When You Decide to Rent

Before you sign a rental agreement or a lease, read it carefully so that you understand all of its terms. What kind of terms should be in the rental agreement or lease? Can the rental agreement or lease limit the basic rights that the law gives to all tenants? How much can the landlord require you to pay as a security deposit? This section answers these and other questions.

WHAT THE RENTAL AGREEMENT OR LEASE SHOULD INCLUDE

Most landlords use printed forms for their leases and rental agreements. However, printed forms may differ from each other. There is no "standard rental agreement" or "standard lease"! Therefore, carefully read and understand the entire document before you sign it.

The written rental agreement or lease should contain all of the promises that the landlord or the landlord's agent has made to you, and should not contain anything that contradicts what the landlord or the agent told you. If the lease or rental agreement refers to another document, such as "tenant rules and regulations," get a copy and read it before you sign the written agreement.

Don't feel rushed into signing. Make sure that you understand everything that you're agreeing to by signing the rental agreement or lease. If you don't understand something, ask the landlord to explain it to you. If you still don't understand, discuss the agreement with a friend, or with an attorney, legal aid organization, tenant-landlord program, or housing clinic.

Key terms

The written rental agreement or lease should contain key terms, such as the following:

• The names of the landlord and the tenant.
• The address of the rental unit.
• he amount of the rent.
• When the rent is due, to whom it is to be paid, and where it is to be paid.
• The amount and purpose of the security deposit (See Basic Rules Governing Security Deposits).
• The amount of any late charge or returned check fee (see Late Fees).
• Whether pets are allowed.
• The number of people allowed to live in the rental unit.
• Whether attorney's fees can be collected from the losing party in the event of a lawsuit between you and the landlord.
• Who is responsible for paying utilities (gas, electric, water, and trash collection).
• If the rental is a house or a duplex with a yard, who is responsible for taking care of the yard.
• Any promises by the landlord to make repairs, including the date by which the repairs will be completed.
• Other items, such as whether you can sublet the rental unit and the conditions under which the landlord can inspect the rental unit.

In addition, the rental agreement or lease must disclose:

• The name, address and telephone number of the authorized manager of the rental property and an owner (or an agent of the owner) who is authorized to receive legal notices for the owner. (This information can be posted conspicuously in the building instead of being disclosed in the rental agreement or lease.)
• The name, address and telephone number of the person or entity to whom rent payments must be made. If you may make your rent payment in person, the agreement or lease must state the usual days and hours that rent may be paid in person. Or, the document may state the name, street address and account number of the financial institution where rent payments may be made (if it is within five miles of the unit) or information necessary to establish an electronic funds transfer for paying the rent.
• The form in which rent payments must be made (for example, by check or money order).⁵⁶ (As a general rule, the landlord cannot require that you make rent payments in cash. See Living in the Rental Unit, Check or Cash)⁵⁷

Every rental agreement or lease also must contain a written notice that the California Department of Justice maintains a Web site at www.meganslaw.ca.gov that provides information about specified registered sex offenders. This notice must be in legally-required language.⁵⁸

A rental agreement or lease may contain other terms. Examples include whether you must park your car in a certain place, and whether you must obtain permission from the landlord before having a party.

It is important that you understand all of the terms of your rental agreement or lease. If you don't comply with them, the landlord may have grounds to evict you.

Don't sign a rental agreement or a lease if you think that its terms are unfair. If a term doesn't fit your needs, try to negotiate a more suitable term (for example, a smaller security deposit or a lower late fee). It's important that any agreed-upon change in terms be included in the rental agreement or lease that both you and the landlord sign. If you and the landlord agree to change a term, the change can be made in handwriting in the rental agreement or lease. Both of you should then initial or sign in the area immediately next to the change to show your approval of the change. Or, the document can be retyped with the new term included in it.

If you don't agree with a term in the rental agreement or lease, and can't negotiate a better term, carefully consider the importance of the term, and decide whether or not you want to sign the document.

The owner of the rental unit or the person who signs the rental agreement or lease on the owner's behalf must give you a copy of the document within 15 days after you sign it.⁵⁹ Be sure that your copy shows the signature of the owner or the owner's agent, in addition to your signature. Keep the document in a safe place.

