Saturday, March 29, 2014

California Multi-Family Residential Real Estate Building Signage

California multi-family rental home owners and property managers need to be educated about appropriate ‘Signage’ for their properties.  The following is a concise list of typical signage at multi-family buildings, rental properties, and neighborhoods.

Responsible Person (At Property) Signage
For 4-15 unit residential properties, if the home owner does not live on-site, a sign must be posted showing the name and address of the property "responsible person". California Code of Regulations Title 25, Section 42 reads in pertinent part, a supervisor, a manager, a janitor, a housekeeper, or other responsible individual shall live upon the premises and shall have charge of every apartment building in which there are 16 or more apartment houses, and of every hotel in which there are 12 or even more visitor rooms, in the event that the owner of any such apartment house does not live on the premises.

Simply one caretaker or manager would be required for all structures under one possession and on one adjoining tract. If the property owner does not reside upon the premises where there are greater than four units but less than 16 units, a notice specifying the manager’s name and address, or the name and address of his agent accountable of the apartment building(s), should be posted in a visible and conspicuous location on the premises.

Parking Regulations, Parking Restriction Signs
Parking is usually a critical component to a multi-family residential building, especially in crowded neighborhoods, or downtown areas.  California Motor vehicle Code § 22658 authorizes removal of unauthorized or abandoned cars from private parcels if certain conditions exists and specific procedures are followed. One scenario permitting vehicle extraction states that posted signage be installed, in a conspicuous and visible location, at each entry to the residential property.  The sign must be 17” by 22” and its lettering much be in 1” tall letters. It must state that public parking is prohibited and/or restricted and that cars will be towed/hauled at the car owner’s expense.  The sign must state that a citation may be issued. It must also show the telephone number of the local police department and any towing company that will be towing the vehicles.

To learn more about towing cars from personal/private property parking lots, look to California Vehicle Code § 22658 which can be found at

Health Facility Signs and Diving/Swimming Pool Signs
If the multi-family residential property has a pool or spa, the California state regulation calls for the following:

-         Where No Lifeguard Service is Supplied:
-         At least one (1) required sign posted that reads:
"WARNING -- NO LIFEGUARD ON DUTY", in clearly clear letters a minimum of 4 inches higher. (Title 22, Cal. Administrative Code, § 65539(c)).

-         At least one (1) required sign posted that reads:
"Children Under the Age of 14 Should Not Use Pool Without and Adult in Attendance" (Title 22, Cal. Administrative Code, § 65539(c)).
-         A property manager must post diagrammatic illustrations of artificial respiration where plainly apparent from the nearby pool deck. (Title 22, Cal. Administrative Code, § 65539(d)).

-         A property manager must post the phone number of the nearby ambulance service, fire, police, and sheriff’s department, in addition to instructions that, if needed, artificial respiration should be started immediately and continued until a physician shows up or mechanical resuscitators are applied. (Title 22, Cal. Administrative Code, § 65539(d)).

-         A property manager must post a sign near the swimming pool entrance displaying the maximum number of permitted occupants. The capacity for every swimming pool is one bather for every single twenty square feet of water surface area. The signage needs to have plainly clear letters at the very least four inches high. (Title 22, Cal. Administrative Code, §§ 3119B.1. 3118. B. 1.2).

-         A property manager must post a sign by the spa indicating the maximum spa occupants. The capacity for every swimming pool is one bather for every single ten square feet of water surface area. (Title 22, Cal. Administrative Code, § 3119B.1.1).

-         Where diving is prohibited, a property manager must post signage with clear letters of a minimum of four inches high that states "NO DIVING ALLOWED." (Title 22, Cal. Administrative Code, § 3119B.2).

-         If gas chlorine is used for swimming pool disinfection, a property manager must post signage conspicuously on the exterior side of the entry door to the chlorine area or on the nearby wall surface location.  The sign must present the proper hazard recognition for gas chlorine, and letters a minimum of 4 inches higher stating "DANGER: GASEOUS OXIDIZER-- CHLORINE." (Title 22, Cal. Administrative Code, § 3119B.3).

-         If the swimming pool does not have light fixtures complying with Part 2-9019 of the code, a property manager must post signage with clearly legible letters a minimum of 4 inches high should be posted in an area near each entryway to the swimming pool location that states: "NO USE OF SWIMMING POOL ALLOWED AFTER DARK." (Title 22, Cal. Administrative Code, § 3119B.4).

-         For spa pools, post a preventative/precautionary sign with clearly legible letters a minimum of 4 inches high near the entrance to a swimming pool area, having the following language:

1. Elderly persons, pregnant women, infants, and those with health conditions requiring medical care should consult with a medical doctor prior to entering the spa.

2. Unsupervised use by kids under the age of 14 is not allowed.

3. Hot water immersion while under the influence of alcohol, narcotics, drugs, medicines, or narcotics could cause major and serious consequences and is not advised.

4. Do not use spa alone.

5. Long direct exposure may cause nausea, lightheadedness, or fainting." (Title 22, Cal. Administrative Code, § 3119B.5.).

Approved signs should be preserved in a legible manner. (Title 22, Cal. Administrative Code, § 3119B.6).

More signage could be required under neighborhood regulations or other appropriate state laws.

