Can I Say No to Pot in My Apartments When it is Legal in my State? – by John Triplett

With permission from AOA (Apartment Owners Association)

California just became the world’s largest legal marijuana market. When pot is legal in a state, what issues does this present to property managers and landlords of rental properties? Property managers are often confused and seeking to better understand how to handle the issues of legal marijuana and medical marijuana when it comes to tenants and rental housing in their states.

Laws are changing all the time in many states, just as California did on January 1, 2018, as voters approve different levels of permission when it comes to marijuana. This leaves property managers trying to figure out what should be in their leases around the issue.

You may be able to ban smoking, but do you really know what your tenants are eating or growing in their apartments? Do you really want to know if they are good paying tenants?

Rental Housing Journal did a recent interview with Seattle, Washington attorney Bret Sachter, an expert in tracking the progression and transformation of marijuana laws, to discuss some common questions property managers have about marijuana and tenants.

“I’ve been asked this a lot,” Sachter said, “but it does not come up as often as you might think. The overarching issue here is that, with few exceptions, people can do what they want to protect their property, even if the prohibited behavior is not illegal. You can prohibit smoking, prohibit pets, but with marijuana it’s much easier because it is federally illegal. So you can pretty much prohibit it if you want to no matter what, even medical marijuana,” Sachter said.

4 Questions About Pot, Tenants and Apartment Leases

Sachter says in terms of Fair Housing issues, and the U.S. Department of Housing and Urban Development (HUD) it is a situation where HUD wants it in the lease that marijuana is illegal but enforcement is another issue, he said. It is not so much that HUD wants landlords to evict over marijuana, but that you have something in the lease language that allows for eviction in the instance of marijuana use on the property. “So it is pretty clear as far as HUD is concerned,” he said. Here are his answers to four questions on pot and apartments.

  1. 1.     Tenants With a Disability and Medical Marijuana

Question: If a tenant comes in and says I have a disability, here is a note from my doctor, I use medical marijuana, which is legal in this state, and I want to rent your apartment. Can a landlord prohibit that?

Answer: “A landlord can absolutely prohibit that because marijuana is illegal under federal law.” The landlord can say, “I understand our state allows medical marijuana but it is still a Schedule 1 drug and I prohibit it on my premises.”

  1. 2.     Marijuana is Legal in My State – But What Does the Lease Say?

Question: What if a tenant says marijuana is legal and they should be allowed to use it?

Answer: “If your lease prohibits smoking and prohibits use of illegal drugs, then the legality of marijuana at the state level is irrelevant because under federal law marijuana is illegal. If your lease does not have those types of clauses, you should talk to an attorney in your state or city to find the best solution for your lease.” There is no law about reasonable accommodation for marijuana users, federal laws do not require it. As far as the federal government is concerned it is not ok.

“One thing I would say, and it is important, I would encourage landlords just to make everything clear,” in the leases, he said. “Clarify in a lease that you must abide by all laws both state and federal.” That is the case in residential. He said it can be different in commercial.

“But in residential it is not as tricky, and I am speaking very generally here,” Sachter said. “The states may have their own thing going on with legal marijuana laws, but it is still federally illegal. Make it crystal clear in your leases is my best advice,” he said. “How can you attract tenants in a state where it is legal yet protect the owners of the property? You cannot have it both ways.”

“I know in Seattle there are Airbnb bed and breakfasts that specifically market themselves accordingly, as part of marijuana tourism to come and stay in our place where it is legal.” But if a property manager doesn’t want that going on, then they have to be up front in the lease.

“If your tenant is Airbnbing to a tenant who is then using marijuana – well if you can’t catch them you cannot do anything about it. You have to prove they are doing this.  They are going to be using marijuana regardless of what the lease says.”

  1. 3.     What if the Tenant Using Marijuana is a Well-Paying, Good Tenant?

“Landlords can certainly put a no-waiver clause in the lease. If I say, ‘Here is a list of prohibited things’ and if you do these prohibited things in the lease, you are subject to eviction,” he said.

“However, any time I waive any of these things does not constitute an overall waiver. It basically means you should not ever do it again,” he said. “Just because you get away with it once, does not mean you get away with it every time,” Sachter said.

  1. 4.     Can I say ‘no pot in my apartment

“Usually if you say, ‘No pot in my apartment’ and you find a tenant using marijuana and you haul them into court, more than likely the judge is going to say, ‘Have you stopped?’ to the tenant and ‘Are you going to do it again?’ and the tenant is going to say ‘No.”  And then judge will say, ‘Ok, dismissed.”

To put a more legalistic term on it, usually a court will be in favor of “allowing the tenant to cure the defect,” rather than evict for most things like that, Sachter said.