Tenant's basic legal rights

Tenants have basic legal rights that are always present no matter what the rental agreement or lease states. These rights include all of the following:

• Limits on the amount of the security deposit that the landlord can require you to pay (see Basic Rules Governing Security Deposits).
• Limits on the landlord's right to enter the rental unit (see When Can the Landlord Enter the Rental Unit) .
• The right to a refund of the security deposit, or a written accounting of how it was used, after you move (See Refunds of Security Deposits).
• The right to sue the landlord for violations of the law or your rental agreement or lease.
• The right to repair serious defects in the rental unit and to deduct certain repair costs from the rent, under appropriate circumstances (see Repair and Deduct Remedy).
• The right to withhold rent under appropriate circumstances (see Rent Withholding Remedy).
• Rights under the warranty of habitability (See Repairs and Habitability).
• Protection against retaliatory eviction.

These and other rights will be discussed throughout the rest of this booklet.

Landlord's and tenant's duty of good faith and fair dealing

Every rental agreement and lease requires that the landlord and tenant deal with each other fairly and in good faith. Essentially, this means that both the landlord and the tenant must treat each other honestly and reasonably. This duty of good faith and fair dealing is implied by law in every rental agreement and every lease, even though the duty probably is not expressly stated.⁶⁰

Shared utilities

If the utility meter for your rental unit is shared with another unit or another part of the building, then the landlord must reach an agreement with you on who will pay for the shared utilities. This agreement must be in writing (it can be part of the rental agreement or lease), and can consist of one of the following options:

• The landlord can pay for the utilities provided through the meter for your rental unit by placing the utilities in the landlord's name;
• The landlord can have the utilities in the area outside your rental unit put on a separate meter in the landlord's name; or
• You can agree to pay for the utilities provided through the meter for your rental unit to areas outside your rental unit.⁶¹

LANDLORD'S DISCLOSURES

Lead-based paint

If the rental unit was constructed before 1978, the landlord must comply with all of these requirements:

• The landlord must disclose the presence of known lead-based paint and lead-based paint hazards in the dwelling before the tenant signs the lease or rental agreement. The landlord also must give the tenant a copy of the federal government's pamphlet, "Protect Your Family From Lead in Your Home" (available by calling 1-800-424-LEAD), before the tenant signs the lease or rental agreement.⁶²
• The lease or rental agreement must contain a Lead Warning Statement in legally-required language.⁶³
• The landlord also must give potential tenants and tenants a written Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards ⁶⁴

If the rental unit was constructed before 1978, the landlord must disclose the presence of known lead-based paint and lead-based paint hazards in the dwelling before the tenant signs the lease or rental agreement.

Periodic pest control treatments

A pest control company must give written notice to the landlord and tenants of rental property regarding pesticides to be used when the company provides an initial treatment as part of an ongoing pest-control service contract. The landlord must give a copy of this notice to every new tenant who will occupy a rental unit that will be serviced under the service contract⁶⁷

Asbestos

Residential property built before 1981 may contain asbestos. A leading reference for landlords recommends that landlords make asbestos disclosures to tenants whenever asbestos is discovered in the rental property. (This book also contains detailed information on asbestos disclosures, and protections that landlords must provide their employees.)⁶⁸

Carcinogenic Material

A landlord with 10 or more employees must disclose the existence of known carcinogenic material (for example, asbestos) to prospective tenants.⁶⁹

Illegal Controlled Substances

The owner of a dwelling who knows that an illegal controlled substance has been spilled or dumped on or beneath the dwelling must give a prospective tenant written notice of this fact before the tenant signs a rental agreement. LSD and methamphetamines are examples of illegal controlled substances. The owner must provide this notice if the owner knows of the condition, or if he or she has received notice of it from a law enforcement or health agency. The notice may be a copy of the agency's notice to the owner.⁷⁰

This notice is not required after December 31, 2005.

Methamphetamine Contamination

Residential property that has been used for methamphetamine production may be significantly contaminated.

