The Landlord-Tenant Environment in California
California has the most tenants in the country. Of the 36.25 million residents in California, 17.21% are renting, meaning there are 6.2 million tenants in California.
We ranked the best landlords in the US, and based on our survey California landlords ranked third. California landlords understand their laws and rarely are in court against their tenants.
California landlord-tenant law is relatively clear-cut. However, many cities in the state have their own laws. It is important that landlords follow their city laws, because the laws in that city may be more in-depth than the state law.
In this article, we will focus on the state’s landlord-tenant law, and the landlord-tenant law of two of California’s major cities, Los Angeles and San Francisco.
Security Deposits Laws in California
California does not require security deposits, but we recommend that landlords collect them regardless. They are a good way to test a tenant’s financial stability. Also, they help landlords secure compensation for property damage caused by the tenant or the nonpayment of rent. In California, a landlord can withhold a security deposit for three reasons:
-
- If the tenant owes unpaid rent
-
- If there is damage caused by the tenant beyond normal wear and tear
- If the apartment is dirty
Most landlords in California collect a security deposit. Of the landlords who collect a security deposit, approximately 75% of them set the security deposit equal to the monthly rent price. In California, a security deposit cannot equal more than two months of rent, unless the apartment is furnished. If the apartment is furnished, then the security deposit cannot be higher than three months of rent.
Amount Held for Security Deposit
It is more likely for landlords to withhold a security deposit for property damage than for anything else. In fact, 90% of California landlords who collect a security deposit withheld part of the deposit for property damage.
Landlords are required to notify the tenant in writing of his or her option to request an initial inspection prior to the end of their tenancy. The purpose of this inspection is to allow the tenant the opportunity to remedy any damages or issues to the property that may result in deductions from the security deposit.
When must a landlord return the deposit by in California?
If a landlord has no reason to withhold the security deposit, as mentioned above, the landlord must return the deposit within 21 days of the tenant moving out.
If the landlord does not return the full security deposit, she must provide a written itemized list to the tenant stating how the security deposit has been used to cover costs (whether it is to cover unpaid rent or paying for repairs). The landlord must give this list to the tenants within 21 days of the tenant moving out. The itemized list must include paid receipts stating the cost of repairs.
The landlord is required to fix repairs within 21 days of the tenant moving out because they must provide receipts stating the cost of repairs on the itemized list.
Do landlords have to pay interest on security deposits in California?
California state law does not require landlords to pay interest on security deposits. However, some cities (such as Los Angeles and San Francisco) do require landlords to pay interest on security deposits. In most of California’s large cities, there is a rental board that is responsible for deciding what the interest rate will be.
You can learn more about Los Angeles and San Francisco laws toward the end of this guide.
Can security deposits be commingled with other assets?
Landlords are allowed to commingle deposits in California, but according to our survey over half the landlords in California hold deposits in a separate account from all other assets. This is likely because landlords in Los Angeles and San Francisco are required to pay interest on security deposits so they must keep deposits separate from other assets.
Is a deposit receipt required in California?
Security deposit receipts are not required, but we recommend issuing a receipt to record the transaction nonetheless.
Although California does not require the following procedure, we recommend landlords follow this procedure to reduce confusion and legal trouble.
-
- The rental agreement should state the amount and location of the deposit; the agreement should also state the purpose of the deposit.
-
- If the landlord must pay interest on the deposit, then the rental agreement should also state the interest rate the tenant will earn on the deposit.
- If the landlord changes the location of the deposit, the landlord should notify the tenant in writing of the new location of the deposit, why the landlord moved it, and when the landlord moved it.
Rental Agreement Laws in California
California law requires rental agreements for tenancies 12 months or longer. Oral agreements are technically “legal and enforceable” if the term is less than one year, but it is hard to prove what the terms are in a verbal agreement. Written agreements make it easier to prove what was agreed and help settle disputes about the rental agreement quicker. Regardless of the length of the rental term, we recommend having a written agreement signed by the tenant and landlord.
California Laws on Repairs: Tenant’s Right, Landlord’s Duty
Landlords must repair substantial defects in the apartment and substantial failures to comply with state and local building and health codes. Landlords are also responsible for maintenance work which is necessary to keep the rental unit livable. However, the landlord is not responsible for repairing damages that are caused by the tenant, or the tenant’s family, guests, or pets.