Technically, in Washington, a landlord would serve a 10-Day notice to comply or vacate with the terms of the lease.  This process, therefore, gives the tenant a chance to “cure” the violation before the landlord can evict. Check your local state laws on this.

 

What One Experienced Property Manager Says About Pot

Sam Driver, Product Director for Buildium.com, and an experienced property manager, said as far as marijuana use in apartments, due to the newness of the legislation, the federal laws that supersede state and county laws, and liability concerns, it is not a topic that comes up a lot – yet.

“Generally, the safest solution is to choose the most conservative path-impose a no-smoking policy, which can in some cased cover outside areas, and a crime provision that includes local, state and federal laws. In many states, there are setbacks from doors, and it is particularly important if the building is a place of work which a multi-unit apartment building certainly is. So your lease should contain a provision explicitly banning smoking and illegal activity. Because the feds still outlaw it, this should be sufficient,” Driver said.

“This of course only covers the smoking angle. If a resident consumes it in another way, you’d likely never know,” he said.

 

Growing Marijuana Could Put a Power Load on Your Apartments

“As for growing, that’s less clear. But in general, unless the electrical system is designed for it, the loads grow lights put on the apartment unit could be excessive. I’d consider a reasonable use clause that specifies all high load equipment, including lights, air conditioners and any kind of pump be approved by you.

“This would put you in a position to take action if they are putting too much load, without specifically calling out the use of the equipment. Pumps are a good area for monitoring, because of the intermittent load, they trip breakers, and anyone who is using a hydroponic system would need several,” Driver said.

 

What if I Want to Market My Apartment to Marijuana Users?

“If, however, you wanted to roll the dice and market to this crowd assuming your state laws allow it, remember that the federal laws would cover any bank deposits from proceeds,” Driver said.

“In this case, you’d be able to do it, assuming no federal intervention, in compliance with local laws. No insurer would provide EO&E (errors and omissions excepted) insurance to you, and you wouldn’t be able to deposit any funds into a federally-accredited bank. So you’d have to self-insure, and run an entirely cash business, but you could do it, risking only federal enforcement.

“The big question is, ‘Would the premium rents be worth the risk of forfeiture?’ If you run afoul of the federal drug laws, the asset seizure possibility is a huge risk. You could lose the building.
“If you’re managing other owners’ properties, then you’d be risking their assets even if you used different leases, unless you kept fully separate books, bank accounts, and co-mingled nothing. So I’d say it would be all-or-nothing,” he said.

“The timing is tricky, too. Leases contain a provision that stipulates that the contract is in force in a specific jurisdiction. If they change the laws rendering your lease out of compliance, what happens during the remaining time of the lease? Is it invalidated? Or does the contract remain in force until it expires? “Good questions for your lawyer,” Driver said.

Rich Triplett is a writer for the RentalHousingJournal.com which is an interactive community of multifamliy investors, independent rental home owners, residential property management professionals and other rental housing and real estate professionals. It is the most comprehensive source for news and information for the rental housing industry. Their website features exclusive articles and blogs on real estate investing, apartment market trends, property management best practices, landlord tenant laws, apartment marketing, maintenance and more.  

What Landlords Should Know About Section 8 – Myths vs. Facts – by Kristin Maithonis

With permission from the Apartment Owner’s Association (AOA)

The Housing Choice Voucher Program (commonly known as Section 8) is a federally funded program providing monthly rental assistance to very low income tenants renting units in the private market. The rental assistance is provided through a local housing authority.

Myths about the Section 8 program continue to prevent Section 8 participants from finding landlords willing to rent to them. Below is a list of common misconceptions about the program to help you make a more informed decision about whether to give a Section 8 tenant a chance.

Myth: Section 8 tenants are problem tenants.

Fact: Most Section 8 tenants live in the same place over a long period of time (7-8 years on average). You should screen a Section 8 tenant the same way you screen all other tenants. By conducting thorough and consistent screening, you are less likely to end up with a problem tenant, Section 8 or otherwise.

Myth: If you accept one Section 8 tenant, then all your units must be rented to Section 8 tenants.

Fact: If you own multiple units, you may choose to have one or more of your units occupied by Section 8 tenants. Just because you accept one Section 8 tenant does not mean that you have to rent your next available unit to a Section 8 tenant. If a Section 8 tenant moves out, you are not required to rent the vacant unit to another Section 8 tenant.

Myth: The landlord is responsible for a lot of paperwork.

Fact: Most of the paperwork the landlord is required to complete is at the beginning of a new lease. This paperwork includes the Request for Tenancy Approval form, W-9 form, Lead Warning Statement and Lease Agreement. The Housing Authority will assist with completion of these documents if needed. From time to time, the landlord will receive letters, amending the rent portions, inspection reports, newsletters, and other program materials. The landlord does not need to complete these forms.

