Skip to content Sitemap

Can I Limit the Number of Occupants in My Home?

Landlords must be reasonable when they set occupancy limits in order to prevent discrimination against any class of person.  For instance, if you have a three bedroom home and you set the limit at two people then that would likely be considered discriminatory on the basis of family status.  In other words, it would appear that you are trying to prevent families (adults with children) from renting your home since a family would often consist of more than two people.

There has been a long standing guideline accepted in the industry as a occupancy standard–that guideline is call the “two plus one” rule.  The idea is that two people per bedroom, plus one additional for the entire unit would be a reasonable standard that would be safe to use from a fair housing perspective.  This would mean five people for a two bedroom condo–two per each of the two bedrooms, plus one additional for the unit.  Many people feel that five people in a two bedroom home is too much, but that is the guideline that is typically considered safe to use.

There are many factors that can be taken into consideration aside from the “two plus one” guideline.  For instance, occupancy standards based on objective criteria such as square footage are more likely to be considered reasonable as long as the limits set are set appropriately.  In setting occupancy standards, I strongly recommend speaking to an attorney that specializes in fair housing.

As housing prices increase, we are likely to see more occupants per unit as tenants combine households.  I believe the issue of occupancy standards will become more public in the upcoming years.

 

Can I Require my Tenant to get Renter’s Insurance?

There was a case that was recently decided by the California Court of Appeals. The results of the case were an indication that even if your lease requires renter’s insurance, a tenant’s failure to maintain that policy is not a material breech and therefore likely to leave no option for enforcement.

Here is some brief information about the case:

Boston, LLC v. Juarez:  Juarez’s residential lease required him to maintain liability insurance and provided that any breach of the lease allowed the landlord to forfeit and terminate the lease. This decision holds that despite the lease’s broader wording only a material breach of the lease can permit lease termination at the landlord’s option, both because the clause is otherwise unconscionable and because it would violate the public policy embodied in Los Angeles’ Rent Stabilization Ordinance. Furthermore, the renter’s insurance that Juarez was supposed to maintain benefited the tenant, primarily, not the landlord, and the landlord made no showing it was prejudiced by Juarez’s failure to maintain that insurance. Accordingly, failure to maintain renter’s insurance was not a material breach of the lease, did not permit lease termination. Hence, the unlawful detainer judgment in the landlord’s favor had to be reversed.

In my opinion, everyone (landlord/tenant/management company/neighbors/guests) is better off when a tenant maintains a renter’s insurance policy.  There are so many benefits to the tenant.  A perfect example if this is if a unit were to have a flood–without renter’s insurance there is no coverage for their personal property, and if they cannot stay in the unit then they will likely only receive the pro rated daily rate of rent which is typically considerably less than a hotel or replacement housing.  Renter’s insurance usually provides great coverage for this type of loss and without the renter’s policy then the tenants are usually out of luck.  This is just one example of the many benefits.

The court was wrong in their decision but I don’t think that judges really care much about business owners and property owners in California.

I’m not an attorney, so the information I provide is not legal advice–just my impressions.  If you have any questions contact me, Bill Ausen, at American Heritage Properties renthomes.com.

Financial Considerations When Moving as a Senior

Deciding to sell your home and move into a new place of residence requires careful financial consideration. You’ll need to determine at what price to sell your house, where you should move, and more. Being well prepared gives you assurance that you’re making the smartest decisions for your personal financial situation and future financial goals.

Getting Top Dollar for Your Home

When you’re ready to sell your home, you want to make sure you get top dollar. While setting the asking price for what your home is worth may seem like the obvious thing to do, realtors often suggest shaving 15 to 20 percent off what your house is worth. Doing this will ensure you receive multiple bids, even in the worst markets, which will drive the final selling price over what it’s worth. It seems risky, but HGTV claims, “…it’s the single best strategy to sell a home in today’s market.”

When staging your home, leave your closets, cabinets, and pantry half empty to give the appearance of more storage space. Having ample lighting will also attract buyers. Leave curtains and blinds open, clean the windows, and increase the wattage of your light bulbs. Quick fixes are sure to help your home sale. Apply a fresh coat of paint, replace door handles and cabinetry hardware, and make sure your front door makes a statement.

Lastly, remove the personal touches. The less they see of you, the more they can see themselves living in the house. A good rule of thumb is to move a third of your stuff into storage. This includes family photos, trinkets, memorabilia, and other personal keepsakes. Since you’ll need to place all of your stuff into moving boxes when you make the move anyway, think of it as getting a head start.

Tax Ramifications

Selling a home can result in paying capital gains taxes if you make a profit, and the sale proceeds aren’t used to buy another home. However, it’s possible to exclude all or part of the gain. For example, if the home was your primary place of residence, and you lived in the home for at least two of the five years prior to the date of sale, you can exclude up to $250,000 if you’re single or up to $500,000 if you’re married filing joint and both qualify. The excess amount beyond the exclusion will then be taxed at capital gains rates.

