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California Residential Leases: Ten Things to Know (Part 1)

March 23, 2017 Tyler Atkinson

Renting a house or apartment in California presents many potential legal pitfalls for tenants and landlords alike.  This article is Part 1 of a two-part series listing ten important rights and responsibilities every residential landlord and renter should know.  Part 2 will be published next week.

1. Disputes may arise even before a lease has been signed. 

It is possible for a landlord to violate the law even before a lease has been signed.  Discriminatory renting practices, for example, are illegal under state and federal law.   Landlords also must be careful not to impose illegal requirements on their tenants.  For properties in areas governed by “rent control” ordinances, residential lease agreements cannot impose rental rates or rate increases greater than those allowed by law.  Residential leases also may not require security deposits which exceed certain statutory limits.

2. Tenants should inspect before they rent. 

Rarely should a renter sign a lease sight-unseen.  A lease is a contract.  As with any contract, the parties should know what they are getting into.  A prospective tenant should think about what it will be like to live at the property for the duration of the lease term, considering utilities and amenities, cleanliness, noise, security, surroundings, and potential traffic from and to the property.

Pre-lease inspection also gives the tenant an opportunity to document the condition of the property before he or she acquires possession.  The tenant (and landlord) should take pictures of the property before move-in.  If a dispute later arises over whether the tenant caused damage, each side should have its own record of the original condition.

Pre-lease inspection also gives the tenant and landlord (or landlord’s representative) an opportunity to meet under upbeat circumstances.  The inspection is a chance for both sides to learn about each other.  For the prospective tenant, it can be an opportunity to gather additional information about the property—such as who previously rented the unit, for how long, and why the tenant left.  Courtesy and friendliness early on in the relationship may smooth out problems down the road.

3. Review the lease carefully before signing. 

The terms of a written lease, unless illegal, govern the responsibilities of the parties.  As a general proposition, the parties are more protected if the lease is in writing.  Furthermore, a lease must be in writing if it is for a term of more than a year.  (Civil Code sec. 1624.)

Before the lease is signed, if the landlord and tenant agree to modify or add terms not reflected in the written lease, they should edit the document to reflect the intentions of the parties.  A handwritten change should be initialed by all. 

In reviewing a lease, key terms include a description of the premises, the term (duration) of the lease, any potential late charges, who is responsible for utilities, guest limitations, parking, rent amounts, due dates, and any rent increase provisions (sometimes called a “rent escalation provision”).

4. Security deposits are capped by law and must be refunded promptly.  

A security deposit cannot be made “nonrefundable,” i.e., nonreturnable.  (Civil Code sec. 1950.5.)  A security deposit also cannot be increased during the lease term unless the lease expressly authorizes the increase. 

Further, security deposits are capped by statute.  A deposit requirement may not exceed (a) 3 months’ rent for a furnished unit, or (b) 2 months’ rent for an unfurnished unit.  (Civil Code sec. 1950.5.)  A renter’s “processing fee” counts toward the security deposit.  However, a “screening” or “application fee”—concerning work performed before the lease was entered—is not part of the security deposit and may be made nonrefundable.

A landlord may only draw from a security deposit in an amount “reasonably necessary” to:

  • compensate for unpaid rent;
  • repair damages to the premises beyond “ordinary wear and tear,”
  • pay for cleaning of the premises “to return the unit to the same level of cleanliness it was in at the inception of the tenancy;”
  • restore, replace, or return personal property “if the security deposit is authorized to be applied thereto by the rental agreement.”

(Civil Code sec. 1950.5.)

Within 21 days of the renter’s leaving the premises, a landlord must mail or personally deliver to the renter “a copy of an itemized statement indicating the basis for, and the amount of, any security received and the disposition of the security, and shall return any remaining portion of the security to the tenant.”  (Civil Code sec. 1950.5.)  If a repair cannot be made within 21 days, the landlord must provide a good faith estimate of the cost to repair.

Bad faith withholding of a security deposit may subject the landlord to actual damages (i.e., the amount wrongfully withheld) and a statutory award of up to two times the amount of the withheld deposit.  (Civil Code sec. 1950.5.) 

5. Tenants cannot be charged for “ordinary wear and tear.”  

As noted above, the rented property only must be as clean as it was when it was first occupied by the renter.  Depending on how long the renter has occupied the premises, it is expected that he or she will cause some “wear and tear” to the property, for which the renter will not be required to compensate the landlord.    (Civil Code sec. 1950.5.)  As a general rule of thumb, a property occupied for a month should be more like its original condition than a property occupied for over a year.

Stay tuned. 

Next week, in Part 2 of this series, we will look at covering rent increases, entry by landlord, subleasing, move-outs and more.