Myth: You cannot evict a Section 8 tenant.

Fact: If a Section 8 tenant has violated your lease agreement, you may evict the tenant in accordance with State law. Please note that if you want a tenant to move after the initial term of the lease but do not want to state the cause for the termination of tenancy, then you must give the Section 8 tenant a 90-day written notice. When a notice without cause is issued, the Housing Authority will provide the tenant with a new voucher to relocate.

Myth: The Housing Authority has very tough inspection requirements.

Fact: The Housing Authority inspects the unit before a contract is signed with the landlord and annually or bi-annually thereafter. The Housing Authority checks the unit for any health and/or safety problems. The Section 8 inspection is not a code enforcement inspection. The Housing Authority checks the working order of smoke detectors and carbon monoxide detectors, water heaters, appliances, exits, window and door locks, fans, outlets, plumbing fixtures, heaters, and light fixtures.  The presence of trip and fall hazards, structural defects, rodents or roaches, peeling paint, excessive dirt or clutter, broken windows and the like are also checked. These are all items that most landlords would want to inspect themselves before renting a unit.

Myth: Evicting problem tenants on Section 8 does not accomplish anything.

Fact: The tenant may lose their Section 8 Voucher if they are evicted for lease violations. This ensures that problem tenants are not recycled to other unsuspecting landlords and acts as an incentive for participants to comply with their leases in order to continue participation in the program. Once a participant loses their Section 8 assistance, it is very difficult, if not impossible, to get back on the program.

Myth: Section 8 tenants are all on welfare and do not contribute to society.

Fact: Section 8 tenants come from all walks of life. In California, 61% of Section 8 participants are elderly or disabled, and 33% of Section 8 households are wage earners. Most housing authorities offer participants a chance to participate in the Family Self Sufficiency (FSS) Program. The goal of FSS is to assist participants with obtaining the education and skills they need to secure high wage jobs, start their own businesses, move off of assisted housing, and become homeowners.

Myth: The landlord cannot raise the rent.

Fact: Landlords may raise the rent for a Section 8 tenant after the initial lease term with proper written notice to the tenant and the housing authority. The housing authority does not have a pre-determined annual percentage rent increase. The rent increase requested must be reasonable when compared with similar units in the neighborhood. For multi-unit buildings, the rent for the Section 8 unit cannot be the highest rent in the building.

Section 8 vouchers help low-income people in your community afford a decent place to live. Without landlord participation in the program, more people would be forced to live in overcrowded and unsafe conditions or on the streets. For more information about how you can benefit from being a Section 8 landlord, please contact your local housing authority. To locate your housing authority, visit the U.S. Department of Housing and Urban Development website at https://portal.hud.gov/hudportal/HUD?src=/states/california/renting.

 

Kristin Maithonis, is Housing Manager for the City of Norwalk Housing Authority and former President of the California Association of Housing Authorities.

Legal Corner

WRITTEN BY MICHAEL A BRENNAN, EVICTION ATTORNEY 

Question: I just received a phone call from one of my tenants asking me whether she can pay her rent for this month in two payments. I don’t like doing it, but she has been a great tenant over many years and this is the first time she has made such a request. While I want to help her, I don’t want to create any legal problems for myself. What are your thoughts on this situation?

Answer: Generally, I’m not a fan of allowing tenants to make partial payments, as it sets up expectations that you will do so in the future. However, in your case, the tenant has been there quite a while and actually took the time to notify you in advance that she is short on rent. Based on her responsible behavior (which seems to be more and more rare these days), you might decide to allow her to pay rent in payments. Before you make that decision, be sure to check your rental agreement for a “nonwaiver” provision which states your decision to accept rent in two payments does not waive your right to insist on the entire amount on its due date in the future.

Assuming your rental agreement has such a provision (most modern agreements do), you can allow her to pay rent in payments without worrying about waiving your rights. Additionally, avoid putting anything in writing indicating the payment is for any specific period. Instead, simply provide her with a receipt (if you provide receipts) indicating the payment is a “partial payment” for the entire amount owed with a “balance due” for the unpaid amount. You can either issue a three day notice at the time she makes the partial payment, with a promise you won’t file eviction until the day after the date on which she has agreed to pay the balance (provided she fails to do so) or you can wait to serve the three-day notice until after the date on which she agreed to pay.

Either way, you are able to accept the partial payment without creating legal problems for yourself, keep control over the situation, and keep the relationship intact by accommodating her needs this month.

