Welcome!

Posted: 4th January 2012 by Melissa in Uncategorized
 

Welcome to the FBS Rent Sense Blog. We will be posting weekly Rent Sense Articles written by Neil and Chris. These articles can also be seen in major publications such as the San Diego Union Tribune. Our goal is to bring quality information to help counsel those already in or interested in the industry. Check back each week to see what is new and exciting in the Property Management world.

“Nearly half of all the housing in San Diego is offered for rent. This condition has existed locally for decades and will continue for the foreseeable future. It is imperative that rental owners and rental residents respect the other for their important role in the essential segment of our local economy. The more informed each are about their respective rights and responsibilities as well as changes in the marketplace the more realistic are the expectations. That just makes good sense; Rent Sense.” – Neil,  2008

Where your home matters…

Ms Management Feb 2018

Posted: 23rd February 2018 by Melissa in Ms. Management
Tags: , , ,
 

Carol Levey, writer and creator of Ms. Management also appears as a guest blogger on Rent Sense. Her insights appear in dozens of other industry publications across the country. Carol is a regular presenter at the annual AAMD Education Conference, has served as MC Host for Award Events, and consistently over 35 years of volunteerism taught & authored curriculum for AAMD Education. She has been acknowledged for her outstanding contribution as an Industry Supplier becoming the recipient of the Jack Shapiro Award Winner twice; in 1987 & 1990.

Carol Levey is perhaps more recognized at the national level as an educator in the real estate industry. She served as one of the original team that produced the National Apartment Association coursework leading to the respected NALP designation. Her company Levey Enterprises has provided temporary leasing specialists, site managers and marketing offsite personnel to major apartment community operators throughout Colorado and across the U.S. Her business was founded on decades of experience in property management and executive leadership as a third-party leasing and corporate housing provider.

Read on for this month’s Ms. Management Q and A:

Q. I am a Maintenance Supervisor with a team of four. I mostly enjoy my assignment which I’ve had for about a year, but I find that I am managing personalities more than anything else. Do you have any suggestions for handling the demands of a prima (that’s what I said), an introvert that doesn’t talk to anyone, and a passive aggressive for my lead tech?

A. It is true that you are managing people as well as maintenance. It’s also true that personalities can both compliment and complicate our ability to build and lead an onsite service team. The first thing that comes to mind is a return to the basics. You are managing performance that crosses personality boundaries. Often personality tendencies are dramatized or acted out when individuals believe that it will help them gain control. So, the first concern with building and leading a team is that performance is what matters. Performance standards must be established, communicated and rewarded. While personality can be incorporated to enhance performance often some standards are being ignored or avoided. If this is allowed, then team morale will suffer. Here’s an example – a prima gets recognition and often gets away with bending the rules like punctuality, documentation detail in their files, disrespecting a team member one minute then expecting help the next.

Trust me, everyone else on the team notices and responds according to their respective personalities. The introvert goes inside themselves making communication and recognizing this individual more difficult. The passive aggressive is angry but would rather wait to set a trap for the prima or their leader. Obviously, all these personalities acting out do not develop a team mentality.

You need to counsel with the team as well as the individuals. Be sure to keep your supervisor in the loop.  In your meetings take leadership responsibility for not dealing with these issues sooner. Indicate that going forward you are also taking responsibility to get the team back on track with turns, response to all maintenance requests and common area routines; spell out expectations in writing within a 30-day plan of action. Sit down with individuals weekly to determine progress. During these meetings, be transparent and direct about your thoughts and intentions. Document and coordinate your actions with your community manager. By the end of the 30 days you should be able to determine what comes next for each team member. As the leader going forward, communicate sooner and keep everyone on a performance-based plan. Personalities will calm down with all the emphasis on performance, pride for team accomplishments and positive resident feedback.

KTS- Legal Questions Feb 2018

Posted: 13th February 2018 by Melissa in Legal Questions
Tags: , , ,
 

FBS operates Rental Properties for Independent Owners utilizing Industry Best Practices which creates direct benefits to our Rental Customers. We have provided Superior Housing Alternatives now in our 5th Decade. Our available rental inventory changes daily. www.fbs-pm.com
As professional managers we must stay on top of local, state and federal laws, regulations and housing codes that are imperative to our clients and rental customers. We review and update our contracts, policies, forms and routines with the help of KTS (Kimball, Tirey and St. John)
Ted Kimball, Esq. weighs in:

1. Question: We rent a house to a family.  My husband helped the tenant move a washing machine into the laundry room and noticed that the tenant’s defective hoses had leaked water onto the sheetrock. We want to have the sheetrock repaired.  Can we deduct the cost from his security deposit and then send a 30-day notice for the tenant to reinstate that amount? Answer:  You can serve a 3-day notice to perform conditions and covenants or quit to require the tenant to make repairs or to pay for the repairs.  If they do not comply with the notice, you can proceed with an eviction, or alternatively, deduct repair costs from their security deposit.

2.   Question:  I heard that if a tenant is using drugs on a property, the landlord can be charged on a drug charge, is this true?

Answer:  A landlord can be cited for maintaining a drug-related nuisance if he or she does not take reasonable steps to remove the illegal drug activity from the property. The local enforcement agency must first advise the landlord of the nuisance.