Tuesday, March 18, 2014

What the Law Requires Property Managers to Know About Lead-Based Paint

Lead, (Pb on the Periodic Table from Chemistry 1A), has been an integral part of human existence for thousands of years.  It has been very useful and instrumental in the development of plumbing, waste disposal, and water diversion systems from early civilizations.  Most importantly lead-based paint was used prolifically up until 1978 to paint the homes, dwellings, and buildings of the United States.  It is estimated that 38 million homes in our country have some form of lead-based paint in the interior or exterior.  Although lead has helped advance our human cause it has also presented hazardous health side effects which required laws restricting its use and requiring disclosures.  Property managers, landlords, and owners who rent for a fee must be aware of the requirements set forth by State and Federal Law before renting, leasing or even selling a property built prior to 1978.

Lead is Found All over the World
Metallic in form lead is found all over the world, in each continent – usually mined as an ore, copper, silver, zinc or other metal.  Archaeologists believe that lead has been used since around 6500 B.C. primarily because of its low melting point and ease of manipulation.  Originally used to make tools, cookware, and plumbing systems lead found its way into cosmetics, hair coloring, glazed ceramics, toys, game pieces, bullets, gasolines, and interior and exterior paints to name a few products.  Lead became so pervasive in paints that it is estimated that over 38 million homes built prior to 1978 have lead in the paint somewhere in the homes.

Why was Lead Eliminated from Paint?
The most common source of lead poisoning was determined to be dust from friction of painted surfaces which was inhaled.  Lead paint becomes a hazard when: 1) it starts to deteriorate including cracking, peeling, or chipping; 2) if it is in a high friction area it can turn to dust, such as a window sill or door frame; 3) when it is located in areas that children can access like railings, stairs, door frames, window sills; or 4) where areas containing old paint are being renovated. 

After research into lead poisoning was determined to be directly related to lead in residential house paint a directive to enact safety requirements led to some new laws promulgated by both State and Federal governments.  In 1992, The Residential Lead-Based Paint Hazard Act (“The Act”) became law which was designed to help protect individuals, mostly children, from the hazards of lead in paint, dust and soil.  The Act allowed the Department of Housing and Urban Development along with the Environmental Protection Agency to create specific requirements for paint with lead in housing built prior to 1978.  Under The Act property managers, landlords, and sellers are required to: 1) provide lead paint disclosure pamphlets to prospective renters, lessees, or buyers; 2) disclose knowledge of lead paint including location of any known lead paint hazards; 3) provide records of paint hazards or locations; 4) give buyers ten (10) days to inspect a home with Pb-paint; 5) attach a Pb-paint warning to the lease or contract which discloses warning of possible hazards; and 6) keep records for three (3) years of this signed document.

The Fine for Owner’s Violations is Significant
In the event a property manager, landlord, or owner fails to follow the law, fails to disclose the known existence of Pb-paint, or fails to comply with any aspect of the law a fine of $10,000 can be imposed on the owner of the property plus paying damages to the tenant, lessee, renter, or buyer including possible loss of attorneys’ fees.  The best practice is to make sure the age of construction of the house, dwelling or unit, fully disclose all information about the unit, and provide the required disclosures.

How can this Problem be Eliminated?
There are basically two choices for property managers, landlords, or owners who are aware of paint laced with lead.  First, a temporary repair can be utilized by painting over the older painted areas.  Second, a permanent but more expensive fix involved complete abatement or removal of the paint.

Property Managers, Landlords, and Owners must be Educated about Lead Paint
Without proper education a property owner, landlord or owner who rents or sells a property prior to 1978 might be setting themselves up for some trouble.  It is a must that these individuals understand the law, the required disclosures, and the minimum efforts necessary.  Owners must also be aware that the individuals that they hire to manage their properties should be educated, professional, and perform all their statutory duties or else consequences may result.

Thursday, March 13, 2014

What California Law Requires Property Managers to Know About Smoke Detectors and Smoke Alarms

If you manage properties or rental units for a fee, or you are an individual who rents properties or rental units to people/tenants for a rental fee or leasing fee you should pay attention to what the law requires when it comes to smoke detectors or smoke alarms.  As a landlord you are responsible to know the law; ignorance is no defense to a wrongful death lawsuit or serious fire causing major property damage.  Smoke alarms and smoke detectors are critical residential components which must be handled with care and diligence as they are life-saving and property-saving devices which must not be taken lightly.  The undertaking of managing properties is wrought with legal pitfalls and unknown obstacles, however understanding the law is paramount to being a fiduciary for your client, or being on the right side of the law if something goes wrong.  A new 2014 law in California implements some standards which all property managers and property owners who rent to individuals must be aware of and abide by.

New Law for Life-Saving and Property-Saving Devices
As of January 1, 2014 all smoke detectors installed in residential units in California must be on the State Fire Marshall list of approved  and listed devices and are required to; 1) display date of manufacture on device; 2) provide place on device where date of installation can be written; 3) incorporate a hush button feature; 4) incorporate an end-of-life feature that provides notice that device requires replacement; and 5) maintains a non-replaceable, non-removable battery capable of powering smoke alarm no less than ten (10) years – if the device is battery operated.

New Obligations for Rental Property Managers and Rental Owners
Prior existing law required multi-family rental property owners to install, test, and maintain smoke detectors, while single-family unit owners were under no obligation to do so.  As of January 1, 2014 all residential unit owners who rent to tenants for a fee are required to install, test, and maintain listed and approved smoke detectors.  For apartment buildings with two or more units landlords are even required to maintain smoke detectors in vacant units.

Owners, property managers and landlords are allowed access to tenant units to inspect, test, repair and maintain smoke detectors provided they give reasonable written notice to the tenants.  Reasonable notice is considered to be written notice within 24-hours, Monday through Friday, or whatever can be arranged with the tenant as not to disrupt the tenant’s quiet use and enjoyment.  Importantly for property managers and sole property owners who rent a new tenancy requires an inspection and confirmation of an operable, code complying device, in all of the required locations within a rental unit.