A Whopping 130 Housing Bills Make for a Very Busy 2017

Reprinted with permission of the Small Property Owners of San Francisco Institute.

State legislators are sponsoring a record setting 130 housing-related bills during this legislative session. Below are the most important. 

Abolishing the Costa-Hawkins Act

AB 1506 (Bloom, D-Santa Monica, Chiu (D-San Francisco) and Bonta (D-Alameda), would repeal the state Costa-Hawkins Rental Housing Act, giving all cities and counties the power to impose rent control ordinances, including vacancy control without limits. The bill’s authors decided not to move forward with the bill in 2017, but will take it up again in 2018. Position: Oppose 

Weakening the Ellis Act

AB 982 (Bloom, D-Santa Monica), would expand the number of tenants entitled to receive a year’s notice from a landlord before that owner closes a building as allowed under the Ellis Act. Under current law, tenants who have lived in the unit for at least one year and are at least 62 years of age or are disabled are entitled to a year’s notice. Other tenants are entitled to a 120-day

notice. AB 982 would extend the one-year notice requirement to all tenants, regardless of age or disability. Position: Oppose 

Undercut the Bonus Density Law

AB 915 (Ting, D-San Francisco) would allow San Francisco to count added density bonus units when calculating the total number of affordable units required for a development. The state’s density-bonus law incentivizes developers to include affordable housing in their projects. In exchange, developers get to build more market-rate units, helping their projects “pencil out.” AB 915, however, would force developers to price a portion of their density-bonus units at below market rate, thereby removing the very incentive that these bonuses are intended to create. The bill would undercut the state’s density-bonus law and make housing in San Francisco even more expensive. Position: Oppose 

Labor-Related Bill Onerous to Rental Industry

AB 1008 (McCarthy, D-Sacramento) would make it unlawful for an employer to include on an employment application any question that seeks disclosure of an applicant’s criminal history, and bars employers from asking about any convictions until the employer makes a conditional job offer. The ability to screen for past criminal activity is particularly important in the rental housing industry, as employees work around children at rental properties and are granted access to tenants’ units and personal possessions. Position: Oppose 

Curbing Ballot-Box No-Growth Measures

AB 943 (Santiago, D-Los Angeles) would require a ballot measure proposed by the voters to curb, delay, or deter growth or development to be approved by 55% of the voters instead of a simple majority. Position: Support 

Fast-Tracking Housing Construction

SB 35 (Wiener, D-San Francisco) would move housing more quickly through the building permit process when developers meet certain standards. Position: Support 

SB 540 (Roth, D-Riverside) would streamline the approval process to spur housing construction by having cities identify where housing needs to be built and adopting specific, upfront plans and conducting all necessary environmental reviews and public engagement. Position: Support 

Boosting Housing Near Public Transit

AB 73 (Chiu, D-San Francisco) would incentivize local governments to complete upfront zoning and environmental reviews, and rewards them when they permit housing on infill sites around public transportation. Position: Support 

Encouraging Affordable Housing

SB 2 (Atkins, D-San Diego) would establish a permanent funding source for affordable housing through a $75 fee on recorded documents; it exempts owner-occupied residential real-estate sales. Position: Support 

SB 3 (Beall, D-San Jose) seeks to provide $3 billion through a statewide housing bond to fund affordable housing programs in California. Position: Support 

SB 62 (Jackson, D-Santa Barbara) would create the Affordable Senior Housing Program under the Department of Housing and Community Development to guide the development of affordable senior housing dwelling units. Position: Support

AB 291 – IMMIGRANT TENANT PROTECTION ACT

California Apartment Association

Gov. Jerry Brown has signed a bill that will deter landlords from discriminating against any tenant based on their immigration status. AB 291, introduced by Assemblyman David Chiu, D-San Francisco, is set to protect tenants from unethetical landlords who seek to intimidate them by threatening to report them to immigration authorities, or those who seek to acquire possession of the premises based off a tenants’ inability to provide proof or documentation of their immigration status. [ Learn More ]

The Legality of Using Criminal Background Checks in Light of HUD’s 2016 Guidance Memo – by Eviction Attorney, Michael A. Brennan

With permission from AOA

In April, 2016, HUD issued a Guidance Memo concerning the applicability of the Fair Housing Act to the use of information found in criminal background checks to deny housing to applicants with criminal histories. While some believe the Guidance Memo has raised more questions than answers, the truth is that landlords may still use criminal background checks for screening purposes and will not likely face any liability for doing so, provided they follow the requirements set forth therein.