A local health officer who inspects rental property and finds that it is contaminated with a hazardous chemical related to methamphetamine laboratory activities must issue an order prohibiting the use or occupancy of the property. This order must be served on the property owner and all occupants. The owner and all occupants then must vacate the property until the officer sends the owner a notice that the property requires no further action.

The owner must give written notice of the health officer's order and a copy of it to potential tenants who have completed an application to rent the contaminated property. Before signing a rental agreement, the tenant must acknowledge in writing that he or she has received the notice and order. The tenant may void (cancel) the rental agreement if the owner does not does not comply with these requirements. The owner must comply with these requirements until he or she receives a notice from the health officer that the property requires no further action.⁷¹

These requirements took effect on January 1, 2006.

Demolition Permit

The owner of a dwelling who has applied for a permit to demolish the dwelling must give written notice of this fact to a prospective tenant before accepting any fee from the tenant or entering into a rental agreement with the tenant. (The owner must give notice to current tenants, including tenants who haven't moved in yet, before applying for a permit.) The notice must state the earliest approximate dates that the owner expects the demolition to occur and that the tenancy will end.⁷²

Military Base or Explosives

A landlord who knows that a rental unit is within one mile of a closed military base in which ammunition or military explosives were used must give written notice of this fact to a prospective tenant. The landlord must give the tenant this notice before the tenant signs a rental agreement.⁷³

Death in the Rental Unit

If a prior occupant of the rental unit died in the unit within the last three years, the owner or the owner's agent must disclose this fact to a prospective tenant when the tenant offers to rent or lease the unit. The owner or agent must disclose the manner of death, but is not required to disclose that the occupant was ill with, or died from, AIDS. However, the owner or agent cannot intentionally misrepresent the cause of death in response to a direct question.⁷⁴

Condominium Conversion Project

A rental unit may be in a condominium conversion project. A condominium conversion project is an apartment building that has been converted into condominiums or a newly constructed condominium building that replaces demolished residential housing. Before the potential tenant signs a lease or rental agreement, the owner or subdivider of the condominium project must give the tenant written notice that:

• The unit has been approved for sale, and may be sold, to the public, and
• The tenant's lease may be terminated (ended) if the unit is sold, and
• The tenant will be informed at least 90 days before the unit is offered for sale, and
• The tenant normally will be given a first option to buy the unit.

The notice must be in legally-required language. This notice requirement applies only to condominium conversion projects that have five or more dwelling units and that have received final approval.⁷⁵

BASIC RULES GOVERNING SECURITY DEPOSITS

At the beginning of the tenancy, the landlord most likely will require you to pay a security deposit. The landlord can use the security deposit, for example, if you move out owing rent, damage the rental unit beyond normal wear and tear, or leave the rental less clean than when you moved in.⁷⁶

Under California law, a lease or rental agreement cannot say that a security deposit is "nonrefundable."⁷⁷ This means that when the tenancy ends, the landlord must return to you any payment that is a security deposit, unless the landlord properly uses the deposit for a lawful purpose, as described below and under Refunds of Security Deposits.

Almost all landlords charge tenants a security deposit. The security deposit may be called "last month's rent," "security deposit," "pet deposit," "key fee," or "cleaning fee." The security deposit may be a combination, for example, of the last month's rent plus a specific amount for security. No matter what these payments or fees are called, the law considers them all, as well as any other deposit or charge, to be part of the security deposit.⁷⁸ The one exception to this rule is stated in the next paragraph.

The law allows the landlord to require a tenant to pay an application screening fee, in addition to the security deposit.⁷⁹ The application screening fee is not part of the security deposit. However, any other fee charged by the landlord at the beginning of the tenancy to cover the landlord's cost of processing a new tenant is part of the security deposit.⁸⁰ Here are examples of the two kinds of fees:

• Application screening fee - A landlord might charge you an application screening fee to cover the cost of obtaining information about you, such as checking your personal references and obtaining your credit report (see Application Screening Fee). The application screening fee is not part of the security deposit. Therefore, it is not refundable as part of the security deposit.
• New tenant processing fee - A landlord might charge you a fee to reimburse the landlord for the costs of processing you as a new tenant. For example, at the beginning of the tenancy, the landlord might charge you for providing application forms, listing the unit for rent, interviewing and screening you, and similar purposes. These kinds of fees are part of the security deposit⁸¹ Therefore, these fees are refundable as part of the security deposit, unless the landlord properly uses the deposit for a lawful purpose, as described below and under Refunds of Security Deposits.

