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Real Estate Today

Tenant Expects Improvements with Rent Increase

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Robert S. Griswold | Steven R. Kellman | Ted Smith
26-March-2000 Sunday

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

Q: My husband and I moved to San Diego several years ago and found a
three-bedroom apartment in Hillcrest for $725 a month.

We considered the rent appropriate because the apartment's condition was
poor and required work, which we did. Now we have the nicest unit in the
building (there are four units). The rent stayed at $725 until January 1998
when the building was sold and our rent was increased to $825. We have
received additional rent increases since then and now pay $975 per month. We have a month-to-month rental agreement.

There is practically an identical apartment next door which is being rented
for $1,025 a month. There have been no landlord-made improvements to our apartment or the building itself.

When we first moved in we accepted many of the little inconveniences
because of the cheap rent but if the rent keeps going up, I feel we should
be receiving something in return.

Is our landlord under any legal obligation to pump some money back into
our unit?

Shouldn't the landlord repair the broken electrical outlets or the
peeling paint?

Since I have a month-to-month rental agreement, could the landlord kick
me out for asking for repairs?

A: Griswold: You present several excellent questions that I regularly hear from tenants.

No, the landlord is not obligated to pump any money from your rent
increase back into the rental unit. Likewise, the landlord could not avoid
properly maintaining the rental unit when you first moved in under the
excuse that they could not afford to make the needed repairs.

Yes, the landlord is obligated to make repairs for all habitability
items -- electrical, plumbing, locks, etc. The habitability standard may or
may not apply to the paint in your unit as the landlord is not required to
repaint unless the peeling paint can be shown to be a health and safety
issue (i.e. lead-based paint and you have small children). The replacement
or repair of cosmetic items is not required. That doesn't mean you cannot
negotiate these items along with your rent increase and a new lease
agreement.

No, the landlord cannot legally evict you for requesting repairs for
habitability items or exercising any of your other rights as a tenant. The
landlord does not have to offer you a new lease or anything beyond a
month-to-month (i.e. they can just keep accepting your monthly rent).

You may need to take the initiative and propose something. Since you are on a month-to-month the landlord does not need any reason to give you a 30-day notice as long as the reason is not illegal (i.e. retaliatory or
discriminatory) and the burden of proof rests with you.

The reality is that the rental market was very soft for many years and many
landlords lost a lot of money or even lost their property. Now that the
rental market has become a landlord's market many owners are making up for lost time. Based on the $1,025 rent next door, it appears that your
landlord is still within the market.

But I hear many complaints about tenants who are afraid to ask for repairs,
painting, carpet, appliances, etc., as they are concerned that the landlord
will raise the rent or even evict them. In a free market economy and with
the fact that it was a renter's market for many years, I candidly believe
that both renters and landlords need to be realistic.

Both parties should realize that cosmetic upgrades or improvements to the
property in exchange for a reasonable rent increase in conjunction with a
new lease (or some other guarantee of no further increase for a reasonable
time period) is in everyone's best interest.

Getting bugged

Q: I live in an upscale beach community and was just given a one-week
notice to vacate my apartment for fumigation. Is this legal? The landlord
offered to put tenants up at a less than acceptable hotel in a commercial
section of town, or they will credit us "with two nights lodging expense."
No mention was made for costs of food or time spent preparing our
apartments for this procedure.

With such short notice, many alternate hotels are already booked. What are our rights?

A: Kellman: Your landlord is obligated to provide habitable premises and conduct the necessary maintenance required to keep it habitable.

Sometimes it involves minor intrusions to your privacy like a quick visit
from a plumber or an electrician. It could also involve a major
inconvenience like for a fumigation, especially when tenting the structure
is needed.

Of course you, the tenant, should cooperate in such maintenance efforts
which include allowing access by the fumigators and assisting in making the necessary preparations. This protects your health and safety in maintaining the building to be free of potentially dangerous insects.

The landlord must also cooperate. That cooperation should include
compensating the tenants for the inconvenience that the landlord's
maintenance is causing. After all, the tenants are paying for a livable
home but will not get it during the fumigation.

Therefore, I believe the landlord should keep the rent received for those
affected days but pay for a comfortable hotel.

Also, I believe the landlord should pay for incidental expenses like
increased food costs, etc.

Smith: California landlords have every right to maintain their property in
a habitable condition -- which includes fumigating for termites and other
dangerous insects. Kudos to Mr. Kellman for acknowledging the landlord's right. The landlord has the right to ask tenants to vacate temporarily to accomplish the fumigation. Tenants cannot take this as an opportunity for luxury housing during the temporary period.

In this case, the landlord has gone far enough by offering the rent
abatement and two nights' lodging expense. In my view, that's more than
reasonable.

While I realize you may be inconvenienced, you will need to cooperate with your landlord to avoid further legal proceedings.

First things first

Q: We want to convert our primary residence into our first rental property. Do we need to notify our insurance company that the property will be nonowner occupied? Will we also need to refinance our owner-occupied financing?

A: Griswold: Yes, you do need to immediately notify your insurance company and have them issue a landlord policy for your rental home.

As far as the lender, you really need to review your loan documents and
possibly consult with an attorney. Typically, lenders will allow you to
maintain the loan even if the home is no longer owner-occupied as long as
you were not deceitful when you received the loan since the terms of
owner-occupied home loans are typically much better than investor loans.

For example, many lenders' loan documents will state that you must live in
the home as your primary residence for at least six months while a few may even require unrealistically that the home must always be owner-occupied or that the terms (primarily the rate) may be adjusted higher to account for the higher risk associated with rental property loans vs. owner-occupied home loans.

Generally speaking, you should be all right as long as it has been at least
six months since you got the loan and there was no intent to deceive.
Lenders know that plans change and people buy new homes without selling their old home and thus the old home often becomes a rental.

This scenario happened a lot in the past few years when the market value of homes fell below the loan balance. In those cases, it was in the best
interest of both the homeowner and the lender for the homeowner to rent the property until the market values increased.


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

Copyright Union-Tribune Publishing Co.

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

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Revised and Updated - Wednesday, April 26, 2006

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

Email: rgriswold.ret@retodayradio.com

2006, 2005, 2004, 2003, 2002, 2001, 2000, 1999, 1998, 1997, 1996 Robert S. Griswold.  All Rights Reserved.
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