3.   Question:  A tenant claims her attorney told her that since she did “quit” after we gave her the 3-day notice, she is not responsible for the balance of the rent for that month.  Is she correct?

Answer:  Her attorney is wrong.  Even if a tenant “quits” pursuant to a notice to perform or quit, the tenant is still liable for lost future rent.

4.   Question:  Is the legal age for leaseholders over 18 or over 17?

Answer: The legal age to contract in California (including leases) is 18 or over.  However, if the under age person is “emancipated” (is or has been married, in active military duty or by court order) he or she does have the ability to enter into binding contracts and leases.

5.   Question: I am evicting a married couple.  My attorney says that we have served the lawsuit on the wife personally and the husband by substituted service. What does this mean and what difference does it make?

Answer: A lawsuit for unlawful detainer can be served either personally or by substituted service by giving a copy of the lawsuit to a person at least 18 years of age at the subject property or at the usual place of employment of the defendant.  A personal service is completed as of the date of delivery.  A substituted service is completed 10 days after both the delivery and mailing are completed.

6.   Question: I have tenants who have a written rental agreement for their apartment. They also rent the garage at $150, but there is no written agreement for the garage, either separately or in the rental agreement.  If we give the tenant a 3-day notice to pay both the garage and the apartment rent, would it be enforceable in court?

Answer: Since the terms of the garage rental are unclear, it would be safer to serve two 3-day notices, one for the apartment rent and one for the garage rent. They could be served simultaneously.

7.   Question: If I suspect drug activity in an apartment, can I evict the residents?

Answer: Yes, but proving drug activity can be challenging, and there are several different ways that landlords may want to proceed. Consult an attorney who can help you determine how to proceed.

8.   Question: I am planning to rent to three adult roommates. I know they all have to fill out separate applications.  But, how do I handle the security deposit? Do I ask each tenant for 1/3? Answer: You should charge one deposit and not account for it until all tenants vacate.  Make this clear in your lease so that if one tenant vacates, it is up to his or her former roommates to get reimbursed.

9.   Question: I have reason to believe that a single tenant has moved out from my rental property and have an arrangement with a third party couple now in residence.  How do I best legally remove them and take back my apartment?

Answer: You can serve a 3-day notice to perform conditions and covenants or quit if your lease has a prohibition against subletting or assignment of the lease, or, if there is a provision limiting residency to named occupants.

10.   Question: I have an applicant for an apartment who informed me that she had bad credit because of her ex-husband’s irresponsibility. Her current employer has offered to co-sign. Is this a good idea to accept him as a co-signor, and how would this be done?

Answer: You should first determine whether or not you are going to have a policy of accepting applicants with bad credit on the condition they have a co-signor, in order to stay within fair housing laws.  You should then decide what criteria the co-signor must meet, such as credit history, income, residency in the local area or at least in the state.  Finally, require the co-signor to sign a separate guarantor agreement reviewed by legal counsel.

11.   Question: We lease out a condominium and do not wish to renew the lease when it expires.  Should we give a 90-, 60- or 30-day notice? What form should we use to terminate the lease?

Answer: California law does not require any notice prior to a fixed lease expiration.  However, examine your lease since many leases do require a notice of intent of non-renewal.  Typically, they are for 30 days. It is always a good idea to communicate your intentions to your tenants as early as possible and document the communication.

12.   Question: Can I require a tenant to pay a deposit for their assistive animal?

Answer: No. It is unlawful to condition the granting of a reasonable accommodation, such as allowing a resident to have an assistive animal, on that person paying a fee or deposit.

However, the resident can still be held liable for any damage to the unit above ordinary wear and tear that is caused by the animal and those damages can be taken out of the regular security deposit that the resident paid for the unit.

 

KTS Legal Questions Jan 2018

Posted: 22nd January 2018 by Melissa in Legal Questions
Tags: , , , ,
 
  1. FBS operates Rental Properties for Independent Owners utilizing Industry Best Practices which creates direct benefits to our Rental Customers. We have provided Superior Housing Alternatives now in our 5th Decade. Our available rental inventory changes daily. www.fbs-pm.com
    As professional managers we must stay on top of local, state and federal laws, regulations and housing codes that are imperative to our clients and rental customers. We review and update our contracts, policies, forms and routines with the help of KTS (Kimball, Tirey and St. John)
    Ted Kimball, Esq. weighs in:

Question:  Can we use a recent Section 8 inspection report as a standard of habitability in an eviction case?

Answer: The court will allow any relevant evidence that tends to prove the condition the premises during the time in question.  Since the purpose of the inspection is to qualify the unit as habitable and in compliance with HUD regulations, the report may be considered as evidence of the condition of the premises at the time of the inspection, but the custodian of records may have to testify as to the accuracy of the report.

Question: One of our tenants recently requested that we paint the inside of her apartment. She has threatened to do it herself and deduct the cost of the paint from the rent if we do not have it painted within the next two weeks. Is she legally able to carry out her threat?

Answer:  Unless the condition of the walls rendered the premises uninhabitable, the owner is under no obligation to paint the unit at the request of the tenant.

