60-day Notice is Needed When Rent Increase is 10 Percent

Robert S. Griswold | Steven R. Kellman | Ted Smith
18-February-2001 Sunday

This column on issues confronting renters and landlords is written by Counselor of Real Estate and Certified Property Manager Robert Griswold, host of Real Estate Today! with Robert Griswold (10 a.m. Saturdays on AM1130 - KSDO radio, or on the Internet at www.retodayradio.com), and by attorneys Steven R. Kellman, director of the Tenants' Legal Center, and Ted Smith, principal in a law firm representing landlords.

Q: I am a rental property owner and I have heard there is a recent change in the law requiring a 60-day notice to the tenant to increase the rent. Can you tell me the details?

A: Effective Jan. 1, 2001, California Civil Code Section 827 requires that rental owners or their property managers provide tenants with a 60-day written notice when the rent is increased more than 10 percent. However, it is not that simple.

This new law also contains a "look back" provision for calculating the 10 percent threshold that includes any rent increases during the prior 12-months from the effective date of the latest rent increase. In other words, a 60-day written notice is required when the proposed rent increase, alone or combined with other rent increases for the 12 months prior to the effective date of the new increase, raises the rent by more than 10 percent of the lowest rent charged within the 12 months before the effective date of the increase.

You may need to read that a couple of times, but let me try to give you one example.

Let's say there is a tenant with a 12-month lease at $1,000 per month rent that expires next month. The owner wants to give a $70 per month rent increase to $1,070 per month and sign a new six-month lease with this tenant. Since the rent in crease is 7 percent, only a 30-day written notice is required.

However, if at the end of the new six-month lease, the owner wants to give an additional rent increase of $50,the latest rent increase will require 60 days written notice since it exceeds 10 percent of the lowest rent charged in the last 12 months ($70 plus $50 equals $120 divided by $1,000 equals 12 percent).

Remember that there are still no limits on the amount or frequency of rent increases in nonrent-controlled areas of California. Any rent increase of up to 10 percent or any other change in terms of the tenancy will still require only a 30-day written notice on month-to-month tenancies.

Again, only rent increases of greater than 10 percent are affected by this new law requiring a 60-day written notice. As with any legal notice, the rent increase can be served personally, by substituted service, or by posting the notice and mailing a copy by first class mail to the tenant.

This new law also provides an additional method of service option that allows the rent increase notice to be served by first class mail alone. An owner is not required (and I do not recommend) using certified mail. Also, the law contains a sunset provision and will automatically expire on Jan. 1, 2006, unless new legislation is passed to extend that time frame.

Ready or not?

Q: I gave an apartment management company a $400 deposit to hold an apartment. When I originally viewed the apartment it still needed cleaning and repairs. I was assured that the apartment would be ready no later than the agreed move-in date in two weeks.

On this prearranged date I viewed the apartment again and it was still dirty and still needed repairs and replacements. At this time I informed the company that I was no longer interested in the apartment and asked for my deposit back. They refunded only $100 of it, saying that my deposit kept them from showing it to other prospective tenants.

In reality they didn't start on the cleaning and repairs until three days before the deadline, and when I saw the apartment, it was still in no shape to be rented out.

Please let me know what my options and rights are regarding the remainder of my deposit, and if cashing their check for $100 would prevent me from collecting the balance.

A: Griswold: The terms of the holding deposit should have been clearly spelled out in a written document at the time that you placed this deposit.

It would be my opinion that if the apartment was not clean and in move-in condition on the agreed date, then the landlord should not be withholding any of your good-faith holding deposit. If you saw the apartment even on the day before the scheduled move-in date and it wasn't rent-ready, then the landlord has not breached their agreement.

The key factor is the condition of the rental unit at the time of the mutually agreed and scheduled move-in. As far as the cashing of the partial refund, unless there is an enforceable release or conditional endorsement, then you should not have any problems by negotiating that check and still pursuing the balance of your holding deposit.

Kellman: You may be entitled to more than the refund of the deposit. I agree with Robert that the apartment should have been rent ready on the date promised and the failure to do so may have been a breach of the lease by the landlord.

I will go further, however, and say that if it was a breach, you should be compensated. After all, what about the two weeks you lost that you could have been looking for another place? Your lost time and aggravation are certainly worth some compensation.

Also, if you had a lease and the new place you find to move in to charges a higher rent, you may be entitled to the difference for the duration of that original lease.

Therefore, unless that $100 check or accompanying letter contains release language (i.e. "refund in full" etc.), you can keep it and bring a case in the Small Claims Court for your losses.

IF YOU'RE A TENANT OR LANDLORD, the authors stand ready to answer your questions in this column, although letters cannot be answered individually. Write them at: Rental Roundtable, Homes Section, San Diego Union-Tribune, P.O. Box 120191, San Diego, CA, 92112-0191. Or you may e-mail them at rgriswold.sdut@retodayradio.com

Copyright Union-Tribune Publishing Co.

Back to 2001 Rental Roundtable Index

Robert Griswold and the Real Estate Today! radio show strongly support the intent and the letter of all federal and state fair housing laws. As a reminder to all owners and managers of real estate, note that all real estate advertised is subject to the Federal Fair Housing Act, which makes it illegal to advertise "any preference, limitation, discrimination because of race, color, national origin or ancestry, religion, sex, physical disability, or familial status, or intention to make any such preference, limitation or discrimination." Additional state and/or local fair housing laws may also apply. Be sure to inform all persons that all dwellings offered or advertised are on an equal opportunity basis.

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Revised and Updated - Wednesday, April 26, 2006

Robert S. Griswold, CRE, CPM, CCIM, PCAM, GRI, ARM
Griswold Corporate Center
Griswold Real Estate Management, Inc.
5703 Oberlin Drive, Suite 300
San Diego, CA 92121-1743
Phone: (858) 597-6100
Fax: (858) 597-6161
Email: rgriswold.ret@retodayradio.com