The law limits the total amount that the landlord can require you to pay as a security deposit. The total amount allowed as security depends on whether the rental unit is unfurnished or furnished and whether you have waterbed.

• Unfurnished rental unit: The total amount that the landlord requires as security cannot be more than the amount of two months' rent. If you have a waterbed, the total amount allowed as security can be up to two and-a-half times the monthly rent.
• Furnished rental unit: The total amount that the landlord requires as security cannot be more than the amount of three months' rent. If you have a waterbed, the total amount allowed as security can be up to three-and-a-half times the monthly rent.
• Plus first month's rent: The landlord can require you to pay the first month's rent in addition to the security deposit⁸²

The landlord normally cannot require that you pay the security deposit in cash. (see Living in the Rental Unit, Check or Cash)

1. Security deposit example: Suppose that you have agreed to rent an unfurnished apartment for $500 a month. Before you move in, the landlord can require you to pay up to two times the amount of the monthly rent as a security deposit ($500 x 2 = $1,000). The landlord also can require you to pay the first month's rent of $500, plus an application screening fee of up to $33, in addition to the $1,000security deposit. This is because the first month's rent and the application screening fee are not part of the security deposit.
2.  
3. Suppose that the landlord has required you to pay a $1,000 security deposit (the maximum allowed by law for an unfinished unit when the rent is $500 a month). The landlord cannot also demand, for example, a $200 cleaning deposit, a $15 key deposit, or a $50 fee to process you as a new tenant. The landlord cannot require any of these extra fees because the total of all deposits then would be more than the $1,000 allowed by law when the rent is $500 a month.

Suppose that you ask the landlord to make structural, decorative or furnishing alterations to the rental unit, and that you agree to pay a specific amount for the alterations. This amount is not subject to the limits on the amount of the security deposit discussed just above, and is not part of the security deposit. Suppose, however, that the alterations that you have requested involve cleaning or repairing damage for which the landlord may charge the previous tenant's security deposit. In that situation, the amount that you pay for the alterations would be subject to the limits on the amount of the security deposit and would be part of the security deposit.⁸³

A payment that is a security deposit cannot be "nonrefundable."⁸⁴ However, when you move out of the rental, the law allows the landlord to keep part or all of the security deposit in any one or more of the following situations:

• You owe rent;
• You leave the rental less clean than when you moved in;
• You have damaged the rental beyond normal wear and tear; and
• You fail to restore personal property (such as keys or furniture), other than because of normal wear and tear.

If none of these circumstances is present, the landlord must return the entire amount that you have paid as security. However, if you have left the rental very dirty or damaged beyond normal wear and tear, for example, the landlord can keep an amount that is reasonably necessary to clean or repair the rental.⁸⁵ Deductions from security deposits are discussed in detail in Refunds of Security Deposit.

Make sure that your rental agreement or lease clearly states that you have paid a security deposit to the landlord and correctly states the amount that you have paid. The rental agreement or lease should also describe the circumstances under which the landlord can keep part or all of the security deposit. Most landlords will give you a written receipt for all amounts that you pay as a security deposit. Keep your rental agreement or lease in case of a dispute.⁸⁶

THE INVENTORY CHECKLIST

You and the landlord or the landlord's agent should fill out the Inventory Checklist (or one like it). It's best to do this before you move in, but it can be done two or three days later, if necessary. You and the landlord or agent should walk through the rental unit together and note the condition of the items included in the checklist in the "Condition Upon Arrival" section. Both of you should sign and date the checklist, and both of you should keep a copy of it. Carefully completing the checklist at the beginning of the tenancy will help avoid disagreements about the condition of the unit when you move out. See additional suggestions about the Inventory Checklist at the top of the checklist.