While space limitations prevent an in-depth analysis of the topic, this article will address several key topics in connection with the use of criminal background checks during the screening process, including those criminal background policies strictly prohibited by Fair Housing, those specifically permitted, how to narrowly tailor your policies in connection with the use of criminal background checks, strategies to use when developing your screening policy, and a few mistakes to avoid to diminish the likelihood that you will be found to have discriminated when you do, in fact, deny an applicant housing due to their criminal past.

HUD’s Prohibited Practice

HUD has a single prohibited practice in connection with criminal background checks. Simply stated, landlords are strictly prohibited from using “arrests” without a corresponding conviction as a basis for denying housing to an applicant. The basis for the prohibition is that arrests are simply that; an arrest. Without a corresponding conviction, an arrest means nothing more than the applicant was suspected of committing some type of infraction or crime. The theory is that without a conviction, the individual is, theoretically, innocent.

The problem I see with that belief is that there are a multitude of reasons an individual could be arrested but not convicted when, in fact, they were guilty. For example, there are pretrial diversion programs which place otherwise guilty people on probation and, provided they don’t get in any trouble during their probation period, the case is dismissed. Additionally, it is not uncommon for someone to be arrested yet not tried in exchange for their cooperation with the prosecutor in landing a “bigger fish”. Regardless of the above situations, the use of arrests without corresponding convictions as the basis of a denial is prohibited.

HUD’s Permitted Practices

HUD’s Guidance Memo states landlords may deny housing to an applicant based on two specific convictions; the “manufacture or distribution” of a controlled substance. It is important to be aware of the fact that a conviction for anything other than the “manufacture or distribution” (e.g., the “use” of a controlled substance) does not, by itself, substantiate a denial of housing.

Developing Narrowly Tailored Policies & Criteria

Assuming an applicant’s criminal background check reveals one or more convictions for something other than “the manufacture or distribution of a controlled substance” the landlord will be required to go through an analysis of the conviction to determine whether it justifies a decision to deny the applicant.

In order to deny housing to an applicant based upon convictions revealed by a criminal background check, landlords must first develop “narrowly tailored” policies which demonstrate that the “narrowly tailored” policy “accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/or property, and criminal conduct that does not.” In other words, landlords must show that their policies are effective at denying housing only to those applicants with convictions for crimes that create a risk to the other tenants in the building and/or property. For example, a policy which denies housing to an applicant convicted of assault and battery, but allows an applicant with a conviction for “possession of marijuana” would likely be acceptable to HUD, since “assault and battery” can be shown to present a direct threat to the safety of the other tenants, while “possession of marijuana” poses little threat, if any.

A short list of crimes for which a denial of housing would likely be acceptable to HUD might include assault & battery, domestic violence, rape, murder, and mayhem, to name a few. Additionally, since HUD appears to recognize a need to protect the safety of both “resident[s] and/or property” arson, vandalism, and grand theft of property might likely be acceptable categories as well.

Finally, it would serve landlords well to consider their approach to white collar crimes. For example, can a landlord demonstrate that a conviction for, say, identity theft, is a direct and/or “demonstrable risk to resident safety and/or property”? While you and I can see how an individual convicted of such a crime could easily pose a risk to the security of the neighboring tenants, is that enough to use as the basis for denying that individual housing? My position is that under the normal circumstances surrounding identity theft, the answer is “yes”. Here you have an individual who is surrounded by other tenants, who all receive mail in a centralized area, share a central trash bin, and receive packages in close proximity to each other. So, for me, this would be a crime for which a conviction would disqualify an applicant.

Factors to Consider for Each Conviction

In addition to developing policies regarding which specific crimes will support a decision to deny an applicant, HUD requires that the use of criminal convictions to deny housing to an applicant must be determined on a “case by case” basis. In other words, even where an applicant has been convicted of a crime for which it can be shown that a “demonstrable risk to resident safety and/or property” exists, the landlord must go further and look at the specific facts and circumstances surrounding the conviction. In fact, criminal screening standards must take into account: 1) the “nature and severity” of the conviction; 2) The length of time between the conviction and the application; and, 3) The landlord must conduct an “individualized assessment” of each applicant, considering “relevant mitigating information” such as: a) the facts or circumstances surrounding the criminal conduct; b) the age of the individual at the time the conduct occurred; c) evidence that the individual has maintained a good tenant history before and after the conviction or conduct; and d) evidence of rehabilitation efforts.

For example, a conviction for simple battery can be either a misdemeanor or felony. When reviewing an applicant’s conviction for battery, landlords would be wise to look deeper into the situation. For example, was the conviction based on spitting on someone’s food (in California, such action can lead to a conviction for battery)? Or, on the other hand, was the conviction for beating a motorist in a fit of road rage (which would be charged as a felony)? Has the applicant just been released from incarceration? Or did the conviction take place 20 years ago when the applicant was 18 years old?