You may still be able to exclude some of the profits if you meet other conditions, such as a change of employment or moving for health reasons. To find out whether you qualify for one of the exceptions, view the “Excluding The Gain: Reduced Maximum Exclusion” section in IRS Pub 523. Before listing your home, contact a tax specialist or professional financial advisor to determine how the sale will affect your finances and to see if you qualify for any exceptions.

Housing Costs

The cost of your home will vary widely based on where you choose to live and the size and type of your residence. In general, the difference between the types of housing will remain the same, so take Florida for an example. Obviously the rates vary by county, but on average a house in Florida costs $200,000, which puts the mortgage around $950. The pricing of the homes in retirement communities, also called 55-and-over communities, is generally comparable to standard houses in the area.

A two-bedroom apartment in Florida averages in at $1,587 per month. The average cost of an independent living facility in Florida is $2,545 per month. As you can see, these options are more expensive than purchasing a home, but they have their perks. Apartments and assisted living facilities come with little to no maintenance, plenty of amenities, and typically include utilities. Some independent and assisted living communities also include food and transportation in their cost, not to mention on-site medical assistance.

As you can see, the decision to sell your home and move into a new place of residence comes with a lot of important financial decisions. Working with a realtor and a financial advisor will help to ensure you make decisions that best fit your unique situation. While cost is definitely important, finding somewhere you can comfortably live and enjoy life is the ultimate goal.

Here are some resources that may be helpful:

 

Courtesy of Michael Longsdon from elderfreedom.net

Do residential leases have a right of rescission?

After signing a lease, a tenant changed his mind and exercised his 72 hour right of rescission to terminate the lease. The problem–there is no right of rescission for residential leases under California law.

California does establish a right of rescission for several categories of consumer purchases, often relating to those transactions occurring at the home, such as a contract to install a pool. However, once the rental agreement is signed it is then binding on both parties without a right to terminate without cause.

Why Not Take Section 8?

In theory, Section 8 is a wonderful program. The idea is that the government subsidizes the rent for those who cannot afford the full rent amount.

So, why doesn’t it work? My answer is bad landlords. Over time there were bad landlords who took advantage of this government program and as a result the government had to put protections in place to ensure the landlords were not taking advantage of tenants and the government.

The government regulations involved with Section 8 put burdens on landlords that make the program less desirable from a business perspective for many landlords.

Here are a few of the regulations that are not appealing to landlords:
1) The Housing Authority may not set the vouchers at realistic fair market values.
2) It can take several weeks for the inspection in order to qualify for the program.
3) Tenant complaints can result in the program terminating the monthly rent, as opposed to the procedures set forth by California Law.
4) It may be difficult to exit the program if the landlord chooses to sell or move back into their property.

Over the years the Section 8 program has improved in some areas but there are barriers that still exist. I have heard rave reviews of the program from those that are well established with the program, but also horror stories from others.

Currently the acceptance of the Section 8 program is voluntary. Some tenant activist groups have been pushing legislators to require that landlords accept the program so sometime in the future you may have no choice but to start doing business with the government.

San Diego Rental Market–don’t put all of your faith in statistics though

I have been tracking inventory and vacancies for over a decade and doing so on a weekly basis.  I don’t need statistics to tell me that the rental market is strong but the statistics do support the state of the current market.  Rents are up, vacancy times are down, and inventory is down.  In a typical supply and demand model you would see the rents continuing to rise as demand increases and supply remains the same.  However, what I have found is that the rental value to attract a quality tenant is a reasonable amount of time has not changed much over this past year.

Frequently you will see data from news sources that indicates real estate and rental market trends.  Data on real estate sales is collected through the multiple listing service.  Data on apartments is mostly collected from larger multi family (apartment) communities.  This data often is not an accurate portrayal of the market for individually owned houses and condos in the rental market.  In theory you can compare apartments to houses/condos, but in reality they only share general market directions.  Apartment rents rising 5% during a particular year does not mean that an individual house has increased 5% in the same time period.  The reason for this difference is too extensive to write–however, I am happy to discuss the differences that I have found in the 28 years that I have been in the property management business–just give me a call at American Heritage Properties.

When you are evaluating the rental market to make adjustments to your rent, or to property price your property, it is best to accumulate information from a variety of sources and cross reference those with your owner experiences in order to reach a conclusion.  Even then, it is more of an art than a science.

If you ever need advice on what the rental market is doing and how it affects your own rental property then feel free to give me a call.