Question:  Several of our tenants have complained to us about the neighboring property. The people who live there work on their cars in the driveway at all hours, and have loud and wild parties almost each weekend until dawn. What are my legal responsibilities?

Answer:  You have a right to inform the owner of the neighboring property and request their assistance, in resolving the problem.  Recommend that your residents contact the police during the time of the disturbances.

 Question: What is the most useful information on the tenant’s application for collection purposes?

Answer: The most useful for locating former residents, are the social security, driver’s license and license plate numbers.  For collection on judgments, current employment and bank account records are the most valuable.

 Question: What is an assistive animal?

Answer:  According to HUD, an assistive animal “is an animal that works, provides assistance or performs tasks for the benefit of a person with a disability, or provides emotional support that alleviates one or more identified symptoms or effects of a person’s disability.  Assistive animals perform many disability-related functions, including but not limited to, guiding individuals who are blind or have low vison, alerting individuals who are deaf or hard of hearing to sounds, providing protection or rescue assistance, pulling a wheelchair, fetching items, alerting persons to impending seizures or providing emotional support to persons with disabilities who have a disability-related need for such support.

Question:  I rent out a condo that I own.  Are the rules and regulation of the homeowner’s association automatically applicable to my tenant?

Answer:  Not automatically; your residential lease should incorporate by reference the CC & R’s of the homeowner’s association and all rules and regulations. That way if there is a breach of the association rules, you can serve an appropriate notice to perform or terminate the lease.

Question: What is an estoppel certificate? The owner of the property I manage requested that each of the tenants sign an estoppel certificate. I did not want to appear unknowledgeable. Answer:  An estoppel certificate is a document signed by the tenant certifying that the major terms of the lease are true and correct. Estoppel certificates are sometimes required during the sale of rental property so the buyer knows that the tenant understands and agrees to the major terms of the lease.

 Question:  Can we legally restrict the number of automobiles our tenants can park on the property? There is open parking but some of our tenants have four or five cars.

Answer:  You have the right to control the number of automobiles that the tenant may park on the property.  Clear guidelines should be given in writing and equally enforced.

Question:  After serving a tenant with a three-day notice to pay rent or quit, what is my next step if the tenant does not comply?  Serving a thirty-day notice?

Answer:  Your next step would be to file the unlawful detainer (tenant eviction) in the proper court.  Each court has geographical boundaries, so you should make sure you are filing the action in the court of proper venue.

 Question:  A tenant’s child broke a glass shower door.  Can I charge the tenant for the repair of the door?

Answer: The tenant is liable for any damage done by its invitees, guests or other occupants of the premises. The tenant should have to pay for the repair of the door.

Question:  After a tenant moves out and gives their change of address to the post office, how long are the landlords responsible for any correspondence that may still arrive at their former address?

Answer:  You should let the post office do their job and if the forwarding address has expired, give it back to the post office and indicate that the person no longer resides at the mailing address. We do not recommend you help accommodate your former tenant by playing “post office.”

Question: I need to know the depreciation schedule of new carpeting in a home where the tenant lived for one year. The tenant put 5 cigarette burn holes in the carpet and spilled wax on the corner of this brand new carpet.

Answer:  California’s security deposit law found in Civil Code Section 1950.5 states that the resident is responsible for damage above normal wear and tear. If the carpet needs to be replaced after one year and it should have lasted for five years, most judges will allow you to charge the resident 4/5 of the total replacement costs.

Question: I have a tenant who smokes outside his apartment. Can I request he not do that? There have been issues with cigarette butts on walkways and it also affect the tenant’s next door to him as they always close the kitchen window when he smokes.

Answer:  You can create a non-smoking policy for all or part of the premises, so long as you are consistent in its enforcement.

Question:  I have a roommate situation. One roommate has moved out.  Am I required by law to give back half of the security deposit to the one who has moved out?

Answer:  California law does not require landlords to return the security deposit to one tenant if they move out before the remaining tenant(s).  Landlords are not required to account for the use of the security deposit until after they have recovered possession of the property unless otherwise agreed at the inception of the lease.

Question:  At my property, we are currently doing renovations, and have notified all the residents that there will be noise and water shut offs. One resident said they are entitled to rent discounts because of the situation, is it true?

Answer: There is no “automatic” reduction in rent allowed for temporary shut off of water, and/or noise created by renovation or routine maintenance.

Ms. Management- Jan 2018

Posted: 10th January 2018 by Melissa in Ms. Management
Tags: , ,
 

Carol Levey, writer and creator of Ms. Management also appears as a guest blogger on Rent Sense. Her insights appear in dozens of other industry publications across the country. Carol is a regular presenter at the annual AAMD Education Conference, has served as MC Host for Award Events, and consistently over 35 years of volunteerism taught & authored curriculum for AAMD Education. She has been acknowledged for her outstanding contribution as an Industry Supplier becoming the recipient of the Jack Shapiro Award Winner twice; in 1987 & 1990.