As you can see, simply having a policy which sets forth the convictions for which you intend to deny an applicant is not enough to meet HUD’s guidelines. Even where those convictions can be shown to present a “demonstrable risk to resident safety and/or property” when looked at in a vacuum, landlords are still required to analyze the various circumstances and situations surrounding the conviction before implementing a blanket policy of denying an applicant convicted of that specific crime.

Strategies to Think About

While it is clear that landlords may no longer apply blanket restrictions to deny housing to applicants with criminal backgrounds, landlord are still permitted to use criminal background checks as a screening tool. Below are some strategies that can be used to limit the risk of liability for claims of discrimination based on a denial of housing to an individual with a criminal history.

First, if you intend to conduct criminal background checks, take the time to develop very specific policies on the convictions and their connected situations and circumstances for which you will deny an applicant housing. While this may initially be time consuming, the ability to provide such policies in the event of a Fair Housing investigation will demonstrate that you have at least attempted to comply with the requirements by developing your narrowly tailored policies.

Second, implement a policy under which your non-criminal-related screening criteria are considered first, before resorting to criminal background checks in your screening process. In other words, run your standard criteria first. If the applicant doesn’t qualify under the regular screening requirements, (e.g., 2.5 times the rent in gross monthly income, a minimum FICO score, acceptable and verifiable credit and tenant histories, etc.) then there is no need to rely on the information found in a criminal background check to deny the applicant. Rather, base your denial on the inability of the applicant to comply with the standard screening criteria instead. By doing so, you would be able to prove that criminal history never even came into the picture and, therefore, no disparate impact discrimination could have occurred.

Mistakes to Avoid

When contemplating the use of criminal background checks as part of your screening process, avoid making the following mistakes:  1) denying applicants based solely on arrest records; 2) using blanket prohibitions such as denial of housing to persons with any type conviction; 3) denying housing for less serious convictions such as infractions and misdemeanors; 4) failing to review the conviction on a case by case scenario in which you consider the mitigating circumstances and factors; and, 5) keep the decision making in connection with your policies and case by case analysis to owner or upper level management rather than onsite managers. Leaving such decisions to the discretion of an onsite manager may result in disastrous results. Instead, require the onsite managers to submit the applications to the owner or supervisor to assure the acceptable policies and procedures are being implemented.

Conclusion

In conclusion, landlords are, in fact, still permitted to use criminal background checks as part of their screening process, and they are still permitted to use information discovered in those background checks to deny housing to applicants with a criminal history. However, HUD’s Guidance Memo, while not “law”, sets forth prohibitions and acceptable policies in connection with the use of criminal background checks. While landlords may not deny housing for mere arrests in an applicant’s background, they are specifically permitted to deny housing to those convicted of the “manufacture and/or distribution of a controlled substance”. Additionally, landlords may deny housing to applicants convicted of various other crimes, provided three criteria are met, namely: 1) the policies as to which crimes will be used to deny housing are “narrowly tailored” to “accurately distinguish between criminal conduct that indicates a demonstrable risk to resident safety and/or property, and criminal conduct that does not”; 2) the landlord conducts a “case by case” analysis taking into consideration  the “nature and severity” of the conviction; b) the length of time between the conviction and the application; and, 3) the landlord conducts an “individualized assessment” of each applicant, considering “relevant mitigating information”, such as the facts or circumstances surrounding the criminal conduct, the age of the individual at the time the conduct occurred, evidence that the individual has maintained a good tenant history before and after the conviction or conduct, and evidence of any rehabilitation efforts on the part of the applicant.

The foregoing information is presented and intended to address the topic(s) covered above in a general nature, and not as specific legal advice.  Specific situations and their facts should be presented to your attorney for review.  The Brennan Law Firm is one of the premier landlord-tenant law firms in Southern California, representing landlords exclusively in evictions, judgment enforcement, and other landlord-tenant matters. Mr. Brennan is a frequent speaker and contributing author for AOA, and may be reached at (626)294-0500, or toll free at (855)285-2230. Please visit our website at www.MBrennanLaw.com for more information.

AB-2330 Walk-through – the Initial Move-Out Inspection – by Grayce Long, Attorney

With permission from AOA

When was the last time you had a walk-through with your tenant prior to them vacating the unit? The law regarding having a pre-inspection with your tenant was passed in 2003 however, many of you are still not following the proper procedures. Did you know that the number one reason a landlord is sued by their tenant is because of the landlord’s retention of the tenant’s security deposit?  You need to be very vigilant in your dealings with your tenant during their tenancy so that you have no problems and you protect yourselves from future litigation.   This article will outline the procedures that you must follow in order to comply with AB-2330.