Penalties for Non-Compliance Can be Expensive
When building permits for repairs or remodeling are obtained a final inspection of the construction will not be approved until code complying smoke detectors are installed and tested by the building inspector in all of the required locations within a rental unit.  If this inspection fails a delay in obtaining a final building permit approval could be a few days (depending on the building department scheduling) which could result in rental income losses.

Importantly property managers, landlords or owners who fail to comply with the new law can be fined $200 for the first and each subsequent offense.

Compliance with the Law is the Best Practice
The new law creates an opportunity for property managers, landlords, or owners to inspect their units for compliance and maintenance during a period of time when it was not otherwise required.  The life-saving device inspection should be done periodically as this is an important component of the rental unit habitability, rental unit life-safety and a prudent business practice.  An inspection of carbon monoxide detectors should be performed at the same time.

Tuesday, March 11, 2014

Attorneys’ Fees, Property Managers, Landlords and Tenants

The American rule for attorneys’ fees is that each party bears its own attorneys’ fees and costs unless otherwise specified by contract or statute.  When a contract or statute specifies that the prevailing party is entitled to their reasonable attorneys’ fees and costs, assuming the matter is litigated to conclusion by a court or a jury, the prevailing party can then make a motion for their attorneys’ fees and costs (Motion for Attorneys’ Fees).  The motion is then taxed (Motion to Tax Costs), or opposed, by the opposing party by paperwork, a declaration, and exhibits.  The moving (winning or prevailing) party will then provide a reply brief to the judge addressing the issues raised in the opposition papers (Reply to Motion to Tax Costs).  The judge who presided over the matter will rule on the Motion for Attorneys’ Fees and grant an award of fees and costs.  This process is rather lengthy and costly; the fees of which to produce the motion paperwork are also calculated and included for the prevailing party.  How this applies in a landlord tenant situation is simple; a lease or rental agreement between and landlord and a tenant typically has a clause which allows recovery of attorneys’ fees for the prevailing party if a dispute arises under the lease or rental agreement.

Typical Contract Attorneys’ Fees Clause
After careful review landlords, property managers, and owners should have attorneys’ fees clauses in their leases or rental agreements because it is usually the tenant, lessee, or renter who is in breach of the terms of their agreements, not the landlords, property managers, or owners.  Thus, in order to have leverage and a motivating hammer over tenants, lessees and renters these clauses are important to enforce bad tenant behavior.  The below italicized language is a typical attorneys’ fees clause:
In any legal action, lawsuit, or arbitration brought by either party to enforce the terms of this lease/rental agreement which arises out of the property, whether based in tort or contract, the prevailing party is entitled to their reasonable attorneys’ fees and costs upon motion in front of a competent court, judge or arbitrator.

Why Attorneys’ Fees Clauses Are Important
While Landlords, property managers, and owners are more likely to prevail and win an award against a defiant tenant the awards are not always collectible.  However, an award against a landlord, property manager or owner is more likely than not collectible because they have more resources and assets.  Because of this economic imbalance some landlords, property managers and owners choose not to have these clauses as it is motivation to the tenant to sue the more substantial rival.  The economic reality of these clauses typically weighs against a tenant, but in those instances where the landlord has breached it can be a powerful weapon for the tenant.

Attorneys’ Fees Clauses are Reciprocal and Apply to Both Parties to a Contract
Some inexperienced landlords have even drafted one-way attorneys’ fees clauses which attempt to only allow for a landlord recovery.  In California these type clauses are actually reciprocal and work against and for both parties to a lease or contract.  California Civil Code Section 1717 makes any one-sided attorneys’ fees clause reciprocal.

Know Your Contract Clauses and What They Mean
It is important to know and understand what clauses are in your property management agreement, your leases, and your vendor contracts.  Attorneys’ fees clauses are extremely important components of contracts and they are the first clauses plaintiff’s attorneys look for when evaluating a case against a landlord, owner, or property manager.  If you drafted your agreements on your own you should have an experienced real estate attorney review them for clarity, legality, and items which may affect how you do business.  The amount of time and money spent for this little exercise is sometimes worth its weight in gold.

Thursday, March 6, 2014

Property Managers Owe Fiduciary Duties to Their Clients at Minimum

“Fiduciary” is basically defined by Black’s Law Dictionary as a term derived from Roman law which means, as a noun, a person or legal entity, holding the character of a trustee, with respect to the trust and confidence involved as scrupulous good-faith and candor towards another’s affairs.  A fiduciary also has duties which are described as involving good-faith, trust, special confidence, and candor toward another’s interests.  Typical fiduciary duties are imposed on and include such relationships as executor, administrator, trustee, real estate agents, attorneys, and, of course, property managers.  A person or company who manages money or property, i.e., the property manager, for other people must exercise a standard of care in that the interests of the money or property owners are placed above and beyond those of the property manager.  In some states, like California for example, a property manager is statutorily defined as an individual or entity which has the same duties as a trustee, i.e., a fiduciary.

The way I always explain it to clients, using my hands to demonstrate, is that my interests end at the top of my head (one hand at the crown of my head), but the client’s interest rise above and beyond my head and take precedent over my own (holding both of my hands above my head in a clasped position).  Most people understand the gesture and comprehend that as a property manager and a lawyer my interests are much lower than those of the clients in our relationship.