Tenants are required to take reasonable care of their rental units, as well as common areas such as hallways and outside areas. Tenants must act to keep those areas clean and undamaged. Tenants also are responsible for the repair of all damage that results from their neglect or abuse and for repair of damage caused by anyone for whom they are responsible, such as family, guests, or pets.
Outside of the duties of landlords and tenants described above, landlords and tenants can make different arrangements regarding repairs in the lease. Landlords may agree to take care of trash removal and the repair of other amenities for the tenant. Conversely, tenants may agree to perform all repairs and maintenance for lower rent.
Tenants’ Rights Regarding the Landlord’s Duty to Repair
In California, tenants have a couple of remedies they can pursue if their landlord ignores the duty to repair. However, before a tenant can use these remedies, he or she must first notify the landlord of the repairs needed and give the landlord a reasonable amount of time to complete the repairs. For most repairs, 30 days is considered a reasonable amount of time. However, there are instances where the tenant could reasonably expect repairs to be completed quicker than 30 days. For an example, it may be considered reasonable to expect the landlord to have a broken furnace fixed fairly quickly if it is cold outside.
If the landlord has not completed the repairs in a reasonable amount of time, tenants may:
-
- Exercise the right to “repair and deduct.”
-
- Abandon the apartment.
-
- Withhold rent.
-
- Sue the landlord.
- Call state or local health inspectors.
Tenants are most likely to attempt to excise the right to “repair and deduct or withhold rent.
The “Repair and Deduct” Remedy
The right to “repair and deduct” allows a tenant to make repairs to serious conditions (conditions that may affect health and safety, such as a leaky roof) if those repairs would not cost more than a month’s rent.
When can a tenant abandon the rental unit?
A tenant can abandon property for similar conditions that would allow the tenant to use the repair and deduct remedy. Normally, this remedy is used when repairs would cost more than a month of rent, although this is not a requirement for the use of the remedy.
When can a tenant withhold rent?
The requirements for a tenant to withhold rent are similar to the right to “repair and deduct.” However, the conditions must be more serious than conditions that would allow a tenant to use the repair and deduct remedy. The conditions must pose a serious threat to the tenant’s health or safety.
Tenants should not spend the rent that is withheld. When a tenant withholds rent, the dispute is likely to be resolved in court. Even if the judge rules in favor of the tenant, the judge is not likely to rule that all of the rent should have been withheld from the landlord.
There are two ways that judges determine the proper amount that should have been withheld by the tenant. One way is that the judge will try to determine the value of the damaged rental unit and subtract that amount from the market value of the unit. The difference would be the proper amount of rent withheld.
Another way judges determine the proper amount of rental withheld is by determining how much of the rental unit is uninhabitable. That percentage will be held as the proper percentage of rent to withhold from the landlord. Since tenants normally withhold rent before a judge makes a ruling on the proper amount of rent to withhold, whatever decision the judge makes normally results in the tenant paying back the landlord some amount of rent.
The tenant runs a risk if he or she uses one of these remedies above, because if the conditions are not serious enough for the tenant to use the repair and deduct remedy, then the landlord could sue the tenant for remaining amount of rent.
California Laws on Retaliation
The landlord cannot retaliate against a tenant who has complained about unsafe conditions, complained to the government (health codes), joined a tenant union, or withheld rent for inhabitable living conditions. Retaliatory acts include ending the tenancy, filing for eviction, locking unit, and decreasing services (e.g., locking laundry room).
What is considered retaliation?
If a tenant claims that his or her landlord has retaliated, the tenant must prove that he or she exercised at least one of following tenant rights within the last 6 months:
-
- Using the repair and deduct remedy
-
- Telling the landlord that the tenant will use the repair and deduct remedy
-
- Complaining about the condition of the rental unit to the landlord, or to an appropriate public agency after giving the landlord notice
-
- Filing a lawsuit or beginning arbitration based on the condition of the rental unit
- Causing an appropriate public agency to inspect the rental unit or to issue a citation to the landlord
- Disclosing the tenant’s citizenship status to immigration authorities or law enforcement
What happens if a landlord retaliates against a tenant?