Move-in Procedure

The first thing you always need to do is to take pictures of your unit prior to renting to the tenant.  Make sure that you have these dated and keep them in your property file.  If you accept a tenant, make sure that you go through the unit with them and you do a move in/move out checklist. This form can be obtained from AOA.

Move-Out Procedure

When does the AB-2330 kick in?  Normally, it is when either the owner or the resident gives notice to terminate the tenancy or the lease is about to expire.  You must, within a reasonable amount of time after the notice is served, inform the resident of their option to request an inspection and option to be present.  You can send them AOA’s form 135 entitled “Right to Request Initial Move-Out Inspection”.

Once the tenant receives the form they either request an inspection or do not request one.  If the tenant denies the inspection then there is no further action required by landlord!  However, if the tenant requests an inspection, then you must schedule an inspection on a mutually agreeable date that needs to take place no sooner than two weeks prior to the date the tenant vacates.  You can either agree on a date for the inspection, or if you don’t agree on a date, you still must do the inspection.  It is imperative that you give that resident at least a 48 hour written notice that you are going into their unit to do the inspection.   The notice can be waived but the waiver has to be in writing so it is best just to give notice of the date.

If the tenant withdraws the inspection then you do not have to do anything further.   If the inspection goes forward, the tenant has the option of being present at the inspection or not.  Either way the landlord can proceed with the inspection.

You then need to fill out the Initial Move-out Inspection Record which is part of AOA’s Form No. 135.  The inspection record requires you to go through each and every room and item and determine the condition of the item.  Once you do the inspection, you will need to do an itemized statement specifying repairs’ or cleanings that are proposed to be the basis of any deductions from the security deposit you intend to make.  The itemized statement must include the following statement:

“State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed.  In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.”

The tenant then shall have the opportunity during the period following the initial inspection until they vacate to fix any of the identified deficiencies.   This is a landlord’s nightmare giving the tenant the right to make their own repairs and fix the unit.  Be advised that if the tenants work is not acceptable by a reasonable person’s standard, you can still deduct for the cost of the repair.  You are not stuck with accepting the tenants repairs if they are inferior.  Also, you are not limited to what you do on your initial inspection.  If you find something else that you missed on the pre inspection, you can still deduct from the security deposit for repairs.  Remember to attach the receipt for the work with the name and phone number of the person who did the work or estimate.   Also, you are not required to do the work in or deduct the estimate from the security.

Make sure that you take pictures of the damage and the subsequent repairs to the unit and keep those in your file for the tenant.  If the tenant sues you in small claims court for failure to return their security deposit, you will be well armed with all evidence to support your claims!  Make sure that if you do get sued that you file a defendant’s claim for all the money the tenant owes you and also specify any damages to the property.  Further, do not stipulate to a judge pro tem always ask for a judge or commissioner.

[Editor’s Note:  AOA members may download form 135, the AB-2330 Walk-through (at http://www.aoausa.com) which includes instructions and required forms to perform the initial move-out inspection.] 

Attorney Helen Grayce Long is an attorney at Fast Eviction Service. She attended UC Berkeley and graduated with a bachelor of arts.  She then attended the University of San Francisco School of Law.  Grayce has been an attorney for 25 years and specializes in Real Estate Law.  She’s done landlord/tenant work throughout the state of California with an emphasis on Rent Control law.  For more information, call (800) 686-8686, email hglongatty@fastevict.com or visit www.fastevictionservice.com

New bed bug disclosure law goes into effect soon By Gideon Kramer, SPOSFI News Editor

With permission from the SPOSFI (Small Property Owners of San Francisco)

May 19, 2017

Effective July 1, Assembly Bill 551 will place new obligations on all California residential landlords and tenants regarding the disclosure and treatment and control of bed bugs. In brief:

  • A landlord is prohibited from showing or renting a unit if bed bugs are known to exist.
  • Tenants must cooperate in the investigation and eradication of bed bugs in their unit, surrounding units, or common areas.
  • Landlords must include a statutory bed bug notice as an addendum to the lease for all new tenants. All existing tenants needn’t be noticed until January 1, 2018. This notice must provide information regarding bed bug identification, behavior, and biology as well as the landlord’s and tenant’s obligations in the event a bed bug infestation is discovered.

Our June issue of SPOSFI News will include a more detailed discussion of the new law, and why it pays to be very vigilant when it comes to bed bugs.

Los Angeles Imposes Further Restraints on Landlords! – by Sheri Swist

Reprinted with permission from AOA.

On April 19, 2017 the L.A. City Council voted 12-0 to make changes to portions of the Los Angeles Municipal Code governing the Ellis Act.  Of course, as anyone who knows how the city operates would guess, these changes further hinder landlords’ property rights.

