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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.

When do tenants forfeit their security deposit?

Over the years I have heard landlords say that since a tenant did something wrong that they are going to take their deposit. It doesn’t work that way in California.

Security deposits may be used to offset expenses the tenant incurred such as unpaid rent or damage to the property. However, even if they have breached a part of the lease, you can only charge the cost to correct the breach and if the tenant disputes those charges then the landlord must be able to substantiate the charges or the landlord will likely be liable not only for the amount of the deposit but also for bad faith withholding, also referred to punitive damages.

Remember to keep it business and do not use charges to the deposit to try to punish your tenant.  If you ever have a question on what to charge you can give me a call at American Heritage Properties.

Bill Ausen

Broer

It isn’t personal–it’s business

As a landlord, you may encounter tenants with some really sad stories. Be understanding, but above all, be firm and unwavering when it comes to sticking with your policies. They are there to protect you and your property. In addition, you should only have these types of discussions with people who are named on the lease. Family members or significant others may want to get involved, and while you should be respectful, only discuss details with the tenant.

When you live in your house it is your home, when you rent it out then it is your business. Keeping it “business” is not easy to do but a key to being a successful landlord.

What happens when a tenant won’t cooperating in showing after notice has been given?

Most rental agreements allow for entry for the purpose of showing the property to new prospective tenants.  So what do you do if the tenant does not cooperate?  Legally you can serve a 3-day notice to perform and force them to show.  However, if they still do not cooperate then your legal recourse is to start an eviction.   This might be the route that an attorney would recommend, but as a property manager, my recommendation is to wait until the tenant moves out to show.  Yes, you do lose some marketing time, but I feel that the drawbacks exceed the benefits.

I could go into detail with the drawbacks, but I don’t want to write a book here–if you are interested in hearing more, just give me a call at American Heritage Properties.

Bill Ausen

858-695-9400 x178

Time to end state funding for eviction defenses!

The California Apartment Association has urged the state Legislature to stop providing funding for defense attorneys to help evicted tenants drag out the unlawful-detainer process.

The practice has occured for several years under a state law that CAA believes should expire in 2017.

Under the Sargent Shriver Civil Counsel Act, defense attorneys receive money from the state to represent low-income Californians in a variety of legal areas, from evictions to custody disputes. Since 2011, the Legislature has spent $9.5 million annually on the program in seven areas across the state.

While the concept is laudable, it’s rife with abuse when it comes to fighting evictions.

With money provided under the Sargent Shriver Civil Counsel Act, some lawyers make false claims about property owners who are simply trying to regain possession of their properties from tenants who’ve failed to pay rent.

The most common tactic: Answer an eviction complaint by claiming the unit is substandard. Despite having no proof, tenants often stay put until trial.

Most landlords end up settling because they cannot afford the delays or legal fees associated with such a claim.

Unless the Sargent Shriver Civil Counsel Act is revamped to stop abuses in eviction cases, the California Apartment Association will continue to oppose refunding it next year.

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