Several of my tenants have asked that the due date for the rent be changed to better fit their pay schedule. I have good, long-term tenants and want to help them. Is it legal for me to change the rent due date from the 1st to the 15th?

A- There are no laws regulating the day of the month rent must be paid. This is a date set solely by you. Since you agree to make this change, give each of the affected tenants a written 30-Day Change of Terms notice that states the new due date. This change will create a one-time event where the rent needs to be paid twice during the month the new date is effective.

For example, the first rent payment is a pro-rated amount due on the 1st to cover the first 15 days of the month. The second rent payment is due on the 15th of the same month that covers the next 30 days. After this second payment is paid, the rent will be due on the 15th of each month thereafter.

To determine the pro-rated amount, divide the monthly rent by 30 to obtain the daily rate. Then multiply the daily rate by 15, the number of days between the 1st and the 15th. This payment will complete the previous rent payment arrangement. The last step will be for the tenants to pay the full rent on the 15th of the same month and on the 15th day of the month thereafter.

Q- A tenant in the community I manage has asked if he can begin having a part-time tutoring class in his apartment for extra income. All of our leases prohibit home-based businesses. Some tenants have been unemployed over the last year and I understand the financial need. My district supervisor has agreed to allow the tutoring class but wants the lease agreement to be modified. What do I do?

A- Changing terms and conditions of a month-to-month agreement is done by serving the tenant with a 30-day Change of Terms written notice detailing the agreed upon change. Lease agreements can't be unilaterally changed until their expiration date, but in this case since the parties have mutually agreed to amend, you can prepare an addendum to the lease.

Like any lease change, the addendum should be in writing and should be signed and dated by all parties. In either case, the change should be specific as to the time, number of visitors, parking and other aspects of the business that may affect other tenants. Perhaps you should consider limiting this change to a trial period just in case the impact is greater than your supervisor expected.

Q- I own a number of rental houses, so I recently hired a real estate company to manage them. One of my long-time tenants has sent me a letter stating that the property supervisor for the real estate company has been revealing personal and confidential information about him to other tenants. Now he is threatening to sue me. Am I responsible for the actions of the property supervisor, or is the company who employs her liable for any damages?

A- You may be liable for the actions of the property supervisor because that person and her real estate company are considered to be your agents. The real estate company may also be separately liable but that does not insulate you. Hopefully your management agreement with the real estate company requires them to reimburse you for any losses caused by their employee. In any case, you should address the matter quickly either on your own by investigating this complaint or by consulting with legal counsel.

Q- I hope to move out of my parent's home into a place of my own. I started my search about six months ago and have been having a problem getting a property owner to accept me as a tenant.

Here is the problem. I go to school full time and my income comes from a trust fund set up many years ago by my grandparents. It seems that property owners are not willing to consider this trust fund as a "source of income." Can't this money be considered the same as any other income type?

A- Yes, trust-fund income is considered a verifiable form of income. A landlord may set income limits and refuse to rent to persons whose incomes fall below a certain level, as long as they apply that standard to all applicants. Landlords may not discriminate against persons because of their source of income, as long as it is legal, verifiable income paid directly to the tenant or his/her representative.

In your case, your source of income is from a trust fund set up by your grandparents. You could offer to provide receipts of the regular payments made from the trust fund to you as verification. If you continue to encounter such refusals because of your trust fund, please contact your local fair housing agency for more information and assistance.







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@projsen.org.