RENTER'S INSURANCE

Renter's insurance protects a tenant against property losses, such as losses from fire or theft. It also protects a tenant against liability (legal responsibility) for many claims or lawsuits filed by the landlord or others alleging that the tenant has negligently (carelessly) injured another person or damaged the person's property.

Carelessly causing a fire that destroys the rental unit or another tenant's property is an example of negligence for which you could be held legally responsible.⁸⁷ You could be required to pay for the losses that the landlord or other tenant suffers. Renter's insurance would pay the other party on your behalf for some or all of these losses. For that reason, it's often a good idea to purchase renter's insurance.⁸⁸

Renter's insurance may not be available in every area. If renter's insurance is available, and if you choose to purchase it, be certain that it provides the protection you want and is fairly priced. You should check with more than one insurance company, since the price and type of coverage may differ widely among insurance companies. The price also will be affected by how much insurance protection you decide to purchase.

Your landlord probably has insurance that covers the rental unit or dwelling, but you shouldn't assume that the landlord's insurance will protect you. If the landlord's insurance company pays the landlord for a loss that you cause, the insurance company may then sue you to recover what it has paid the landlord.

If you want to use a waterbed, the landlord can require you to have a waterbed insurance policy to cover possible property damage.⁸⁹

RENT CONTROL

Some California cities have rent control ordinances, that limit or prohibit rent increases. Some of these ordinances specify procedures that a landlord must follow before increasing a tenant's rent, or that make evicting a tenant more difficult for a landlord. Each community's ordinance is different.

For example, some ordinances allow landlords to evict tenants only for "just cause." Under these ordinances, the landlord must stat and prove a valid reason for terminating a month-to-month tenancy. Other cities don't have this requirement.

Some cities have boards that have the power to approve or deny increases in rent. Other cities' ordinances allow a certain percentage increase in rent each year. Because of recent changes in state law, all rent control cities now have "vacancy decontrol." This means that the landlord can re-rent a unit at the market rate when the tenant moves out voluntarily or when the landlord terminates the tenancy for nonpayment of rent.

Some ordinances make it more difficult for owners to convert rentals into condominiums.

Some kinds of property cannot be subject to local rent control. For example, property that was issued a certificate of occupancy after February 1995 is exempt from rent control. Beginning January 1, 1999, tenancies in single family homes and condos are exempt from rent control if the tenancy began after January 1, 1996.⁹⁰

A rent control ordinance may change the landlord-tenant relationship in other important ways besides those described here. Find out if you live in a city with rent control. (See the list of cities with rent control in Appendix 2.) Contact your local housing officials or rent control board for information. You can find out about the rent control ordinance in your area (if there is one) at your local law library,⁹¹ or by requesting a copy of your local ordinance from the city or county clerk's office. Some cities post information about their rent control ordinances on their Web site (for example, information about Los Angeles' rent control ordinance is available at www.lacity.org/lahd/).