The Old Law

Under the old law, when a landlord withdrew a building from the residential rental market pursuant to the Ellis Act and demolished the building, any new replacement rental units constructed within five years would be subject to the Rent Stabilization Ordinance (RSO).  In other words, the new units would be rent controlled.  However, if a landlord wanted to avoid having an entire new building be subject to rent control, they could either dedicate the same number of units that had been under the RSO that were withdrawn from the rental market to being affordable units, or they could dedicate 20% of the units in the new construction to being affordable units, whichever was less.

The NEW Law

Under the newly voted on changes, the replacement units in this type of scenario must be a one for one replacement of affordable units or 20% of the new building, whichever is greater.  While in some instances this change may not make much of a difference if any at all, in others the difference is drastic.

For example, a landlord who demolishes a smaller building that is under the RSO and replaces it with a much larger building that provides many more units for the community of Los Angeles could end up having a substantially higher number of units that must be affordable housing units subject to the RSO.

In addition, the new law clearly states that even if a building is completely vacant, a landlord must remove it from the housing market pursuant to the Ellis Act, with all of its requirements and limitations before demolishing it.  This goes against the purpose of the Ellis Act, since the purpose was to allow landlords who had tenants to go out of business.  If there are no tenants, there is no need to go out of business, because no residential rental business is being done.

Once again, the City of Los Angeles is attempting to thwart your rights as property owners and so far … getting away with it.  As was stated, the new law was passed already, but will not take effect until it is published and all other requirements for enactment are complete.   So, if you are thinking about going out of the residential rental business pursuant to the Ellis Act, be aware that these changes will be in effect very soon.

For more information, please call Sheri Swist at the Housing Reform Coalition of Los Angeles at 310-869-5153.

Following HUD Guidelines on Criminal Background Checks Can Be Problematic – by Deborah Lopez

Reprinted with permission of  the Apartment Owners Association

Screening tenants is a vital part of the job of a landlord or property manager.  While most of the criteria – credit score, income, employment – by which prospective tenants are screened, are straightforward to evaluate, one in particular is not – criminal background.

In order to steer clear of allegations of discrimination by a rental applicant, it’s important to take due care if you use the criminal background check to eliminate a prospective renter

The U.S. Department of Housing and Urban Development (HUD) estimates that as many as 100 million adults in the United States have some sort of criminal record.  Because a disproportionate  number of minorities undergo arrest, conviction and incarceration in this country, using the existence of an arrest or conviction record as part of the tenant screening process for housing often has the effect of discriminating against those groups.  While individuals with criminal records are not a protected class, they can fall under the protections of the Fair Housing Act (FHA).

Last year, HUD released new guidelines on the use of criminal background checks in rental housing.  The guidelines are based on a legal standard upheld last by the U.S. Supreme Court, allowing plaintiffs to challenge rental housing practices that have a discriminatory effect, without having to show discriminatory intent.

In general, not renting to persons with a criminal record may be justified based on the need to protect the safety and property of other tenants.  But there must be a careful examination to prove that any decision made about a prospective tenant will actually advance that goal.  The HUD guidelines provide some dos and don’ts but leave much room for interpretation.

The HUD Guidelines

  • A housing provider cannot justify an exclusion based solely on an arrest record but no conviction.
  • A blanket ban on any applicant with a criminal record is illegal.  Landlords must take a more individualized approach to avoid violating the FHA.  A policy must show that the landlord “accurately distinguishes” between criminal conduct that poses a risk to safety and criminal conduct that does not.
  • A criminal background review must take into consideration both the severity and type of crime and the length of time since the person was convicted and must be decided on a case-by-case basis.  Every situation is unique.  A non-violent crime committed 20 years ago must be treated differently from a violent crime committed more recently.  The only exception is a conviction for drug manufacturing and distribution.  A blanket ban on applicants convicted of such crimes is legal.
  • Other factors must be considered in the evaluation to establish that the landlord is using the least discriminatory policies possible.  Besides the severity and type of crime, the person’s age when convicted, rehabilitation efforts since conviction and tenant history must also be considered.
  • Any intentional discrimination using criminal background as a pretext to deny housing is a violation of the RHA.  For example, a landlord cannot turn down a minority applicant with a criminal record while accepting a Caucasian with a similar record.

Each year, 650,000 people are released from federal and state prisons.  The reality is they all need to find housing.  As rental housing providers, it is important that we apply these HUD guidelines in our tenant screening process.  Giving people with criminal convictions a second chance without jeopardizing the safety of your other tenants is a worthy societal goal.

Deborah Lopez is a SPOSFI business member.  Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News.  For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.