New Landlord Tenant Laws
A. 60-Day Termination Notice
Effective January 1, 2003 a landlord must provide a month-to-month periodic
tenant with an additional 30 days notice to terminate the tenancy if the tenant
has lived in the dwelling for one year or more. Thus, the notice requirement
is now a total of 60 days, instead of 30 days.
There are certain situations where the 60-day notice is not required. First, it does not apply if the landlord enters into a fixed-term lease, such as a one-year lease agreement. Second, a 30-day notice is sufficient for tenants who have lived in the property for less than one year. Third, landlords selling their properties may give a 30-day notice if all of the following six conditions are met:
1. The owner has entered into a contract to sell the dwelling or unit to a
bona fide purchaser for value;
2. The buyer is a natural person(s);
3. The buyer in good faith intends to live in the property for at least one
year after termination of the tenancy;
4. The termination notice is given within 120 days of opening escrow;
5. The owner has established an escrow with a licensed escrow officer, or a
licensed real estate broker; and
6. The dwelling or unit is alienable separate from the title to any other
dwelling unit.
B. Landlord’s Entry Into Premises
A landlord must now give the tenant reasonable notice in writing of the landlord’s intent to enter. Entry must be during normal business hours, unless the tenant otherwise consents. These written notice and business-hours-only requirements do not apply to cases of emergency, or when the tenant has abandoned or surrendered the premises.
Twenty-four hours notice is presumed reasonable absent evidence to the contrary. The written notice may be served in any of the following ways:
1. Personal delivery to the tenant;
2. Left with someone of suitable age and discretion at the premises;
3. Left on, near, or under the usual entry door in a manner that a reasonable
person would discover the notice; or
4. Mailed to the tenant. A notice mailed at least six days before an intended
entry is presumed reasonable notice absent evidence to the contrary.
To be prudent, a landlord should serve the entry notice in one of four methods prescribed above. However, these four methods are all described in the statute as permissible methods of service, and so, a court could arguably interpret the statutory language as allowing other reasonable methods of service as well.
As an exception to the written notice requirement, a landlord selling his or her property can give the notice of entry orally, in person, or by telephone, if all of the following conditions are met:
1. The purpose of entry is to show the dwelling unit to prospective or
actual purchasers.
2. The landlord or his or her agent has notified the tenant in writing within
120 days of the oral notice that the property is for sale and that the
landlord or agent may be contacting the tenant orally to show to prospective
or actual purchasers. Twenty-four hour notice is presumed reasonable absent
evidence to the contrary.
3. At the time of entry, the landlord or agent leaves written evidence of the
entry inside the unit, such as his or her business card.
Source: California Senate Bill 1403 (Kuehl), amending California Civil Code section 1954.
C. Move-Out Inspection Rights
Effective January 1, 2003, tenants have the right to request an inspection of the premises before they move out. This new law gives tenants an opportunity to correct any identified deficiencies in the condition of the property, and thereby minimize deductions, if any, from their security deposits.
The new procedures for the move-out inspection are as follows:
1. Providing Notice of Inspection Rights. Within a reasonable time after
either the landlord or tenant gives notice to terminate the tenancy, or before
the end of a fixed-lease term, the landlord must give the tenant written
notice that the tenant may request an initial inspection, and may be present
at that inspection.
2. Scheduling the Inspection. If the tenant requests an inspection, the
parties must try to schedule a mutually acceptable date and time. If the
tenant does not request an inspection, the landlord’s duties regarding the
inspection are discharged.
3. Providing 48-Hour Notice of Inspection. For a tenant requesting an
inspection, the landlord must give at least 48 hours prior written notice of
the date and time of the inspection, whether the parties agreed to a mutual
time, or could not schedule a mutually acceptable time.
4. Conducting the Inspection. The landlord or landlord’s agent must conduct
the inspection at a reasonable time no earlier than two weeks before the end
of the lease. The landlord must proceed with the inspection whether the tenant
is present or not, unless the tenant withdraws the request for inspection.
5. Preparing the Inspection Statement. Based on the inspection, the landlord
must prepare an itemized statement of repairs or cleaning that are proposed to
be the basis of any deductions from the security deposit. This statement must
include the statutory language in California Civil Code sections 1950.5(b) and
(d) which set forth, among other things, the items that may be properly
deducted from the security deposit, including the following:
a. Defaults in the payment of rent;
b. Repairing damages, other than ordinary wear and tear, caused by the
tenant or the tenant’s guest or licensee;
c. Cleaning costs (see section E below for New Cleanliness Standard); and
d. Future defaults by the tenant to restore, replace, or return personal
property as authorized by the rental agreement.
6. Delivering the Inspection Statement. The landlord must give the
inspection statement to the tenant if the tenant is present for the
inspection, or leave it inside the premises.
7. Providing an Opportunity to Correct. The tenant must be given an
opportunity to avoid deductions from the security deposit by remedying any
identified deficiencies in a manner consistent with the rental agreement.
This new law does not change the landlord’s existing duty to give the tenant, within three weeks after the tenant vacates the premises, an itemized statement of the final disposition of the security deposit. The landlord may use the security deposit for the following purposes: (a) Items set forth in the inspection statement that the tenant failed to correct; (b) Items arising between completion of the inspection and termination of the tenancy; and (c) Items not identified during the inspection due to the presence of the tenant’s possessions.