Carol Levey is perhaps more recognized at the national level as an educator in the real estate industry. She served as one of the original team that produced the National Apartment Association coursework leading to the respected NALP designation. Her company Levey Enterprises has provided temporary leasing specialists, site managers and marketing offsite personnel to major apartment community operators throughout Colorado and across the U.S. Her business was founded on decades of experience in property management and executive leadership as a third-party leasing and corporate housing provider.

Read on for this month’s Ms. Management Q and A:

 

Q.    I’m an experienced maintenance tech. I recently became aware that my company is considering offering me a maintenance supervisor position. I’m pleased about the potential promotion, but I have been privately considering a changeover to operations. Operations appeals to me and I believe there are more opportunities to advance, learn and enjoy my work. I’m concerned that accepting something more in maintenance might be sending the wrong message and my heart might not be in it. Any advice?

 

A.   You raise some critical issues and I understand your concerns. You spend too much time and effort at your workplace not to be confident about your career path. You should know that in our industry what you have learned and accomplished as a maintenance technician will serve you well in operations, should you choose to attempt to make that change. I have seen the transition first hand. It has also been my pleasure to know individuals that lead large companies coming up through the maintenance side of the business.

Having said this there are several principles that come to mind as I consider useful advice in your circumstance. Regardless of current and future assignments our business is a daily stream of schedules, people with expectations, and constant communication demands. It is also true that what got you here won’t get you there. While maintenance and operations have many things in common you are going to be required to demonstrate your capability in specific areas that are not generally required from a maintenance technician. Some examples might include: the ability to schedule and prepare for various kinds of work over an extended period; ability to document the details of all work clearly and timely; ability to trust the work of others with proper mentoring, delegation and reporting; direct and transparent communication in person, to a group, and/or in writing; ability to fully utilize technologies to assist you in all the above. As you can see, you are more likely to demonstrate these skillsets as a maintenance supervisor, so your best career opportunity might be right in front of you.

Now let me go back to several keywords you used to describe your situation; experienced, aware, considering, pleased, privately, believe, concerned all send a message that you are not taking primary responsibility for your career path. This responsibility includes: assertive communication that would clarify what you’re privately considering with a person(s) that you trust to give honest feedback; periodic scheduled evaluation in which you ask a supervisor how your experience specifically matches their expectations; what can you improve to become more competitive; where can you find the resources for needed improvements to advance and/or changeover; when or under what conditions can you realistically expect new or additional responsibilities. Be sure to listen; maybe take notes so you can reference to mark personal progress. The good news is that in 2018 there is a growing demand for this approach and you can begin sooner than later.

 

Rent Sense: Long-Term Investors in Real Estate Should Pay Attention to Historic Attitude

Neil Fjellestad and Chris DeMarco

Special acknowledgement to recent article authored by Bryan Rich. His daily publication, The Forbes Billionaire’s Pro Perspectives contains global market perspectives from the founder of Forbes Billionaire’s Portfolio. Bryan Rich is a former hedge fund professional with nearly 20 years of experience researching, trading and investing for some of the most sophisticated investors in the world.

December 12th a report was issued that small business optimism hit the second highest level in the 44-year history of the index. Last year, following the election, this index that measures the outlook from the small business community had the biggest jump since 1980. For most of them, they had dealt with a decade-long crisis in their business, where they had credit lines pulled, demand for their products and services crushed, health care costs out of control, and their workforce slashed. If they survived that storm and were still around, any sign that there could be a radical political change coming in was a good sign.

A year ago, with a new administration coming in, half of the small business owners surveyed, expected the economy to improve. That was the largest agreement of that view in 15 years. They’ve been right. You might argue that Trump talks about economic growth and is taking credit for improvements that were already in the pipeline. Just to be clear; this rhetoric matters from the President of the United States especially when the press hangs on every word and small business is finally, not being ignored. Now with an economy that will do close to 3% growth this year, still, about half of small business owners expect the economy to improve further from here.

Why are they still convinced of more economic improvement? Tax cuts are coming down the pike. They’ve seen regulatory relief over the past year. The chief economist for the National Federation of Independent Businesses, says on behalf small business owners that they see the incoming Fed Chair (Powell) as more favorable toward business (and market determined decisions) than Yellen.  He puts it this way – “As long as Congress and the president follow through on tax reform, 2018 is shaping up to be great for small business, workers and the economy.”

This reflects an economic theme that cannot be ignored by both business owners and consumer activists. Here it is in a nutshell – the importance of fiscal stimulus to bridge the gap between the weak economic recovery that the Fed has manufactured, and a robust sustainable economic recovery necessary to escape the crisis era. Included in the crisis era is the inability of public decision-makers planning and providing an infrastructure that includes an adequate supply of affordable housing through the free market that rewards investors for living with inherent business risk while not defiling the property rights of landlords and tenants.

This small business survey tends to correlate highly with consumer confidence. Consumer confidence drives consumption. And consumption contributes about two-thirds of GDP. So, by restoring confidence, the simulative policy actions (and the anticipation of them) has been self-reinforcing.

