Area of Law:
If you own a property and want to rent it or already rent it, then this article is for you. This piece isn’t intended to be your one-stop shop for every detail or nuance but it will provide you with an overview of the information you will need to know regarding the law and your investment property. If you are concerned or have additional questions, you may want to consider speaking to an experienced property management company.
Advertising and Screening Tenants
Finding tenants is a two-step process. First, you advertise and secondly, you screen the applicants. When you advertise and screen potential residents, you are required to comply with the Federal Housing Act and California Fair Housing laws. The basic rule you can take away from the federal and state laws is that you cannot discriminate against anyone based on their race, gender, religious identity, nationality, sexual orientation, gender identity, color, disability, marital status, medical condition, ancestry, family status, income source, or immigration status (this list combines federal and state requirements). Essentially, it means you can refuse to rent to someone because they wore baggy clothes but not because that person is homosexual or Muslim.
The Americans with Disabilities Act (in conjunction with the FHA) and the California Fair Employment and Housing Act (FEHA) requires property owners, when renting to a person with disabilities, to make reasonable accommodations to allow that person to live and utilize the property. As stated above, you cannot refuse to rent to someone because they are disabled therefore, you must take steps to ensure that your property meets their minimum mobility and use requirements.
Reasonable modification refers to the modifications you undertake to make the property more accessible. The “type” of modification you may need to use depends on your property and the disabilities you need to accommodate. It lies somewhere between providing a ramp (probably required) to an elevator in a two-story building (maybe not required).
The lease should be in writing and you and your resident should sign it. The lease will contain the basic terms of the agreement, such as the amount of the rent and deposits (pet deposit and security), when rent is due, the amenities included (parking, utilities, etc.), the method by which you handle resident complaints, and the policy concerning repairs (for example, you must give notice to tenants before entering a property to effect repairs). Many landlords also like to forbid subletting the property without prior approval.
Leases can be month-to-month or for a term of months or years. If you plan on raising the rent, you should include an explanation of when and how rent would be raised (usually at the conclusion of the lease term).
Removing and Evicting Tenants
If you have a troublesome tenant, you cannot simply change the locks and throw their stuff out in the street. In California, before you can evict someone, you need sound legal grounds. If the tenant fails to pay rent, damages the property, remains in the property after the expiration of the lease, uses the property for an unlawful or illegal purpose (i.e. to manufacture or sell drugs), or causes a significant nuisance to other residents or neighbors despite repeated warnings. You should document each violation because you will need it to prove the eviction is valid.
Next, you serve the tenant with notice. The notice will contain an explanation of the violations, the contact information for the person to whom funds are owed, the information of the tenant and it should be signed. When you “serve” the notice it needs to be done by a third-party (companies offer the service). Then, you wait for the notice to expire. You file court documents, serve the court documents (an action for unlawful detainer), and you fight it out in court.
Notice of non-renewal of lease
Notice of nonrenewal is tricky in California. If you have a tenant who has resided in your property for more than one year and they have a month-to-month lease you must give them 60-days notice. If the same tenant has lived for less than one year, then it is 30 days. You do not need to give notice to a tenant who has a standard lease if the lease term is expired.
Security deposits and fees
There are two rules you need to know about security deposits. First, you must return the deposit within 21 days of the tenant leaving. Second, if you deducted expenses for repairs, you must provide the tenant an itemized list of the expenses.
Yes, this is a lot to remember and this is only a very brief overview of all the requirements. Luckily, full-service property management companies possess a deep understanding of these issues and can help you with the property management and day-to-day maintenance of your property.