Additional Considerations. It is unclear from the statutory language whether a landlord carrying out the move-out inspection procedures must also comply with the separate right-of-entry requirements (see section B above). The move-out inspection rules are primarily set forth in California Civil Code section 1950.5(f). However, the landlord’s right to enter the leased premises to conduct this move-out inspection has also been incorporated into the right-of-entry statute set forth in California Civil Code section 1954. Hence, a prudent landlord should, for the time being, comply with both statutes until the courts or the Legislature clarifies the following issues:
1. Waiver of 48-Hour Notice. Section 1950.5(f) allows
waiver of the 48-hour notice of inspection if the waiver is in writing signed by
both the landlord and tenant. However, section 1954 independently requires the
landlord to provide written notice of the landlord’s intent to enter to conduct
a move-out inspection, and section 1954 does not explicitly allow waiver. Thus,
to be prudent, a landlord should provide written notice of an upcoming
inspection, and refrain from invoking the right to waive that notice requirement
until the courts or the Legislature clarifies this issue.
2. Normal Business Hours. In the event that the tenant
wants a move-out inspection but the parties cannot mutually agree to a date and
time, the landlord must unilaterally set a date and time for the inspection, and
notify the tenant accordingly. A landlord should err, if necessary, on the side
of caution by making sure that any unilaterally scheduled date and time are
during "normal business hours" as required by section 1954. There is no
statutory definition for "normal business hours," but some practitioners
interpret it as excluding evenings and weekends.
3. Methods of Service. Section 1950.5(f) does not
provide any specific methods of serving the required notices. However, because
section 1950.5(f) has been incorporated into section 1954, a prudent landlord
should deliver the inspection notices in one of the following ways:
a. Personal delivery to the tenant;
b. Left with someone of suitable age and discretion at the premises;
c. Left on, near, or under the usual entry door in a manner that a reasonable
person would discover the notice; or
d. Mailed to the tenant. A notice mailed at least six days before an intended
entry is presumed reasonable notice absent evidence to the contrary.
Source: California Assembly Bill 2330 (Migden), amending California Civil Code section 1950.5(f) and 1954.
D. New Definition for Security Deposit
Effective January 1, 2003, there is a new definition for a "security deposit." A "security" used to be defined as any payment, fee, deposit or charge, including those imposed as an advance payment of rent. Under the new law, a security deposit also includes any charges imposed at the beginning of the tenancy to reimburse the landlord for costs associated with processing a new tenant, other than application screening fees (discussed below).
This new definition is significant because a residential landlord may only collect a security deposit equal to two months of rent for unfurnished units, and three months of rent for furnished units. For example, for an unfurnished residential property at $800 per month under a month-to-month agreement, the maximum amount that the landlord can collect up front is $2,400, or $800 rent for the first month, plus $1,600 as a security deposit. If the landlord charges a $20 general processing fee, effective January 1, 2003, that $20 is considered as part of the $1,600 security deposit.
A landlord cannot try to collect more than the allowable security deposit by labeling the funds as for something else, such as a move-in fee, pet fee, cleaning fee, or last month’s rent. There are, however, five exceptions to the rules limiting the amount of a security deposit:
1. Application screening fees for actual, out-of-pocket costs for obtaining
information about a rental application, such as credit reports and reference
checks. However, the screening fee cannot exceed $30 per applicant, plus
annual CPI-adjustments after January 1, 1998.
2. Advance payments of not less than six months of rent for residential leases
with a term of six months or more.
3. Separate fee agreements between the landlord and tenant for structural,
decorative, furnishing, or other similar alterations, but not for cleaning or
repairs.
4. For waterbeds, an additional one-half of one month’s rent as a security
deposit, plus a reasonable administrative fee.
5. These security deposit limitations do not apply to commercial properties.
Source: California Assembly Bill 2330 (Migden), amending California Civil Code section 1950.5(a).
E. New Cleanliness Standard
For all tenancies beginning after January 1, 2003, a landlord incurring costs to clean the premises after a tenant moves out, may only deduct from the security deposit the cleaning cost "necessary to return the unit to the same level of cleanliness it was in at inception of the tenancy." For tenancies that began January 1, 2003 or earlier, the cleaning standard is more generally stated; that is, the landlord can deduct from the security deposit "the cleaning of the premises upon termination of the tenancy."
Source: California Assembly Bill 2330 (Migden), amending California Civil Code section 1950.5(b)(3).
F. Bad Faith Claims of Security Deposits
Under the previous law, a landlord who acted in bad faith in claiming or retaining a security deposit was subject to statutory damages up to $600, plus actual damages. Effective January 1, 2003, this statutory penalty will be changed from $600 to twice the amount of the security deposit, plus actual damages. A court may impose a statutory penalty against the landlord, even if the injured party does not specifically request such relief. The landlord bears the burden of proving the reasonableness of the amount of security deposit claimed.
Source: California Assembly Bill 2330 (Migden), amending California Civil Code section 1950.5(l).