Common Fiduciary Duties Owed by Property Managers
Since a property manager is a fiduciary they must act with the highest good-faith and fair dealing with respect to the owner’s asset, disclose all material information that may affect the owners decision-making with respect to that asset, and can’t in any way, shape or form act adversely to the owner’s interests.  This may sound easy, but there are situations that arise that tempt even the best property managers to sometimes not act in their client’s best interests to suit their own self-interested convenience.  Unfortunate as that may sound it happens regularly.

The following is a short list of some common sense duties, rights, and wrongs when a fiduciary relationship exists between a property manager and an owner.

A property manager should have a written agreement with his clients and may even be legally entitled to profit from services for which they provide to the owner, however, a property manager may not secretly profit from this relationship.  For example, a manager may charge an eight percent markup on materials and services provided by vendors to the owner’s property.  This is legal and acceptable provided that the agreement between the parties is in concert with the markup.  If this markup was not in the agreement then the law requires a property manager to disgorge or relinquish any and all secret profits derived from the relationship.  There are so many possible examples of this, but a common one is a property manager making a percentage profit on work and services provided to their clients but not disclosed; like a new roof, bathroom remodel, repairs to interior walls, etc.

A property manager is required to disclose any and all rental offers received along with documentation of those offers such that the property owner is well informed about all potential tenants.  It is easy for a property manage to fail to provide names of potential tenants that don’t necessarily qualify or are poor credit risks as this would involve more work for the manager.

A property manager is statutorily required to act for the sole benefit of the asset owner in matters that evolve from the relationship, whether or not those matters are seemingly insignificant or they are significantly material.

Information about a tenant whom falls behind on their rent must be immediately communicated to the asset owner.  If your management company is using a software system that allows an “Owner Portal” then this information is readily available to see and anytime one has access to the internet.

If a manager receives information that a tenant has caused damage to a property the owner should be notified as soon as feasibly possible.  It is easy for the manager to not disclose this information for fear of confronting the disgruntled owner or just not wanting to deal with the conflict associated with that situation.

Trust Account Duties
A trust account which holds deposits and rent monies for the benefit of the asset owner is a common ground for fiduciary duty breaches.  The law precludes a property manager from commingling of the client trust funds with broker or property manager owned funds.

Additionally, it is a breach of fiduciary duty to make mortgage payments on broker owned properties from a trust account even if the broker quickly reimburses the account for the payments.  The statutory prohibition against conducting personal business from trust accounts is strictly enforced.

Surprisingly another common example of commingling of funds occurs when the property management fee is not timely withdrawn from the trust account.  Sometimes a delay of twenty-five (25) days could be considered commingling.

Trust funds must also be deposited with expediency.  Some states require that deposits must be deposited by no later than the next business day.

Commingling of Trust Funds is a Serious Offense
Commingling of trust and broker funds is such a serious offense it can be grounds for revocation or suspension of a broker’s license in most states.  Thus, this sole issue must be of paramount importance to a property manager and property management company.

Managers owe fiduciary duties to their clients – this is the minimum standard owed.  There are many ways to breach these duties which form the basis for the relationship between the manager and the client.  It is important to hire a property manager who understands and abides by the statutory framework, understands fully what a fiduciary duty entails, and can both clearly communicate those duties and at the same time live up to them.  It is important for owners to make sure they hire property managers who abide by these minimum standards.

Saturday, March 1, 2014

How Property Managers Can Legally Prohibit Smoking in Rental Properties

An owner of rental property including single-family residences and multi-unit apartment buildings can legally prohibit smoking in and around their properties just like they can prohibit pets, too many guests, or too much noise.  In addition to the obvious health related reasons and rationale for eliminating smoking in rental units by reducing or preventing exposure to secondhand smoke, a no-smoking policy can also reduce risks of fire which may lead to reduced insurance premiums for the properties.  Another benefit is that there may be a lower number of turnovers and a lower maintenance load on the building by eliminating smoking on and around the property.  The bottom line is that a property manager, landlord, or property owner all have the legal right to prohibit smoking in and around a rental property and should for all of the properties under ownership or management.

Property Managers Can Prohibit Smoking in Common Areas
Common areas like walkways, hallways, lobby areas, swimming pool areas, spa rooms, and other gathering rooms are all places where a property manager can also prohibit smoking.  A prohibition on smoking in common areas is remarkably similar to other common area rules like restricted hours for pool or spa use, hours for the laundry room, noise restrictions, or a requirement that children must be accompanied by a parent at the common area pool.

Property Managers Can Prohibit Smoking in Individual Units
Similar to restrictions on pets, numbers of guests, excessive noise and the like a property manager or property management company can prohibit smoking in a rental unit.  The restriction would be drafted right into the lease or rental agreement.  A violation of the restriction would be treated just like a non-paying tenant complete with a three-day notice and an eviction proceeding if the tenant was defiant and continued to smoke in violation of the restriction.

If a property manager took over a unit where smoking were permitted and a policy change were desired the property manager can amend the lease or rental agreement to reflect the new policy.  If the tenant were on a 12-month lease then the amendment would take effect at the end of that term.  If the tenant were on a month-to-month agreement then the amendment would take effect after 30 days had passed from the date of notification to the tenant.  In either instance the property manager has the right to amend the lease and restrict the tenant from smoking.

Balconies and Patios Can Also be Off Limits to Smoking
In addition to inside unit restrictions a property manager may restrict smoking on balconies, patios, and any surrounding areas adjacent to a rental unit.  A clear and concise statement in the lease or rental agreement that specifically details a strict no-smoking policy for the rental unit and describes the particular areas where smoking is prohibited must be inserted into the lease or rental agreement.