KTS Legal Questions Dec 2017

Posted: 8th December 2017 by Melissa in Rent Sense
Tags: , , , , ,
 

FBS operates Rental Properties for Independent Owners utilizing Industry Best Practices which creates direct benefits to our Rental Customers. We have provided Superior Housing Alternatives now in our 5th Decade. Our available rental inventory changes daily. www.fbs-pm.com

As professional managers we must stay on top of local, state and federal laws, regulations and housing codes that are imperative to our clients and rental customers. We review and update our contracts, policies, forms and routines with the help of KTS (Kimball, Tirey and St. John)
Ted Kimball, Esq. weighs in:
 Question: My tenant has some damage to the outside window to the house I rent to them. The tenant claims the damage was done by a burglary attempt but I suspect they locked themselves out and damaged the window when trying to get back in. Who is responsible for the repair?

Answer: Unless proved otherwise, damage to the premises caused by unknown third parties, acts of nature, or unexplainable are the responsibility of the landlord.

Question: In a co-signer situation what forms do you recommend that the co-signer sign along with the tenant?

Answer:  They  should  sign  a  separate  guarantee  agreement  that  has  been  reviewed  by competent counsel.

Question: As resident managers, we are dealing with several tenants in violation of pet rules. In retaliation, they have made false accusations of us entering their apartments without notice. They are now disturbing other tenants with this untruth and questioning our integrity. How can we protect or defend ourselves?

Answer: You can serve a three-day-notice to perform conditions and/or covenants or quit to permanently remove the unauthorized pets. If you can prove the pets are still there after the notice expires, you can file for unlawful detainer.

Question: In assessing a late charge in a lease, is there a law stating how many days after the due date must expire before a late charge can be imposed.

Answer: California law does not prohibit a landlord from charging the tenant a bona fide late charge after the rent is delinquent. The rent is not delinquent unless one business day has passed at the time the rent became due. If the rent is due on the first and the first is on a weekend, a late charge could not be imposed until after the first business day expires.

Question: What happens when the lease expires? Is it assumed that the agreement goes month-to-month? Or should a new agreement be signed.

Answer: If the lease does not speak to renewal or reversion to month-to-month and the tenant remains in the premises with the landlord’s consent, the law will presume a month-to-month agreement if the rent is paid and accepted by the landlord.  It then can be terminated by either side serving the other with a written thirty-day or sixty-day notice to quit.

Question: I have a lease with two male tenants. The lease specifies two occupants only. One of the tenants has a girlfriend who spends the night every day of the week for the last month.  How do you determine when a guest is an occupant.

Answer: Unless the tenant admits to having another person move into the rental unit, you need to prove that they are occupying the unit through circumstantial evidence.  Proof of facts such as receiving mail at the premises, coming to and from work on a daily basis, present on weekends, or making requests from management all could lead a trier of fact to conclude that the person is an occupant of the premises.

Question: Someone told me that a guest of a resident can file a fair housing complaint, is that true?

Answer: Yes. Guests have standing to bring a fair housing complaint or lawsuit if the guest receives discriminatory treatment while visiting a resident at your property. A common example would be refusing to allow a guest to bring his assistive animal with him when he visits your resident at the property.

Question: Is there a law for returning the security deposit within a certain time frame? If I missed the due date is there an automatic penalty? I overlooked accounting for a deposit and it has been 25 days

Answer: California law allows residential tenants and landlords to contract for up to 21 days for the accounting and, if applicable, return of all or a portion of the tenant’s security deposit. There is no automatic penalty for being late.

Question: When we have called attention to a violation of the lease or community rules, tenants frequently will say we are “picking” on them.  How can we protect ourselves? Answer: First, make sure you are enforcing the lease and community rules equally to all violators. The best way to avoid or minimize legal challenges is by documenting all incidents and responding in a consistent manners.

Question: When typing up a new lease, should we use the spelling of the tenant’s names as it appears on the application or on their driver’s license.

Answer: It is important to be consistent on how you spell their name in the event legal action is necessary. It is best to use the name exactly as it appears on their driver’s license and request that they fill out the application in a manner consistent with this request.

Question: If a one-year residential lease is broken, what becomes of the security deposit? Answer: Once the tenants have vacated the premises and the landlord has taken over possession, the time to account for the use of the security deposit (normally 21 days) begins. The deposit can be used for any monies owed the landlord including delinquent rent.

Question: I have single family homes that I have for lease. They have large, well- maintained gardens.  How do I best insure that they are kept up?

Answer: Your best bet is to hire a gardener yourself, build the cost into the rent and have the lease read that the gardener has permission to enter the property for gardening/landscaping/mowing etc. That way you have more control.

This article is for general information purposes only. Laws may have changed since this article was published. Before acting, be sure to receive legal advice from our office. Ted Kimball is a partner with Kimball, Tirey & St. John LLP. Our primary practice areas are landlord/tenant, collections, fair housing and business and real estate, with offices throughout California. Property owner’s and manager’s with questions regarding the contents of this article, please call 800.338.6039.

 

 

Rent Sense: Long-Term Investors in Real Estate Should Benefit from Current Tax Reform Proposals

Neil Fjellestad and Chris DeMarco

Special acknowledgement to an article authored by Thomas Faust Jr. Chairman and CEO, Eaton Vance

Generations of Americans (many through 401-k contributions) have wisely invested their savings in the stock market to build assets for retirement and to fund educational costs, pay medical bills and meet other family needs. In the process, they’ve provided needed capital to American businesses to help the economy grow—thereby creating greater economic opportunity for all.