If a tenant believes that the landlord has retaliated, he or she can sue the landlord under the California Fair Housing and Employment Act. The possible damages under the act include attorney’s fees, punitive damages ranging from $100 – $1000 for each retaliatory act, and any other actual damages suffered by the tenant because of the landlord’s retaliatory acts.
Notice of Entry
Landlords must provide the tenant with written notice 24 hours before entry. A landlord may only enter a unit for the following reasons: an emergency, abandoned property, agreed upon repairs, showing the unit to prospective tenants, court orders if the tenant has waterbed and landlord enters the rental unit to make sure the waterbed is up to code. Other than in cases of an emergency or abandoned property, the landlord may only enter the unit during normal business hours, which is generally between 8AM and 5PM on weekdays.
In the case of an emergency, the notice of entry law is waived. Emergencies are situations when people or the property are threatened. For example, a gas leak or water leak constitutes an emergency. Also, if the landlord wants to show the unit to prospective tenants, oral notice in person or by phone 24 hours beforehand is normally considered adequate notice.
The landlord does not have to provide any proof of the emergency at the time, but if the tenant should believe that the landlord entered unlawfully, the landlord will need proof of the emergency. Proof could be a gas report or notice from the utility company that justifies the landlord believing there was an emergency.
Keys, Locks, and Security Devices
In California, there are no laws about rekeying the premises before a new tenant moves in. While the law does not require landlords to change their locks, most landlords (68%) change the locks on a unit after a tenant moves out.
Do landlords change the locks on a unit before a new tenant moves into the unit?
Locks and Security Devices
Although California does not require landlords to change the locks on rental units, there are laws about the installation of certain security devices, including but not limited to windows, doors, doorknobs. Every unit must have operable deadbolt locks on the main entry doors of rental units, and operable locking or security devices on windows. If the unit does not have an operable deadbolt lock on the main entry doors, or security devices on the windows, the landlord must respond in a reasonable amount of time to a tenant’s request for installation of a security device.
The installation of security devices (deadbolt lock on the main entry door or locking/security devices on windows) would fall under the implied warranty of habitability. Under the implied warranty of habitability, the landlord has to make the requested repairs or additions in a reasonable amount of time. 30 days is normally considered a reasonable amount of time.
If the landlord fails to install a security device that is required, even after a tenant request its installation, the tenant could withhold rent pending the installation of the security device. The tenant can also install security devices out of pocket and deduct the cost from rent or abandon the unit.
Rental Payment Laws in California
There are not many laws regulating the payment of rent in California. The only thing a landlord cannot do is require rent payment in cash. The exception to this rule is if the tenant has given the landlord a check that bounced within the last three months.
Rent Control in California
California passed statewide rent control in October 2019. Annual rent increases are limited to 5% plus inflation each year until 2030. Note that this only applies to apartments built before 2004; single-family homes or duplexes that are owner-occupied are exempt.
Cities that already had rent control policies in place prior to the statewide legislation (like Los Angeles and San Francisco) will keep their rent control laws — they are not superseded by the newer statewide legislation.
Late Fees and Grace Periods
In California, late fees must be a reasonable estimate of the cost the landlord will face because of a late payment. Also, late fees cannot be so high that they would result in a penalty. Learn how to handle tenants with late rental payments.
In California, a landlord is not required to have a payment grace period. If the tenant pays any time after the expected due date, the payment is late. If a landlord wishes to include a grace period for late rent, then they can include the grace period in their rental agreement. By including a grace period, even if very brief, it makes it very clear to tenants the exact day that a late fee will be assessed.
Three-Day Notice
Before a landlord can evict a tenant for not paying rent, the landlord must issue a Three-Day Notice.
The Three-Day Notice must state:
- The amount of rent due, the name, number, and address of the person whom the tenant must pay
-
- If the notice requires payment in person, the notice must state the usual business hours of the person accepting the payment.
-
- If the address does not accept personal deliveries, then the landlord can mail the rent to the owner at the name and address stated.
- If the notice does not require payment in person, it must provide an account number in a financial institution into which the rental payment may be made or state that the tenant may pay under a previously established electronic funds transfer procedure..
-
To ensure rent is paid on time every month, landlords should complete a thorough tenant screening process and make paying rent easy with online rent payments.
California Laws on Eviction
An eviction is an early termination of a lease. Some cities require landlords to have just cause to evict a tenant.