A Smoke-Free Environment is Legal and Not Discriminatory
It is not a violation of Fair Housing laws to prohibit smoking inside of or around rental units.  In fact, property managers should promote the fact that their properties are smoke-free environments for several reasons.  First, a smoke-free environment will help promote healthy living.  Second, a smoking restriction will help attract potential tenants who are looking to be in a smoke-free environment.  Third, a non-smoking policy will help reduce risks fire and will reduce maintenance costs over time.

Californians have existing protections from exposure to smoke, second-hand smoke and smoking in general in places of employment, restaurants, and recreational facilities, however, there are no state laws restricting smoking at rental units.  Even though the state doesn’t restrict folks from smoking in their rental units property managers can and should require these restrictions.  All parties benefit by a non-smoking policy, even those who smoke as they will find themselves less likely to smoke the more difficult it becomes.

Friday, February 28, 2014

Property Managers, Commercial Tenants and Evictions

Your commercial tenant failed to pay rent.  You have heard that things are not going very well for them, but now it is apparent.  As a property manager your duty and obligation is to resolve the issue as quickly as possible.  When the tenant failed to pay by the due date they have effectively breached the lease and you are entitled to evict the tenant from the property.  An eviction lawsuit commonly called an Unlawful Detainer action is a fairly straightforward legal process.  The important thing for property managers to know is that the steps involved in this process are critical and must be followed to the letter of the law.  A real estate attorney representing both parties in the action is common.  If your property manager has followed the law, given proper notice, and has a detailed file of all of the correspondence between the tenant and their company the unlawful detainer action should go fairly smoothly and the landlord or owner should prevail.

The First Step Is To Resolve Rent Payment Issue If Possible
If at all possible the property manager should make every effort to get the tenant to make the rent payments and bring their lease current.  If this involves waiting a few extra days for payment maybe this would be the best course of action instead of filing a lawsuit.  Your individual company policies and best practices will dictate this action, but it would be better for all parties to resolve before litigation.

Three-Day Notice Drafted
If a payment is not forthcoming then a ‘three-day notice to pay or quit’ must be prepared and properly served on the tenant.  This notice must be in a specific legal format.  A commercial owner, landlord or property manager can choose between different types of 3-day notices; 1) specifies the precise amount of rent owed; or 2) estimates the amount of rent owed – usually when a tenant is paying a percentage rent.
If the lease requires the tenant to pay rent and other separate amounts for triple net or CAM charges, the property manager should get the proper advice on whether or not two separate and distinct notices are required to be served.  For example, if the property manager or landlord accepts an overpayment of the rent because they have miscalculated and the tenant overpaid estimated rents and CAM charges this may lead to a tenant victory in the unlawful detainer action.  This would also possibly give the tenant the right to attorneys’ fees.  It is critical to be correct in this step.

The Three-Day Notice Must Be Properly and Legally Served
The tenant is deemed served when they are personally served with the three-day notice, or a responsible person at the place of business is personally served on the premises.  In the event no one is available the landlord or property manager can attach the notice to the front entry door of the business premises while simultaneously sending a copy of the three-day notice by certified mail return receipt requested.  The landlord or property manager must then prepare a ‘proof of service’ in the proper format which states in pertinent part that the ‘three-day notice’ was served on the tenant, or describe the method of service.

The Property Manager or Landlord Has a Three Day Waiting Period Required for Service to be Effective
After properly serving the three-day notice a three day waiting period begins on the next business day.  If the third day falls on a weekend or holiday the three day waiting period is extended to the next business day.

If the tenant decides to pay all rent due at this point or corrects any outstanding violation of the lease terms then the eviction process ceases.  If the tenant makes partial payment the landlord or property manager can accept partial payment but must notify the tenant that they are not waiving their rights to proceed with an eviction.

In the event that the tenant has violated the lease by way of some criminal act or conduct then the eviction process continues.

At the end of the three day waiting period the landlord or property manager may go forward with filing and serving a complaint and summons.

Summons and Complaint are Prepared and Served
In the event that the tenant has failed to cure their outstanding rent violation, or failed to cure any other violation that they have been property notified of, then the landlord or property manager may proceed with filing and serving the summons and complaint to the tenant.  A third party not involved with the action, typically a registered process server can be hired for a fee to serve the papers on the tenant.  The summons, complaint and proof of service must then be filed with the court clerk’s office together with a copy of the lease, and then property served three-day notice and its proof of service.

Technical Mistakes Can Cause Delays
If the landlord or property manager has taken this process on by themselves there is a possibility that they have made a technical error in the processing, preparing, serving, and filing these documents.  There are several technical areas of the law which must be followed or will result is substantial delays if they are not.  A tenant who hires an attorney will likely find these technical errors, if the court doesn’t find the errors.  This will likely result in delays which means money to the property owner.  The best course of action in these situations is to hire an eviction attorney to help prevent delays and additional costs for the owner.

Court Proceedings Require that All Parties Appear in Front of a Judge

If the tenant does not contest the eviction
A properly served tenant has five days to oppose the eviction.  If substituted service was used then the tenant would have fifteen days to file a responsive pleading to the action.  If the tenant fails to oppose the eviction the landlord or property manager will seek a default judgment of possession of the premises.  This will most likely be granted and the case will be referred to the Sheriff’s office for tenant lockout (see below).

If the tenant contests the eviction
In the event the tenant hires an attorney and contests the eviction then things will take a while longer.  The tenant will be granted more time to prepare and there will be approximately thirty-day period in which a trial will be set.  If the landlord wins then the tenant will have to pay the rent and other losses most likely including attorneys’ fees.  If the tenant wins the landlord may have to pay attorneys’ fees.  In this situation a property manager really needs to be represented by counsel.

