01 Apr Abandonment, Prior Tenants, Rental Agreements, Rains
“Stop payment orders are only effective for six months, unless renewed by the maker, which rarely happens.”
Q: I just opened up the mail, and what do you suppose was in it? A notice from my bank informing me that one of my tenant’s rent check was returned unpaid because he placed a stop payment on it. Imagine that, it’s now mid-month, no warning, no phone call, the deadbeat didn’t even have the courtesy of letting me know he was going to stop payment on his check. It kind of makes sense though, he asked a couple of weeks ago if I’d let him out of his lease early, guess his girlfriend has a nicer place and he wanted to move in with her. I called his phone number, got a recording saying that it had been disconnected. His cell phone works, got his voice mail, and left a message. I’m guessing that when I swing by later today, it’ll be empty. What do I do now? I don’t want to make any mistakes. Can I just change the locks if he’s out?
A: You have a couple of issues that you need to resolve. First the issue of return of possession of the premises, and then, of course, getting you paid. If the tenant appears to have vacated when you visit the unit later today, then you must follow certain procedural rules before you simply change the locks.
Ideally, you will be able to contact the tenant on his cell or at work. If you make contact, ask that the tenant confirm that he is out by faxing or emailing you written confirmation. If you are able to confirm that he has moved out, you will not have to follow the abandoned real property notice requirements and will be able to retake possession immediately.
If, when you visit the unit and find that it is vacant, and if the rent is due and unpaid for 14 days and the tenant has not voluntarily surrendered possession, then you must serve a written notice of Belief of Abandonment of Real Property. The notice can be posted on the premises and mailed by regular mail to the tenant’s last known address, your property.
You must wait 18 days before you retake possession.
If the tenant does not reply, in writing, by informing you of his address for service of an unlawful detainer within 18 days, then you may retake possession and change the locks.
Once you regain possession, prepare the security deposit disposition form. If he skipped mid-lease, he would owe the balance of the term, or until you mitigate your damages by reletting the unit, whichever occurs first. Hang on to the tenant’s check that was returned by the bank. Stop payment orders are only effective for six months, unless renewed by the maker, which rarely happens. That means, in six months and a day, you can redeposit the check, and if there are sufficient funds, the check will clear.
Q: I’m looking at a single-family residence to purchase. It’s a pocket listing, no signage, not on the MLS. The agent claims it’s a great deal because the seller needs cash quickly, wants a quick escrow, and is willing to let it go for under market. The only catch is the tenant doesn’t know the house is for sale, and the owner doesn’t want the tenant to know. He says that when I close escrow, I can serve my own notice to have the tenant leave, but he doesn’t want the tenant getting nervous and moving out if the deal doesn’t go through. It seems like a really good deal; I know the house, I’ve peeked in the windows, and it’s in incredibly great shape. What am I missing? What can go wrong?
A: Lots. You have actual notice of a tenant in possession. That means that you are bound by whatever rental agreement or contract exists between the owner and the existing resident. The tenancy agreement may turn out to be a fixed-term lease for a long period of time at less than market rent. The resident may have a lease with an option to purchase the house for a fixed sum, possibly less than what you are paying for it. There may be litigation between the parties relating to the premises, possibly mold or some other contamination issue that you may not be aware of.
If the deal really is as described, then prepare a purchase agreement providing a due diligence period allowing you a brief time period to check title, condition and other issues. Once escrow is open and you are satisfied with title and the condition of the premises, contact the resident, confirm the terms of his tenancy, get a copy of his rental agreement and prepare an estoppel certificate for the resident to sign affirming the tenancy agreement, amount of deposit, and affirming that he has no equitable or legal interest in the property.
Q: I just closed escrow on a small building and I’m trying to figure out who’s who. I received the rental agreements, but the tenant information seems incomplete. The applications, the few that I’ve found so far, are old and outdated. I can’t seem to find any telephone numbers for the residents, and I’m not real sure that the names on the agreements are the same people who actually live in the units. I’ve read your articles before and I know the importance of reviewing the files and doing thorough due diligence before closing escrow, but this deal just happened too fast. Now that I’ve closed escrow, what can I do to clean up the records?
A: First things first. Figure out what you know and what you don’t. Establish individual tenancy files, one per unit. Based on the limited information you have, write down the names and ages of the occupants, the terms of the rental agreement, written or oral, lease or month-to-month, rental rate, deposit on file, and date paid through. Compile whatever contact information you have: home phone number, work and cell numbers, etc. Design a “tenant emergency information sheet” that includes spaces for the following: names of all occupants, home and cell phone numbers for each occupant, work phone numbers, email addresses and detailed vehicle information.
Visit the building around dinner time as most residents will be home, and go door to door and meet briefly with the occupants of each apartment. Spend a few minutes confirming the information in your files and gathering any missing information.
Ask the residents to complete the “tenant emergency information sheet” to be used in case of an emergency while you are there. You will find that the vast majority of your residents will cooperate fully and provide the requested information. Residents are generally eager to please, and since the relationship is still new, there should be no animosity or distrust.
This is also a good opportunity to find out the condition of each unit. Simply ask the residents if there are any issues that need addressing. It’s better to find out now and have an opportunity to address the needed issues, than to allow conditions to worsen, and your relationship with the residents as well. This is also an opportune time to prepare new month-to-month rental agreements for signatures.
You don’t know the players yet, so you certainly don’t want to do fixed-term leases. The few residents who are less than cooperative will be quickly identified as your “problem residents” and can be handled individually. Names and contact information of the uncooperative ones can generally be gathered from the other residents, or from public records. If the property is non-rent control, and a month-to month tenancy, the rental rate and term can be set with either a 30- or a 60-day notice of change of terms, depending on the extent of the change.
Q: With the recent heavy rains, my apartments have experienced some roof leaks. Most of the leaks are minor, but there is a pretty big leak in one apartment. This is of great concern to me, because the roof is less than five years old, and has never leaked before. I even had it inspected prior to the rainy season by a competent roof inspector. The trouble is that the water leaked into one of my resident’s unit, and apparently caused a substantial amount of damage. The resident claimed that his stereo equipment, television, computer, furniture, and clothing were ruined. He even has pictures of the water dripping from the ceiling onto his stereo and television set. The resident is threatening to sue me if I don’t reimburse him for his losses. What should I do? Am I responsible for the resident’s personal property losses?
A: An owner is not generally liable for damage caused to the personal property of a tenant, absent negligence on the part of the owner or his agents. Provided a licensed roofing contractor performed the roof installation, you maintained the roof adequately, had it inspected on a regular basis, and were not on notice of any prior problems, you should not be responsible for damage to the resident’s personal property.
Additionally, the tenant has an obligation to mitigate his damages when faced with a leaking roof. This basically means that if the leak was coming slowly through the roof, and the tenant knew about it, then he should have taken some measures to minimize the damage to his personal property. The fact that the resident had time to grab a camera and take pictures of the dripping water, while letting his television set, stereo and other belongings get soaked suggests the resident failed to mitigate his damages. In simple terms, the tenant should have moved his stuff, and grabbed a bucket, rather than
watch it drip.
This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. Stephen C. Duringer is the founder of The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms in the country. The firm has successfully handled over 285,000 landlord tenant matters throughout California and has collected over $200,000,000 in debt since 1988. The firm may be reached at 714-279-1100 or 800-829-6994. Please visit www.DuringerLaw.com for more information.