Before a landlord can end a tenancy early, the landlord must give the tenant written notice. If the tenant has lived in the unit for 12 months or more, the landlord must give the tenant 60 days’ notice. If the tenant has lived in the unit for less than 12 months, the landlord only must give the tenant 30 days’ notice.
However, landlords only need to provide Three-Day Notice if the tenant:
-
- Failed to pay the rent
-
- Violated any provision of the lease or rental agreement
-
- Damaged the rental property
-
- Substantially interfered with other tenants
-
- Used the premises for an unlawful purpose
-
- Committed domestic violence or sexual assault
-
- Stalked another tenant or subtenant on the premises
-
- Engaged in drug dealing, unlawfully used, cultivated, imported, or manufactured illegally
-
- Used the building or property to conduct dogfighting or cockfighting
- Unlawfully conducted weapons or ammunition
The Three-Day Notice is served to the tenant, the tenant must resolve the issue causing the Three-Day Notice (i.e., pay rent) or move out of the apartment.This notice is similar to a pay-or-quit notice. If the landlord issued the Three-Day Notice because the tenant is behind on rent, acceptance of any payment of rent resolves the Three-Day Notice.
Please note that if the landlord accepts money from the tenant during this three-day period, the eviction process is halted.
Of our landlords surveyed in California, 62.5% of them have never evicted a tenant.
Also, only 25 % of California landlords have been to court with a tenant. Common reasons for going to court in California are unpaid rent, refusal to pay rent or the return of security deposits.
Pet Laws
California does not require landlords to allow pets in their units, but if a landlord does allow pets, then there are some things the landlord cannot do. The landlord cannot require tenants to declaw or devocalize their pets before renting. Also, landlords cannot advertise their units in a way that would discourage application to the unit because a person’s pets are not declawed or devocalized.
Federal law states that people with certain disabilities have a right to request a waiver for a ‘no pets’ policy if they need a service animal for medical reasons.
Landlords may charge a pet deposit and additional pet rent if they choose. However, if a landlord charges a deposit for pets, the pet deposit in addition to any other deposit cannot exceed two months of rent it total.
California Laws on Domestic Violence/Sexual Misconduct/Sexual Assault
Victims of domestic violence have special rights. Landlords have limited rights to evict the victims of domestic abuse. Additionally, victims of domestic violence may ask their landlord to split the lease and evict the abuser, but not the victim of domestic violence. The victim may also ask the landlord to change the locks. However, the landlord is entitled to proof of domestic violence status. Landlords are not allowed to refuse to rent to a victim of domestic violence.
Marijuana Use on the Rental Property
Although recreational marijuana use is legal in California as of January 1, 2018, landlords do not have to allow marijuana use on their property. Proposition 64 expressly allows owners of private property to prohibit marijuana use and cultivation on their property. If a landlord plans to prohibit or partially restrict marijuana use on their property, the rental agreement should clearly state the landlord’s policy regarding marijuana.
If the rental unit is subsidized with federal funds, allowing marijuana use on the property may put your subsidy at risk since marijuana use is still against federal law. Landlords should consult with an attorney when crafting a marijuana use policy for federally subsidized housing.
Required California Rental Agreement Notices
Lead Paint: If the property was constructed before 1978, the landlord must disclose the presence of known lead-based paint and lead-based paint hazards in the dwelling before the tenant signs the lease or rental agreement. The landlord also must give the tenant a copy of the federal government’s pamphlet, Protect Your Family From Lead in Your Home.
Pest control: If the landlord has a contract with a pest control company, the landlord must provide new tenants with a notice that is provided by the pest control company. The notice must state the pest that the pest company is contracted to control and the pesticides that the company will use.
Carcinogenic Material: If a landlord has 10 or more employees, he or she must notify tenants of possible carcinogens (including asbestos and radon). We recommend that landlords attach
California’s EPA’s Residential Environmental Hazard Guide. This guide contains all the required disclosures of potential environmental hazards required in California.
Methamphetamine Contamination: If a health inspector finds that a unit is contaminated with chemicals from the production of meth, the tenants must move out of the unit, and the landlord must also serve health inspector’s notice to future tenants.