The Landlord or Property Manager has the Right to Lockout the Tenant
Assuming a landlord victory the county sheriff will post a ‘Five-Day Notice to Vacate’ the premises on the tenant’s door or entry into the business.  On the sixth day the sheriff meets the landlord or property manager at the property.  The landlord or property manager then receives a receipt of possession of the property.  If the tenant is still there when the sheriff arrives, the sheriff will then physically remove the tenant.  The landlord or property manager will now have a locksmith come and change the locks to keep the tenant out.

Notice to Claim Property
If the tenant leaves behind personal property there are state statutes that deal with this specific issue.  The landlord or property manager must give the tenant fifteen days after the lockout period to claim any possessions from the property, or if the tenant left before the lockout, eighteen (18) days after the mailing of the “notice of belief of abandonment” to the tenant’s last known address.  The notice must describe the property with specificity so the tenant can identify it, and the notice must also describe the storage costs.  A prudent practice for a landlord or property manager would be to photograph and log all of the tenants’ belongings so that there was not a later dispute.

It is not legal for a landlord or property manager to hold a tenant’s personal property as security for payment of money awarded by a court judgment.

Unclaimed Property Disposed of or Sold
When the fifteen day waiting period is over the landlord or property manager can dispose of the tenant’s personal property if it is worth less than $750 or $1.00 per square foot, whichever is greater.  If the property is worth more the landlord or property manager must auction it through a public sale held after properly published notice with the proceeds turned over to the county, minus expenses.


Although this article has briefly touched upon this process one should see that this is not a simple process, but is a process which should be taken seriously and professionally.  It is always a best practice to have an eviction attorney help a landlord and/or a property manager through this process.

Thursday, February 27, 2014

Property Manager Education about Carbon Monoxide Detectors is Critical

Carbon monoxide (CO) is an odorless, invisible gas produced when any fuel such as natural gas, kerosene, wood, oil or even common barbecue charcoal is burned.   At high levels without proper ventilation carbon monoxide can kill humans in a very short period of time, even after just a few minutes.  Moreover, there is credible research that acute exposure or poisoning by carbon monoxide can cause chronic health effects such as lethargy, severe headaches, amnesia, psychosis, concentration problems, memory impairment, personality alterations, and even Parkinson’s disease.  The American Medical Association states that carbon monoxide is the primary cause of accidental poisoning deaths in the United States year after year.  The federal Centers for Disease Control estimates that carbon monoxide poisoning kills approximately 500 people annually and causes another approximately 20,000 injuries per year.  Needless to say carbon monoxide is a very important topic and issue for property managers to understand and embrace in order to act as professionally as possible and to protect their client’s best interests.

Today there are laws requiring listed and labeled carbon monoxide detectors within all residences, rental units, investment properties, multi-family residences, and apartment buildings.  It is tantamount for property managers and property management companies to be fully educated about carbon monoxide, carbon monoxide detectors, carbon monoxide poisoning, exposure and prevention.  There are also some ‘best practices’ guidelines for property managers to be mindful of and incorporate into their property inspection checklists.

Various State Laws Require Carbon Monoxide Detectors in Dwellings
In California as of July 2011 the Carbon Monoxide Poisoning Prevention Act of 2010, (hereinafter “The Act”) requires carbon monoxide detectors to be installed within every dwelling unit intended for human occupancy.  The Act also requires carbon monoxide detectors to be installed in ‘all other existing dwelling units’ on or before January 1, 2013.  Thus, as of 2014 “ALL” dwelling units need to be equipped with properly listed and labeled carbon monoxide detectors.

How are CO Detectors Energized
The standards for manufacture of carbon monoxide detectors are well documented in state laws.  Standard 720 of the National Fire Protection Association is the basis for manufactured detectors.  Most home improvement and hardware stores carry several code complying varieties of detectors.  CO detectors can be battery powered, can be plug-in (outlet) with battery backup, or can be hardwired with battery backup.  CO detectors that are manufactured with a combination smoke detector must emit an alarm or voice warning with each signal different than the other.

Where in a Dwelling Unit are CO Detectors Required?
CO detectors are required to be installed in a manner consistent with building code standards for new construction.  For minimum effectiveness and security CO detectors should be located outside of each sleeping room or in the vicinity of bedrooms.  CO detectors must also be installed in every level of a dwelling unit including basements within which fuel-burning appliances exist and dwelling units that have attached garages.  The CO detectors should be at least six (6”) inches from exterior walls; three (3’) feet from HVAC supply or return ducting vents, and not obstructed by other equipment, furniture, or occupant belongings.

Landlords and Property Managers are required to Supply Carbon Monoxide Detectors in All Dwelling Units
The standards and requirements for CO detectors apply equally to landlords and property managers.  After proper notice has been granted to a tenant property managers have the authority to enter dwelling to install, repair, test and maintain carbon monoxide detectors.  CO detectors are required to be operable at the time the tenant takes possession of the unit.  Tenants are required to notify the property manager if the CO detector becomes defective or inoperable.  A property manager will not be held responsible or in violation of the law if a tenant has failed to notify the property manager of the deficient device.

