CALIFORNIA LANDLORDS – Chapter 2, Rental Agreements and Leases

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As you read this article keep in mind that it was written for the owners of property located in the State of California.  This is critically important because the state statutes, case law, and public policies can vary widely from state to state, moreover, there is also a layer of federal law which applies in every state and territory.

DISCLAIMER

This article is intended to be a general discussion only, and should not be considered legal or real estate advice. Your use of it does not create either an attorney-client or broker-client relationship. Any liability that might arise from your use or reliance on this article, or any of its links, is expressly disclaimed. This blog is not legal, real estate, loan, accounting or tax advice, and is not to be acted on as such, it was outdated the moment it was written, and is subject to change without notice. If you are dealing with a potential problem with your investment property you are advised to retain the appropriate licensed professional. This article is not meant to apply to a rent controlled area in which special rules may apply.

INTRODUCTION

As you read this article keep in mind that it was written for the owners of property located in the State of California. This is critically important because the state statutes, case law, and public policies can vary widely from state to state.

If you are an absentee owner who has decided to manage your own property it’s best you thoroughly familiarize yourself with the territory. This serialized artical is an attempt to identify at least some of the potentially serious issues faced by an inexperienced owner.

PERIODIC RENTAL AGREEMENTS and LEASES

(Written and Oral)

A periodic rental agreement specifies the length of time between rent payments (the rental period). For example, a stated number of days, weeks or months. This type of agreement expires at the end of the rental period, and is renewed by the payment and acceptance of the rent for the next period. A periodic rental agreement for a one month rent period is called a month-to-month agreement.

In periodic rental agreements the rental period establishes the following:

  1. How often the rent must be paid;
  2. The amount of notice that must be given by either the landlord or the tenant to terminate the the tenancy; and,
  3. The amount of notice the landlord must give the tenant in order to change the terms of the agreement.

Of course, in California, there are exceptions to the above, which are usually the result of state statutes.

Periodic rental agreements can be either oral or written. An oral agreement can be legally binding on both the landlord and the tenant, however an oral agreement is harder to enforce in the event of a disagreement. It should also be noted that the agreement must be in writing if the rental if the rental period or lease period is more than one year. In general, periodic rental agreements should be in writing if there are special circumstances involved. Some examples might include long rental periods, agreements regarding pets, or agreements regarding the payment of expenses or utilities.

When the landlord/tenant agreement is oral, the landlord must give the tenant a written statement of identifying the name, street address, and phone number of the landlord or agent for receipt of legal notices; the contact person for payment of the rent and the method by which the rent must be paid.

A written periodic rental agreement should document all of the elements of the agreement. For example the agreement should state the amount of the rent, the length of time between payments, the landlord’s obligations and the tenant’s obligations. Normally the amount of advance written notice the landlord and tenant must give each other must be the same as the length of time between payments. It should also be noted that a shorter amount of time can also be agreed upon by the parties.

California law provides that if you have a written month-to-month periodic rental agreement 30 days written notice is required for rent increases of 10% or less. This notice period is increased to 60 days for rent increases of greater than 10%.

Where a periodic rental agreement states the rental period, a lease states the number of months the lease will remain in effect (the lease term) with payments to be made on a monthly basis. Under a lease even though payments are required monthly the parties are bound by its terms until it expires. Like periodic rental agreements a lease can be oral, however, the terms of verbal agreements are difficult to prove.

During the lease term, rent can’t be raised unless the lease expressly allows it. A tenant can’t be evicted during the lease term except for narrowly defined reasons, such as failure to pay rent or damage to the property. Of course a lease carries with it an implied warranty of habitability and if a landlord doesn’t live up to this implied warranty the tenant may have the right to break the lease and move out.

If you are considering the use of a written lease to rent your property it is best to either hire a real estate professional to list, rent and manage your property or to consult with an attorney regarding the terms and conditions you should include in your lease as well as your possible obligations to supply a translation of the lease to the tenant, before the tenant signs the lease, whether or not the tenant requests it.

JUMP TO OTHER CHAPTERS

  • LANDLORDS – Table of Contents  This is a hyperlinked Table of Contents designed to connect you to the blog entries which comprise the various chapters of the Landlords Blog.
  • LANDLORDS – Chapter 1, Discrimination  Chapter 1 of a serialized virtual book discussing the issues which must be faced by absentee owners attempting to manage their own properties in California.

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USEFUL LINKS TO REAL ESTATE INFORMATION

OC Property Management & Sales, Inc.

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www.OCPropMgmt.com

OCPropertyMgmt@gmail.com

voice: 949-505-3838

fax: 866-764-6325

DISCLAIMER

This article is intended to be a general discussion only, and should not be considered legal or real estate advice. Your use of it does not create either an attorney-client or broker-client relationship. Any liability that might arise from your use or reliance on this article, or any of its links, is expressly disclaimed. This blog is not legal, real estate, loan, accounting or tax advice, and is not to be acted on as such, it was outdated the moment it was written, and is subject to change without notice.  If you are dealing with a potential problem with your investment property you are advised to retain the appropriate licensed professional.