Bill Ausen

Broker

American Heritage Properties

858-695-9400

 

New California Law Regarding Bed Bugs

Recently California passed AB551 which addresses several issues about bed bugs.  Here is a brief summary of the new legal requirements:

  1.  Landlords cannot retaliate against a tenant for reporting bed bugs.  This is very similar to a tenant reporting any other type of maintenance–for example, you shouldn’t raise their rent because they report a problem.
  2. Landlords cannot show and rent units that they are aware have bed bugs.  This is self explanatory.
  3. Landlords will be required to include specific bed bug language in the lease for new tenants beginning July 2017 and for existing tenants January 2018.
  4. Landlords are required to give notice before entering a unit to inspect or treat bed bugs.  Tenants are required to cooperate.
  5. Landlords are required to notify the tenants of the result of a bed bug inspection that was conducted by a pest control company.  This has to be done within two days of the landlord receiving the report.

Bed bugs have become a challenging issue over the past few years.  Many people believe that they are the result of poor housekeeping by a tenant but that is not typically the base.  Bed bugs travel easily and are usually brought in from the outside, or travel from one unit to another attached unit.

Regardless of the source, the landlord is still responsible for eradicating the pests, which can take time and be a lot more costly than other pests.  If the landlord can prove that the tenant was the cause then the landlord can bill the tenant, but proving the source is a difficult task.  One of the most important things to remember with bed bugs is to act promptly if they are discovered to prevent further infestation.

Prejudgment Claims: What are they and when should they be used?

When an unlawful detainer lawsuit is filed in California, every adult residing in a property has the right to be heard in court. This is true even if the person is not a named resident, is not an authorized occupant, and even if the person is unknown to the landlord.

If an adult residing the premises was not named in the unlawful detainer lawsuit, that person can delay the lockout by filing a “third party claim of right to possession,” otherwise known as an Arrieta Claim, right before the lockout, causing a delay of at least two weeks.

If a prejudgment claim form is not served, and if an unknown occupant files a last minute third party claim right of possession, the lockout will not occur as scheduled. Instead, the court will set a hearing to determine whether the claimant should have been named as a party to the unlawful detainer action. Depending on the circumstances, the judge might require that the unlawful detainer process be started over again.

In the extremely unlikely event of an unlawful detainer, we always have our attorney, Kimball, Tirey, & St. John, file the pre judgment claim to avoid the potential issue of a third party claim.

If you are ever stuck with a tenant that needs to be evicted (unlawful detainer) be sure to use an attorney and to request that they file a pre judgement claim on your behalf. The additional time and money may save you from a lot of trouble later.

Can your tenant run a day care center in your rental home?

Short answer–Yes, provided they meet the legal requirements.

Long answer–
The availability of affordable child care has become a hot-button issue in San Diego, where the cost of living can make it difficult for families to get by unless both parents are working. For some families with children, the solution is to offer home-based child care for friends and neighbors who need it.

In California, the need for child care is considered so vital that state law gives renters the right to operate a family day-care business from the home regardless of whether their lease or rental agreement prohibits the “business use of property.” The law applies to all rentals, from single-family homes to apartments and condos.

Of course, renters who wish to run a day-care business out of their home must be sure they’re following the letter of the law and communicating the details with their landlord or property manager. For example, before anyone begins operating a child-care service, they must obtain a license through the California Child Care Licensing Program, which has a local office in Mission Valley. This license specifies the number of children the provider is allowed to watch.

Renters must provide 30 days’ advance notice to their landlord or property manager before they begin operating a child care service from the home. The state license application includes a form that renters can use to provide this notice.

It’s important to note that landlords are legally allowed to charge a higher security deposit to tenants who run a day-care business from the home. Landlords may want to charge a higher security deposit because of the higher risk that young children may damage the property. The California maximum limit on security deposits still applies (no more than double the monthly rent for an unfurnished unit, or triple the monthly rent for a furnished unit).

In addition to sharing licensing information with the landlord, the renter must also share evidence of financial responsibility. There are three ways to demonstrate financial responsibility: obtain liability insurance; secure a bond of at least $300,000; or get signed affidavits from each child’s parents acknowledging that they are aware of the lack of liability insurance or bond.

Beyond these key initial steps, child-care providers should be conscientious and respectful of their neighbors’ right to the quiet enjoyment of their own homes. Take steps to control or manage excessive noise, and be mindful of anything that could damage the property.

Can a Landlord Require a Tenant Speak English to Rent a Property?

Many landlords are concerned about having tenants who do not speak English.  Two issues I hear them express concern about are the lack of understanding of the rental agreement and the inability to communicate regarding necessary maintenance.

More than 25 million people in our country do not speak English fluently. HUD has clarified that although the inability to speak English is not a protected class, that it is closely aligned with national origin that is a protected class.

Housing providers are therefore prohibited from using limited English proficiency selectively or as an excuse for intentional housing discrimination.  The law also prohibits landlords from using limited English proficiency in a way that causes an unjustified discriminatory effect.

Discrimination lawsuits are a hot topic in the rental industry.  Recurring fair housing training is a great way to help protect yourself from a fair housing complaint or a discrimination lawsuit.