Common Sources of Carbon Monoxide in Dwelling Units
Any fuel burning appliance located in a residence or dwelling unit is a potential carbon monoxide producer.  Gas burning heating systems, gas burning cooking appliances like cooktops, ovens, griddles, and water heaters are all possible sources of carbon monoxide.  Typically, the gas burning appliance somehow becomes mal-adjusted and begins to burn the fuel incompletely, leaving CO molecule production.  This is sometimes caused by the equipment failing, but can also be caused by alterations in the dwelling unit interior atmospheric pressures.

Another common source of carbon monoxide in a dwelling unit is from attached garages and vehicular exhaust.  It is always a best practice to start a vehicle in an attached garage and move it to the driveway exterior while allowing it to warm up.  Never allow vehicles to be running within a closed garage as the exhaust will most certainly find its way into the dwelling potentially causing problems.

Property Managers Must Take Carbon Monoxide Education Seriously
Because carbon monoxide (CO) is a silent killer it is imperative that property managers be diligent about CO detector education and maintenance.   Carbon monoxide is such an extremely important area of concern for property managers for the reasons stated above.  In addition to protecting your client’s best interests diligence in maintaining properly functioning CO detectors can save lives.

Property managers and property management companies must be adequately educated about carbon monoxide, carbon monoxide detectors, carbon monoxide poisoning, exposure and prevention.

Monday, February 24, 2014

New Shared Fence Law Effects Property Managers and Rental Property Management Companies

Have you ever heard “Good fences make good neighbors?”  Now, adjoining landowners are statutorily equally responsible for shared fences and boundary fences pursuant to California Civil Code Section 841 which took effect January 1, 2014.  Adjoining or contiguous landowners are now faced with a presumption that because they share an equal benefit of a shared or boundary fence that they are equally responsible for the reasonable costs of construction, maintenance, or necessary replacement of the fence.   Property managers or rental property management companies whose clients’ properties are affected by this new law must be mindful of the change and be aware of the procedural requirements dictated by the state legislature.

Statutory Notice Requirements for Repairing or Replacing Fencing
Landowners, or property managers, who wish to replace an existing common boundary fence, must give each affected adjoining landowner a 30-day prior written notice of any intent to incur costs for a common or boundary fence.   For those of us who manage properties for clients here is where you need to pay attention.  The statutory ‘Notice of Intent’ must including the following elements:
11)    A notice of the presumption of equal responsibility for the reasonable costs of construction, maintenance, or necessary replacement of the fence;
22)    A description of the nature of the problem with the shared fence;
33)    The proposed solution for the problem fence;
44)    The estimated construction or maintenance costs to address the problem;
55)    The proposed cost sharing approach; and
66)    The proposed timeline for addressing the problem fence.
On a personal note, along with the statutory notice, as a Property Manager I would include or attach a copy of the law and a reference to the state website, and any other supporting documentation to help facilitate the neighbors understanding that the law has changed.  If they are initially resistant I would also counsel them to review the law, the state website, and any other resource material to help them understand their obligations.

Burden of Proof to Show Inability to Pay is on the Objecting Landowner
A landowner who wishes to repair or replace a fence will have to sue to enforce the statutory presumption if their neighbor objects.  Objecting landowners have a right to contest their new statutory obligations, but the burden of proof is all on them.  An objecting contiguous or adjoining landowner has the burden to overcome the presumption described in the new state law by adequately demonstrating to a court (which means a judge) by a preponderance of the evidence (which means evidence that is slightly greater than evidence against it) that imposing equal or shared responsibility on them would be unjust.  To determine whether equal or shared responsibility for the reasonable costs of common or boundary fence repair or replacement would be unjust, a court will consider the following evidence through testimony and documents:
11)    Whether the financial burden on the objecting landowner is substantially disproportionate to the benefit conferred upon the proponent landowner;
22)    Whether the cost of the new fence would exceed the difference in value of the (burdened owner’s) property before and after it’s installation;
33)    Whether the financial burden to the objecting landowner would impose an undue financial hardship given that party’s financial circumstances as demonstrated by reasonable proof;
44)    The reasonableness of a particular construction or maintenance project, including the extent to which the costs appear to be unnecessary, excessive, or the result of one landowners personal aesthetic, architectural, or other preferences; and
55)    Any other equitable factors appropriate under the circumstances.
Many times the cost of the fencing divided by two or three parties will be low enough to handle these cases in a small claims division of the local superior court house.  If the case is in small claims court attorneys will not be involved so costs for this type of lawsuit will be minimal.  It is paramount that any property management personnel involved with conversations with neighbors relating to these issues be memorializing all conversations including taking notes and sending letters to the neighbors.  An accurate written record of all conversations will help preserve precisely what occurred during the period negotiation between neighbors should something end up in court.

Property Managers Will Probably Be the Advocates Selling the New Fence to the Neighbor
When the fencing around the perimeter of your client’s property fails and needs replacement, nine times out of ten cooperation of each neighbor seemingly carries the day and allows for a smooth transaction and replacement of the fence.  Property managers will most likely be involved in these conversations.  However for those occasions when the neighbor objects and does not want to pay or participate in the project please be mindful of the above procedures so that you can help your clients fully and faithfully through these issues.

Prior Existing Law is Repealed

The new law does not apply to a city, county, political subdivision, public body, or public agency.  Prior existing law enacted in 1872 which required a landowner who fully enclosed a property to refund their neighbor a just proportion of the value of a division fence is repealed due to this new law.

Thursday, February 20, 2014

How To Fire Your Property Manager

How to Terminate Your Rental Property Management Company
If you are the least bit concerned about the management of your investment property remember the old adage, “Where there is smoke, there is fire!”  Nine times out of ten when there is a significant lack of communication, if the results in your monthly statements continue to disappoint, and if your property manager has overpromised and under-delivered it is time to say good-bye.