Demolition Permit: If a building has applied for a demolition permit, the landlord must give notice to the current tenants and prospective tenants before they pay an application fee.
Military Ordnance: The landlord must notify prospective tenants if the rental property is located one mile from a closed military base where live ammunition or explosives were used.
Death in Unit: The landlord must disclose if the prior tenant died in the unit within the last three years, and why. However, if the prior tenant died in the unit because of AIDS, the landlord does not need to disclose that the prior tenant died of AIDS.
Condominium Conversion Project: If an apartment building has five or more units and has received final approval to be converted into a condominium, the landlord must notify the tenants of the project.
Mold: Landlords must provide written disclosure to prospective tenants of the potential health risks that may result from the exposure to mold.
Utility: The landlord must disclose whether gas or electricity in the rental also serves other areas and must disclose how costs will be fairly allocated.
Flood Hazard: Starting on July 1, 2018, the landlord must tell the tenant whether the property is located in special flood hazard area or an area of potential flooding.
Bed Bugs: Starting July 1, 2017, landlords must provide a notice to new tenants that states general information about bed bug identification, behavior and biology, the importance of cooperation for prevention and treatment, and the importance of tenants promptly reporting (in writing) any suspected infestations to the landlord. Landlords must provide this notice to existing tenants by January 1, 2018.
Megan’s Law: Every rental agreement or lease also must contain a written notice that the California Department of Justice maintains a website at www.meganslaw.ca.gov that provides information about registered sex offenders. This notice must be in the legally required language. The legally required language is as follows:
Notice: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.meganslaw.ca.gov. Depending on an offender’s criminal history, this information will include either the address at which the offender resides or the community of residence and ZIP Code in which he or she resides.
Oft-Cited California Landlord and Tenant Laws
Below you will find references to areas of the California rules and regulations that govern rental properties and issues related to landlord-tenant law.
California Civil Code Section 1942
-
- Tenants may use the repair and deduct, abandonment, or withholding of rent remedies if a landlord does not repair serious conditions the landlord is responsible for in a reasonable amount of time.
-
- Tenants must give their landlord’s written or oral notices of the repairs needed.
-
- Conditions must make the unit unlivable.
- Tenants cannot use any of the remedies stated above more than twice a year.
California Civil Code Section 1950.5
-
- Security deposits can be withheld for unpaid rent, damage to the property caused by the tenant, and cleaning the property.
- The security deposit amount cannot be more than two months of rent.
- If the unit is furnished, the security deposit can be up to three months of rent.
California Civil Code Section 1954
- A landlord may enter a unit in case of an emergency, upon the belief that the unit has been abandoned, to fix agreed upon repairs, to show the unit to prospective tenants, with court orders if the tenant has a waterbed and the landlord is inspecting to make sure it follows requirements.
California Code of Civil Procedure Section 1161
- Only a Three-Day Notice is needed to evict a tenant when the tenant has failed to pay rent, violated the lease, materially damaged the property, used the property for illegal activity, substantially interfered with other tenants, or committed domestic violence or sexual abuse to another tenant.overv
Rules and Regulations in Los Angeles and San Francisco
By following state law, landlords are not necessarily in compliance with city laws, particularly in Los Angeles and San Francisco. Landlords in Los Angeles and San Francisco must follow federal and state laws mentioned above, but also city laws.
In Los Angeles, the landlord’s property may be subject to additional regulation under the Los Angeles Rent Stabilization Ordinance (RSO) and the Systematic Code Enforcement Program (SCEP). In San Francisco, the Residential Rent Stabilization and Arbitration Ordinance subjects landlords to additional regulation for their rentals.
Los Angeles Landlord-Tenant Law
As mentioned above, there are two additional sets of regulation in Los Angeles: the SCEP and the RSO. Here’s how you can tell what regulations a property must follow in Los Angeles:
Properties subject to the SCEP:
- Any property with at least two units, and at least one rental unit
Properties subject to the RSO:
-
- Any property that was built on or before October 1, 1978
- A previous property under RSO was demolished and the owner constructs residential rental units in its place
If the property is subject to either set of laws, then the owner must pay an annual fee to Los Angeles Housing and Community Development Department (HCIDLA) every January.
The Systematic Code Enforcement Program (SCEP)
The SCEP requires landlords to register their property with HCIDLA. The HCIDLA performs a comprehensive inspection of the property every three years to make sure that the property is up to date with L.A.’s building standards and codes.