Obviously, the same is true for long-term individually held real estate investments that are operating as small rental businesses. While these investors experience risks that most cannot and/or will not abide they hope to provide financial improvement for themselves and/or to future generations as they choose. Investors with the will power to be long-term risk takers deserve public incentives which often takes the form of tax incentives.

Independent Rental Owners might be utilizing their knowledge and preference for rental property along with the specialized rules of a REIT to include a unique stock market strategy as well. Such individual investors are attempting to tap into opportunities available through larger acquisitions, geographical disbursement of holdings, diversity of real estate type and/or access to sophisticated real estate services.

Consistent with our nation’s pragmatic commitment to incentivize free markets and preserve individual rights, American investors have always had the ability to decide for themselves exactly what stocks they buy and sell, without interference from the government. Believe it or not, the Senate version of the tax reform bill seeks to change that. For individual investors who hold multiple positions in the same stock purchased over time, the Senate provision would require them always to sell — and make gifts of — the oldest shares first. That’s called FIFO, or first-in, first-out.

Because most stocks increase in value over time, requiring stocks to be sold on a FIFO basis will cause investors to pay more capital gains taxes as they sell down their investments, which the government estimates as generating $2.4 billion of new tax revenue over the next 10 years. While that’s a lot more in taxes for investors to pay, it’s only a drop in the bucket towards offsetting the overall costs of tax reform. The burden of requiring investors to sell stock on a FIFO basis will fall especially hard on retirees. The retiree will be forced always to sell the oldest – and often biggest gain—shares first. That means higher capital gains taxes and less income to pay for retirement.

The financial planning for younger investors will be more distorted by taxes (opposite of stated goal of reform). Those that have enjoyed the benefits in successful stocks will be less inclined to sell down their investments – because they’ll owe more taxes – and discouraged from buying more of the same stock – again, because their tax bill will go up when it later comes time to sell. Since tax considerations will increasingly influence what investors buy and sell, markets will become less effective in allocating capital appropriately to best support growth in the economy. By interfering with efficient capital formation, the FIFO provision ends up costing not just holders of successful investments, but all the beneficiaries of economic growth.

KTS Legal Questions-Nov 2017

Posted: 29th November 2017 by Melissa in Legal Questions
Tags: , ,
 

FBS operates Rental Properties for Independent Owners utilizing Industry Best Practices which creates direct benefits to our Rental Customers. We have provided Superior Housing Alternatives now in our 5th Decade. Our available rental inventory changes daily. www.fbs-pm.com

As professional managers we must stay on top of local, state and federal laws, regulations and housing codes that are imperative to our clients and rental customers. We review and update our contracts, policies, forms and routines with the help of KTS (Kimball, Tirey and St. John)
Ted Kimball, Esq. weighs in:

  1. Question:  I have a renter who gave me a thirty-day notice and then left the following week. Can I re-key the door locks and enter the property?

Answer: If your resident has clearly vacated the unit and communicated the same to you, you do not have to wait until the thirty-day notice expires before you can relet the unit.  California law requires that you mitigate your potential loss of rent by attempting to rent the property as soon as possible. The former tenant is liable for any unpaid rent up to the time the premises are relet or the thirty-day notice expires.

2.   Question:  If we personally serve a tenant a notice to enter the unit and we mail them a copy of the notice, how long do I have to wait before entry?

Answer:  California law requires six days if the notice is mailed only. If served personally or posted on the usual entry door of the premises, a twenty-four hour notice of entry is presumed to be a reasonable time.

3.   Question:  Can residents sit outside their front door and drink beer? Other residents are complaining.

Answer: If the outside portion where they are drinking beer is part of the common area of the premises, you can restrict that activity as long as it is restricted for all residents. If it is part of their rented space, you cannot, unless they are causing unreasonable disturbances to other residents.

4.   Question: I purchased a rental property two years ago and the security deposits need to be increased. Most of the deposits are $600.00 and need to be increased to $900.00. What is the best way to do this?

Answer: If they are on a month-to-month agreement, you can serve a thirty-day notice changing the terms of the tenancy to increase the deposit amount.  You can charge up to twice the amount of the monthly rent if the unit is unfurnished.

5.   Question: Who is responsible for the expense of carpet cleaning and painting when a tenant vacates a unit? Is its lawful to pass on this expense to the departing tenant?

Answer:  Under California law, the carpet must be left in the same clean condition it was when the tenant first moved in.  Any necessary cleaning is the tenant’s responsibility and the cost may be deducted from his or her security deposit.  Painting may also be charged to the departing tenant if the need to paint arose out of extraordinary wear and tear while the tenant occupied  the apartment.

6.   Question: We rented to three roommates who all moved in at the same time. One moved out a couple of months ago and the other two moved out last month.  All three were on the rental agreement and one is demanding that we give the entire deposit refund to him because he was the one who paid it. What should we do?

Answer: Either require the roommate to produce a written, notarized statement from the other two roommates granting their permission and consent, or give him a check with all three names as the payee.