Read the Contract – It has Important Information
A famous lawyer once said to his client who called asking for an answer to a question about a contract, “[R]ead the bleeping contract.”  Rental property management contracts are not that complicated.  Hopefully you read and understood the rental property management contract you signed in the first place.  You need to review that document for a couple of important clauses (if they exist).  Take some time and review the agreement or contract you have executed with the rental property management company and look closely for any termination clause language, and any “for cause” clause language.  Moreover, it’s important to know if the initial term of the contract was set forth, or if it is truly a month-to-month type of agreement.

Understand the Clauses or Hire an Attorney to Help You Understand
Typically, the initial period of the contract will be some determined amount of time, like one to three years.  Once this initial period has expired you may or may not have signed a new contract which will determine how long it will take to rid yourself of the rental property management company.  If the initial term has expired you are on a basic month-to-month agreement with your manager or company.

Some contracts have a 30-day to 90-day termination clauses which requires the terminating party to give written notice of termination for some set period of time to the other party.

Other clauses require “for cause” for the contract to be terminated during the initial contract period.  If you terminate a property manager or a rental property management company without cause and a “for cause” clause was included then the property management company could potentially have a cause of action against you for breach of contract.  Thus, it is important to be mindful of all of the clauses in the agreement or contract before making any rash decisions.  Again, read the contract.

Follow Termination Procedures Accurately
It is paramount that any and all termination procedures are followed accurately.  For example, make sure to follow the writing, notice and mailing requirements that are dictated in the contract for termination.

In the event that you resort to this procedure you must realize there may be costs involved including a termination fee in the contract, or paying the property manager all of the fees they have earned to that point.  Some contracts will even have a clause which requires full payment of the entire contract period fees.  Thus, again it is important to read the contract and understand it before you execute it or terminate it.

An exception to this would be if a property manager or rental property management company was stealing money or materially breaching the contract in some way and there was a 90-day termination period in the contract.  As an owner you would have the right to immediately terminate that contract due to the property manager’s conduct and you wouldn’t have to wait 90-days in that situation.

Tenants Need Notification
Once the decision to terminate has been made and a change has occurred the quicker the tenants are informed the better everyone will be.  Read the contractual obligations imposed upon the property manager in this situation.  If the contract is silent about this procedure then take it upon yourself to contact the tenants and notify them of the change in management whether it is a new manager or yourself.

Make sure that your outgoing property manager has agreed to provide you with all of the tenant and property paperwork.  Make arrangements to have this information communicated to your new manager or to yourself with expediency.  If trust funds are to be transferred make sure that your new manager is with you during those conversations involving transferring monies including the all-important security deposits.

You Are in Charge – You Call the Shots
Remember that as the property owner and hirer of the rental property management company you are the Boss and you call the shots just as if they were your employee.  If you lack confidence in your manager, even for one moment, it is probably time to start paying close attention to how your manager is treating your property.  If repair bills are larger than normal, if information about tenants are being communicated to you on an untimely basis, or if no communication is occurring it is time to make a change.  Do not hesitate to take charge and help prevent your return on investment from being hijacked.

Wednesday, February 19, 2014

Property Managers Should Make Suggestions To Help Improve Your Return On Investment

Property managers and rental property management companies should help owners and investors improve their return on investment with every action they take with the owner’s properties.  A prudent property manager will make suggestions on improving the exterior of the house with cost effective suggestions.  Improvements will help retain existing tenants and will make the property much easier to rent if vacant.  If your existing manager doesn’t make these types of suggestions maybe it’s time to look for a new property management company.  The following is a list of six (6) easy and cost effective exterior improvements.

11)    New Front Entry Appearance.  If the front entry door on your property hasn’t been changed in a while, maybe it’s time for a new paint job with a new color.  Additionally, changing out the hardware is also a cost effective appearance improvement.

22)    Improve Landscaping.  If the outdoor landscaping isn’t on a consistent maintenance program it should be.  Drought resistant plants, hardscaping, and other low-maintenance improvements will help improve the aesthetics and reduce maintenance costs.

33)    New Exterior Paint: If your property hasn’t been painted in 7-10 years hopefully you or your property manager was prudent enough to have you budget for a new paint job.  A quality freshly painted exterior will help improve and energy and vitality of your investment property.  Make sure to pick a natural earth-tone color which will be attractive to potential tenants.

44)    Improved Outdoor Lighting.  A quality new exterior fixture will add safety, drama, and interest to your investment property.  A path lit by some exterior lighting will also improve overall aesthetics, but may not make sense in all instances and properties.

55)    Update Inefficient Windows. If your property has older single-paned windows a prudent plan will be to budget for the installation of dual-paned windows to reduce heating and cooling costs for your tenants.  This will also help you when the property is vacant and a prospective tenant who has lived with single-paned windows knows the difference.

66)    Plant Trees For Energy Efficiency.  A properly-located tree will provide shade in the summer and allow sunlight in the winter which will make your tenants happy.  This energy saving addition is also aesthetically pleasing and will make neighbors happy as well.

Tax Savings For Improvements
Even though these above items may cost some money to implement the return on investment should be measurable.  Moreover, every dollar spent improving the property will be a deduction off your taxable income for the rental property tax return.

If your property manager is not making suggestions like the above six (6) item list they should be.  The property manager should be your partner in helping you drive maximum return on investment and should be looking out for an owner’s best interests.  Without making suggestions to improve the property with cost effective suggestions the property manager may be looking elsewhere when they should be looking at your property.