If the landlord’s property does not pass inspection, the inspector will issue an order listing all the violations. After that order is issued, the landlord has thirty days to correct the violations in the order. If the landlord does not repair the violations in thirty days, then the case is forwarded for enforcement. At this stage, it is possible that the property may be included in the Rent Escrow Account Program (REAP).
Rental Escrow Account Program (REAP)
If the landlord’s property is in this program, the city offers the tenants a 10- 50% reduction in rent until the violations are corrected. The landlord is charged $50/month for every unit in the building in REAP. The tenant can elect to continue to pay the full amount of rent or pay the reduced amount of rent to the city so that it can be held in an escrow account. Once the repairs are completed the funds in the escrow account are released to the landlord minus any administrative fees owed to the city.
The Los Angeles Rent Stabilization Ordinance
The Rent Stabilization Ordinance in Los Angeles regulates when and how much landlords can raise the rent, just-cause eviction, tenant relocation assistance, and the registration of rental units.
The HCIDLA enforces the Rent Stabilization Ordinance. The HCIDLA regulates the increase of rent and there some instances when a landlord needs to petition the HCIDLA for approval to raise the rent.
Registration
Under the RSO, all rental properties must be registered with HCIDLA. New property owners have 45 days to register their property with HCIDLA. All properties subject to the RSO must post a notification on the property stating that it is subject to the RSO.
Rent Increases
Rent can be increased to the market rate when a tenant moves out voluntarily or has been evicted for violating the lease. If the tenant is still occupying the unit, the rent can only be increased once every 12 months at a rate that the HCIDLA has set.
Every year the HCIDLA will release the percentage that rent can be increased on occupying tenants. The current allowable rent increase is 3% and will be the effective rate until June 30, 2018. If a landlord is looking to raise rent to recover the cost of improvements made to the rental property, then the rent increase will require the approval of the HCIDLA.
Increasing rent can be a bit complicated in L.A. We recommend reviewing the HCIDLA’s rent adjustment guide.
Evictions Under the L.A. RSO
Under the RSO, evictions are split into two categories, “at-fault” and “no-fault” evictions. Landlords have different obligations to the tenant depending on whether the evictions are “at-fault” or “no-fault.”
An “at-fault” eviction is when a tenant’s actions have caused the landlord to want to terminate the lease. Only the following eight reasons are “at-fault” reasons for eviction:
-
- Failure to pay rent
-
- Violation of the lease
-
- Unreasonable interference with the comfort, safety or enjoyment of other tenants, or damaging the rental unit or the property
-
- Using the rental unit or the common areas of the property for an illegal drug activity or gang activity
-
- Refusal to renew a lease or rental agreement of like terms and conditions
-
- Refusing the landlord reasonable access to the rental unit for repairs and inspections to name a couple of examples
-
- At the end of a lease term, the landlord discovers the tenant is not the person who initially rented the unit, and the landlord did not approve this person’s tenancy
- The tenant failed to honor a relocation agreement that was approved by the HCIDLA under Tenant Habitability Plan (THP).
Notices for at-fault evictions must indicate one of the reasons stated above as the reason for eviction.
“No-fault” evictions are when the landlord wants the unit back for personal or business reasons such as the following:
-
- The owner or immediate family member will move into the rental unit
-
- A resident manager will move into the rental unit
-
- Demolition and permanent removal from the rental market
-
- Government order
- Conversion to affordable housing
However, a landlord cannot evict a tenant because he or she would like to sell the property. If this is the type of situation, the landlord must convince the tenant to leave the property voluntarily.
If the landlord is evicting the tenant for business or personal reasons that are not the fault of the tenant, the landlord may have to pay the tenant a relocation fee. The relocation fee is based on the length of time the tenant has lived in the unit and the tenant’s income.
Landlords that own no more than four rental units and a single-family house may pay a lower relocation fee if they are terminating the lease to move an immediate family member into the unit.
San Francisco Landlord-Tenant Law
Most residential units built before June 13, 1979, are subject to the San Francisco Rent Ordinance. Like the LA Rent Ordinance, the San Francisco Rent Ordinance regulates security deposits, rent increases, and evictions in San Francisco.
