How to Raise the Rent Without Losing Tenant
Robert S. Griswold | Steven R. Kellman | Ted Smith
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
and by attorneys Steven R. Kellman, director of the
Tenants' Legal Center, and Ted Smith, principal in a law
firm representing landlords.
Q: I've got a tenant who has given me no problems, but I know I can
get more than $1,300 for the house he's renting. How do I raise his
rent without losing his business?
A: Griswold -- The best way to handle rent increases is to be
straightforward. Before actually sending a notice of increased rent,
find a rental rate market survey for comparable properties in your
area. Once you determine what the current market rent could be for
your unit, decide if you are willing to give your tenant a slight
discount in exchange for continued tenancy.
I often recommend the new rent be set at $10 to $25 below current
market rent level. Thus, you might consider a rent increase to $1,275
instead of the full market rental rate of $1,300 per month.
Share the survey information with your tenant. No one likes to pay
more for anything but if you are staying within the rental market
price range for your unit you are being fair.
You could also stay with a month-to-month rental agreement and send
tenant a letter indicating you will not raise the rent again for a set
period of time. This gives your tenant the reassurance that they can
plan their personal budget with some certainty.
Contact your tenant and ask them if there are any items in need of
repair. Remember that you must always maintain the habitability of
your rental unit but you are not required to address merely cosmetic
items. However, it is often a good idea to see if there are any
cosmetic items or even unit upgrades that you could do to show your
appreciation for the tenant's continued tenancy.
Q: I am a senior citizen who needed to move recently. I was shocked by
the large security deposits required. One apartment rented for $550,
but they wanted a $650 security deposit. This seems outrageous,
especially since they are not offering interest.
I heard that back East landlords had to pay interest on security
deposits. What are the laws about the amount legally acceptable for
security deposits and can I demand interest on my money?
A: Smith -- There is nothing illegal or even outrageous about asking
for a security deposit of $650 when rent is $550. California law
allows a maximum security deposit equaling two times the monthly rent
-- here, $1,100.
Thus, it is my experience that $650 is reasonable based on the amount
of rent. Rental property refurbishing costs -- both materials and
labor -- are constantly increasing. For even average amounts of
cleaning and repair, $650 may not go very far.
And, for conventional tenancies, California landlords are not required
to pay interest on residential security deposits. You may not demand
interest on your deposit.
Kellman -- Ted correctly points out that a landlord can charge two
times the monthly rent for a security deposit. Even worse, in a
furnished unit, they can charge a deposit equal to three times the
While state law does not require interest to be paid on deposits, some
cities including Berkeley, Cotati, East Palo Alto, Hayward, Los
Angeles, San Francisco, Santa Cruz, Santa Monica, Watsonville and West
Hollywood do require deposit interest to be paid to tenants.
San Diego does not have such a law. Therefore you may ask that
interest be paid on the deposit but most landlords in San Diego will
not even consider it.
Landlords are entitled to charge a deposit to provide security against
rent default, cleaning or damage charges. Perhaps you can demonstrate
to the landlord that you are a low risk for such charges with
references from past
landlords. Absent the landlord's cooperation, you may be forced to pay
that deposit or keep on looking.
Sign on the dotted line
Q: My current lease still has about two weeks to go, but last week my
landlord gave me a lease renewal to sign. I hadn't even had a chance
to look at it, but now the landlord has left a message on my voice
mail that he has changed his mind about the terms and wants to raise
the rent $50. He has signed the lease. Didn't he accept the terms by
signing the lease?
A: Griswold -- The lease is not valid and binding on either party
sign it. So even though he has signed it, he can still communicate in
writing to you that he is withdrawing the offer. In other words, he
can back out if you have not formally accepted.
Obviously, the fact that you have a copy signed by him is not relevant
if he sends you written, not verbal, notice voiding the lease prior to
your acceptance and your delivering that fully signed lease back to
Thus, the lesson to be learned from this experience is don't wait any
longer than necessary if you really want to stay.
Smith -- I'm afraid that you missed your golden opportunity to bind
the landlord to the proposed lease. When he sent you the already
California law would construe this as his offer to you to renew the
lease at the old rate.
At that moment in time, you had your chance to sign the lease and
accept his offer to renew. When he presented the lease, you didn't
sign it. He took the lease back. The offer to renew was withdrawn.
Now, you'll need to consent to his demand to pay a higher amount.
Otherwise, you'll have to vacate. There is no California law
renewing your lease. Most likely, it will convert or "roll
over" into a month-to-month tenancy, each party having the right
to serve a 30-day notice of termination.
Kellman -- You may not have missed your opportunity to get that lease.
In California, some contracts may be made verbally. When there is a
disagreement over the terms in a contract, a written document will
usually prevail over a verbal communication.
Here, you have a written offer to renew the lease signed by the
landlord. It is reasonable to rely on that existing written lease
renewal offer since there is no subsequent written document which
alters or cancels that offer to lease.
Maybe your landlord's voice mail was not a serious attempt to
"withdraw" the offer, but was merely a tactic to pressure
you to quickly sign the lease. All you received so far was a voice
mail message which may not be a legally binding event. Therefore, if
you want the lease at the originally stated rent rate, you should
promptly sign the lease and deliver it to the landlord, keeping a copy
Once that is done, the presumption should be that you have a binding
lease. Your landlord may then have a real uphill battle to prove
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 email@example.com
2000 Rental Roundtable
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.
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
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