7.   Question:  I served a three-day notice to pay rent or quit to one of our tenants. I received a partial payment within the three-day period. Do I have to serve another notice for the remainder of the rent or is the notice still good?

Answer:  Under California law, a residential landlord who accepts partial payment of rent demanded on a three-day notice is required to serve a new notice for the balance owed.

8.   Question:  How do we get rid of tenants who have filthy units? They always pay on time. Answer: If the condition of a residential tenant’s apartment unit is creating a health or fire hazard, the landlord should take steps to require the hazard be removed, or if necessary, terminate the tenancy and evict.  If the condition does not amount to a health or fire hazard, you may elect to serve a thirty-day notice to terminate a month-to-month tenancy, or if the lease is a fixed term, do not renew.  If the tenant could have a disability called “hoarding,” you should seek legal advice before proceeding.

9.   Question: One of our tenants informed me that residential landlords have to replace carpeting every five years.  Is this true?

Answer: No. California does not have specific requirements for replacing carpets or any condition of the unit so long as it remains in a habitable condition, which means free from substantial health or safety hazards.

10.   Question:  How long should we retain old leases at our apartment complex?  I have heard two years, is this correct?

Answer: The statute of limitations (the time one has to bring a lawsuit) for written leases is four years. Therefore, leases should be retained a minimum of four years from the date of the vacancy.

11.   Question:  A tenant wants to move in with a companion dog.  Our property only allows cats as pets.  Can I tell the tenant to get a companion cat instead?

Answer:  No.  You cannot apply pet restrictions to assistive animals.  An assistive animal is not a pet.  You must allow the tenant to get the type of assistive animal that best meets his/her disability-related needs.

12.   Question: One of our tenants is buying a home and gave us a thirty-day notice.  Now they want to extend escrow fifteen more days beyond the thirty-day period. They are willing to pay for the additional rent.  Should we require a new thirty-day notice from the tenants?

Answer: If you are in agreement to the additional fifteen days, agree in writing to extend the thirty-day notice period to expire on midnight on the agreed extension.  Otherwise, the court may believe that you waived your right under the thirty-day notice by allowing the tenant to remain in possession and paying rent beyond the thirty-day notice period.

13.   Question: We just recently purchased a property with below market rents and intend on raising rents. Which is preferable: to send out a thirty-day notice to raise the rent first, or to have the residents sign a month-to-month agreement, then send out a thirty-day notice? Answer:  Legally, when you purchase rental property, you “step into the shoes” of the previous owner and you are bound by whatever lease agreement is in place.  If it is month-to-month, you can serve a thirty-day notice to change the terms, including rent increase. If the rent is increased more than 10% from what it was one year ago, a sixty-day notice must be served.

14.   Question:  I have rented an apartment to an unmarried couple. The boyfriend’s mom is the co-signor. The boyfriend is moving out and wants his and his mom’s name taken off the lease.

I don’t care if the boyfriend leaves, but I think his mom is still responsible.  Am I right?

Answer:  Most co-signor agreements, also known as guarantee contracts, provide that the guarantee of performance is through the term of the lease. If so, the mom would most likely remain responsible, even if her son moves out

Fences – Shared Fencing Costs

Posted: 16th November 2017 by Melissa in Legal Questions
Tags: , , ,
 

Fences – Shared Fencing Costs

Taylor Baumann, Esq.

October, 2017

Under California law, landowners and their adjoining neighbors are jointly responsible for constructing, maintaining, and replacing fences that divide their properties. While the legislature enacted some procedural changes to the law under the Good Neighbor Fence Act of 2013, the spirit of the original law remains the same.

Adjoining landowners share equal responsibility for “division fences”—fences on the boundary line between two properties that physically lie on both owners’ properties. The law does not apply to fences that are completely within the property of one of the two landowners.1  If a fence is located on the land of only one landowner, the neighbor is not legally responsible for any portion of the fence cost, unless the parties agree otherwise.

Note that if a fence is a “division fence”, neither adjoining owner can move or alter the division fence without the other owner’s consent.

Landowners include any private person or private entity that holds a possessory interest in real property. The law does not apply to any city, county, city and county, district, public corporation, or other political subdivision, public body, or public agency. Theoretically, the law applies to tenants in addition to the owner of the real property. However, most residential leases will require that the landlord bear financial responsibility for fence maintenance, construction, and replacement.

A landowner seeking contribution from the neighbor for a division fence must send 30 days’ written notice to each neighbor. The notice must include the following:

  • A  statement  regarding  the  presumption  that  landowners  share  equally  in  the construction, maintenance, and replacement of division fences2;
  • A description of the problem facing the fence, or the problem the two properties face due to the lack of a fence;
    • The proposed solution to the problem;
    • The estimated cost of the solution;
    • The proposed allocation of the cost; and
    • The proposed timeline for addressing the problem.3

1 Ingwersen v. Barry, 118 Cal. 342, 343 (1897); Western Granite & Marble Co. v. Knickerbocker, 103 Cal. 111, 116-117 (1894).

2 The following language may be used: “Under Cal. Civ. Code § 841(b)(1): ‘Adjoining landowners are presumed to share an equal benefit from any fence dividing their properties and, unless otherwise agreed to by the parties in a written agreement, shall be presumed to be equally responsible for the reasonable costs of construction, maintenance, or necessary replacement of the fence.’”