Security Deposits under San Francisco’s Rent Ordinance
State law governs security deposits in San Francisco for the most part. The difference is that in San Francisco, landlords are required to pay interest annually on deposits. Even properties that are exempt from the Rent Ordinance must pay interest on security deposits.
Interest owed on multiple years is not compounded. That means for each year a landlord owes interest, the landlord pays the interest rate for the year the deposit is held. For example, if the landlord holds a $1,000 security deposit from a tenant in 2015, and in 2016 the interest rate was 1.2%, and in 2017 the interest rate was 1.5% then the landlord would owe $12.00 for 2016 and $15 for 2017, for a total of $27.00.
Annual Allowable Rent Increase
Under the San Francisco Rent Ordinance, San Francisco’s Rent Board determines each year what the allowable rent increase will be for the following year. The Rent Board determines the allowable rent increase by March 1st of every year. The allowable rent increase will stay in effect until February 28th of the following year. The most recent allowable rent increases are stated in the chart below.
The “Banking” of the Annual Allowable Rent Increase
Under San Francisco’s Rent Ordinance landlords can accumulate rent increases if they do not use them. If a landlord does not impose a rent increase on the anniversary date, that rent increase can be added to the next annual allowable rent increase 24 months from the date when increase could have been imposed on the tenant.
For example, if a landlord could impose a rent increase of $50.00 in 2015, in 2017, if the allowable rent increase is $50.00, then the landlord could increase rent by $100 in 2017 because he could add the rent increase 2015 to the rent increase in 2017. However, rent increases cannot be accumulated from a prior tenant of a unit and applied for a new tenant.
A new owner can accumulate the rent increases from the previous owner if the tenant of the unit has not changed.
The banked rent increase is calculated by adding the banked percentage amounts to the current allowable increase and then multiplying it by the tenant’s current base rent.
For more information on annual allowable rent increases and banked rent increases, please see the San Francisco Rent Board’s fact sheet on annual allowable rent increases.
Evictions Under San Francisco’s Rent Ordinance
Under San Francisco’s Rent Ordinance a landlord needs “just cause” to evict a tenant from an apartment or to reduce housing services. There are 15 just cause reasons under Ordinance 37.9(a). The most common just cause reasons provided for eviction are stated below:
-
- Habitual late payment of rent (more than once or twice)
-
- Failure to cure a breach of the lease
-
- Creation of a substantial interference with the landlord or other tenants in the building
-
- Owner-occupancy or, in limited circumstances, occupancy by a member of the landlord’s immediate family
-
- To demolish or permanently remove a rental unit from housing use
-
- To perform capital improvements which will make the unit temporarily uninhabitable while the work is being done – the tenant must be allowed to reoccupy the unit once the work is completed
-
- To perform substantial rehabilitation of a building that is at least 50 years old, provided that the estimated cost of the proposed work is at least 75% of the cost of new construction
- To withdraw all rental units in a building from the rental market under the Ellis Act
The eviction notice must state one of the 15 reasons in the San Francisco Rent Ordinance as a reason for eviction. The eviction must also state that the tenant can seek assistance from the San Francisco Rent Board. A copy of all notices to vacate must be filed with the Rent Board within ten days following service of the notice to vacate.
No-Fault Evictions
If the landlord is pursuing a no-fault eviction, he or she is likely required to pay the vacating tenant relocation fees. Here are a few reasons why a “no-fault” eviction can occur:
-
- Owner/relative moves in
-
- Demolition or permanent removal of the rental unit from the rental market
-
- Temporary removal of the rental unit from housing use to do capital improvement work
- Rehabilitation of the property
The landlord is required to give all occupants in the unit written notice of relocation rights on or before the date of service of the eviction notice, and shall also provide a copy of Ordinance Section 37.9C. The landlord must file a copy of this notification with the Rent Board within ten days after service of the notice, together with a copy of the eviction notice and proof of service upon the tenant.
California Landlord and Tenant Law Resources
Below you’ll find helpful California landlord-tenant law resources:
Outline – Landlords’ and Tenants’ Responsibilities for Habitability and Repairs: Legal Guide
Los Angeles Housing and Community Investment Department
Los Angeles Landlord Tenant Handbook
City and County of San Francisco Rent Board
Comments