3 The timeline should begin after the expiration of the notice (30 days).

The statute does not specify a method to deliver the notice. However, the property owner sending the notice should use a method that keeps a record of delivery (e.g. prepare a proof of service, or send by registered mail, certified mail, or overnight delivery).

If the adjoining neighbor can establish that imposing equal responsibility for the fence cost would be unjust, a court may order that the neighbor pay less than their proportionate share of the costs or none of the costs.

When making this determination, the court will consider the following factors in addition to any other relevant information:

1)        The financial burden on the neighbor compared to the benefit the neighbor receives from the fence;

2)        Whether installation / maintenance of the fence results in a net increase in the value of the neighbor’s property;

3)        The fence’s financial burden on the neighbor given the neighbor’s financial circumstances; and

4)        The reasonableness and necessity of the costs associated with the project.

 

Unfortunately, some neighbors aren’t good neighbors. A neighbor may ignore / refuse to pay their share of the fence’s cost.

In preparing against a neighbor’s potential refusal, the fence builder should keep a paper trail as the fence project is contemplated and planned. Records should include photographs and a video of the problem with the fence (or the lack of a fence) that justify the proposed solution. The fence-building neighbor should keep copies of all cost estimates from contractors to prove they chose the contractor offering the best value4,5.

Work on the project should not begin, nor should costs be incurred, until the 30 day notice period expires. Upon completion of the project, the fence-building neighbor should pay the contractor (and any other expenses) in full and keep copies of invoices and receipts related to the project.

After completing the fence, the fence-building neighbor should make a final written demand for contribution to the neighbor. The demand letter should request the neighbor make payment. If the landowner chooses a higher-priced contractor, they should maintain evidence to prove that the selected contractor was a better choice. A contractor’s license is required if the person constructing the fence is charging the homeowner $500 or more.

Immediately and include the final cost of the originally-proposed project, copies of the invoices or receipts, and a copy of the original 30 day notice.

If the neighbor still refuses to pay, the fence-building neighbor can (after having conducted due diligence and armed with proper documentation), file suit for contribution from the neighbor for their share of the costs. If the amount at issue is less than the jurisdictional limits (generally

$10,000 for an individual, and $5,000 for an entity), small claims court may be the quickest and most cost effective way to pursue claims.

If the fence is a “division fence”, and a property owner wants to request contribution from a neighbor for a portion of the fence cost, Kimball, Tirey & St. John LLP has a package of four letters to request contribution from the neighbor. The letters are available for $350, and can be purchased by contacting Jamie Sternberg or Taylor Baumann at (619) 231-1422.

 

California Civil Code §841

 

(a)  Adjoining landowners shall share equally in the responsibility for maintaining the boundaries and monuments between them.

(b)  (1) Adjoining landowners are presumed to share an equal benefit from any fence dividing their properties and, unless otherwise agreed to by the parties in a written agreement, shall be presumed to be equally responsible for the reasonable costs of construction, maintenance, or necessary replacement of the fence.

(2)  Where a landowner intends to incur costs for a fence described in paragraph (1), the landowner shall give 30 days’ prior written notice to each affected adjoining landowner. The notice shall include notification of the presumption of equal responsibility for the reasonable costs of construction, maintenance, or necessary replacement of the fence. The notice shall include a description of the nature of the problem facing the shared fence, the proposed solution for addressing the problem, the estimated construction or maintenance costs involved to address the  problem, the proposed cost sharing approach, and the proposed timeline for getting the problem addressed.

(3)  The presumption in paragraph (1) may be overcome by a preponderance of the evidence demonstrating that imposing equal responsibility for the reasonable costs of construction, maintenance, or necessary replacement of the fence would be unjust. In determining whether equal responsibility for the reasonable costs would be unjust, the court shall consider all of the following:

(A)  Whether the financial burden to one landowner is substantially disproportionate to the benefit conferred upon that landowner by the fence in question.

(B)  Whether the cost of the fence would exceed the difference in the value of the real property before and after its installation.

(C)  Whether the financial burden to one landowner would impose an undue financial hardship given that party’s financial circumstances as demonstrated by reasonable proof.

(D)  The reasonableness of a particular construction or maintenance project, including all of the following:

(i)  The extent to which the costs of the project appear to be unnecessary or excessive.

(ii)  The extent to which the costs of the project appear to be the result of the landowner’s personal aesthetic, architectural, or other preferences.

(E)  Any other equitable factors appropriate under the circumstances.

(4)  Where a party rebuts the presumption in paragraph (1) by a preponderance of the evidence, the court shall, in its discretion, consistent with the party’s circumstances, order either a contribution of less than an equal share for the costs of construction, maintenance, or necessary replacement of the fence, or order no contribution.

(c)  For the purposes of this section, the following terms have the following meanings:

(1)  “Landowner” means a private person or entity that lawfully holds any possessory interest in real property, and does not include a city, county, city and county, district, public corporation, or other political subdivision, public body, or public agency.

(2)  “Adjoining” means contiguous to or in contact with.

http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=841

 

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