⁵⁶ Civil Code Sections 1961-1962.7. See Moskovitz et al., California Landlord-Tenant Practice, Section 1.21A (Cal. Cont. Ed. Bar 2006); California Practice Guide, Landlord-Tenant, Paragraphs 2:147-2:147.6 (Rutter Group 2005).
⁵⁷ Civil Code Section 1947.3.
⁵⁸ Civil Code Section 2079.10a, Penal Code Section 290.46. The required language differs depending on the date of the lease or rental agreement. See Appendix 5.
⁵⁹ Civil Code Section 1962(a)(4).
⁶⁰ Andrews v. Mobile Aire Estates (2005) 125 Cal.App.4th 578 [22 Cal.Rptr.3d 832]. A typical legal description of the implied covenant of good faith and fair dealing is that neither party will do anything that will injure the right of the other party to receive the benefits of the agreement. See the Andrews decision for a discussion of the closely- related implied covenant of quiet enjoyment.
⁶¹ Civil Code Section 54.1(b)(3)(A). This section also provides remedies for violations.
⁶² California Practice Guide, Landlord-Tenant, Paragraphs 2:104.20-2:104.23 (Rutter Group 2004); 42 United States Code Sections 4851b, 4852d (this disclosure requirement does not apply to dwellings with zero bedrooms, or to housing for elderly or disabled persons (unless a child younger than six is expected to live in the housing)); 24 Code of Federal Regulations Section 35.88;see Health and Safety Code Section 17920.10 (dwellings that contain lead hazards).
⁶³ 24 Code of Federal Regulations Section 35.92. See Appendix 5.
⁶⁴ Moskovitz et al., California Landlord-Tenant Practice, Section 1.29 (Cal. Cont. Ed. Bar 2006); 24 Code of Federal Regulations Sections 35.88, 35.92. The disclosure form is available at www.epa.gov/lead/pubs/lesr_eng.pdf and is reproduced in Appendix5.
⁶⁵Civil Code Section 54.1(b)(3)(A). See Examples of Unlawful Discrimination.
⁶⁶ Civil Code Section 54.1(b)(3)(A).
⁶⁷ Business and Professions Code Section 8538, Civil Code Section 1940.8.
⁶⁸ Brown, Warner and Portman, The California Landlord's Law Book, Vol. I: Rights & Responsibilities, pages 12/31-12/34 (NOLO Press 2005).
⁶⁹ Moskovitz et al., California Landlord-Tenant Practice, Section 1.29 (Cal. Cont. Ed. Bar, 2006). Health and Safety Code Sections 25249.5-25249.13.
⁷⁰ Civil Code Section 1940.7.5. Marijuana is not an illegal controlled substance for the purpose of this notice. This notice requirement was in effect from January 1, 2002 through December 31, 2005.
⁷¹ Health and Safety Code Sections 25400.10-25400.46, effective January 1, 2006.
⁷² Civil Code Section 1940.6.
⁷³ Civil Code Section 1940.7.
⁷⁴ Civil Code Section 1710.2.
⁷⁵ Government Code Section 66459; California Practice Guide, Landlord-Tenant, Paragraphs 5:313.5-5:313.9 Rutter Group, 2003). See Appendix 5 for the required language
⁷⁶ Civil Code Section 1950.5(b).
⁷⁷ Civil Code Section 1950.5(m); Portman and Brown, California Tenants' Rights, page 14/2 (NOLO Press 2005).
⁷⁸ Civil Code Section 1950.5(b).
⁷⁹ Civil Code Sections 1950.5(b), 1950.6.
⁸⁰ Civil Code Section 1950.5(b).
⁸¹ Civil Code Section 1950.5(b).
⁸² Civil Code Section 1950.5(c). These limitations do not apply to long-term leases of at least six months, in which advance payment of six months' rent (or more) may be charged. Civil Code Section 1940.5 sets the limits on security deposits when the tenant has a waterbed or water-filled furniture. The section also allows the landlord to charge a reasonable fee to cover the landlord's administrative costs.
⁸³ Civil Code Section 1950.5(c).
⁸⁴ Civil Code Section 1950.5(m).
⁸⁵ Civil Code Sections 1950.5(b),(e).
⁸⁶ Civil Code section 1950.5(o) (describes evidence that proves the existence and amount of a security deposit)
⁸⁷ In general, every person is responsible for damages sustained by someone else as a result of the person's carelessness. (Civil Code Section 1714.)
⁸⁸ See discussion of renter's insurance in Portman and Brown, California Tenants' Rights, pages 17/1-17/2 (NOLO Press 2005).
⁸⁹ Civil Code Section 1940.5(a).
⁹⁰ Brown, Warner and Portman, The California Landlord's Law Book, Vol. I: Rights & Responsibilities, page 4/3 and Appendix C (NOLO Press 2005); Civil Code Section 1954.52.
⁹¹ For example, see the discussions in Brown, Warner and Portman, The California Landlord's Law Book, Vol. I: Rights & Responsibilities, Appendix C (NOLO Press 2005) and California Practice Guide, Landlord-Tenant, Chapter 5 (Rutter Group 2005).

______________

Aaron Morris is a Partner with the law firm of Morris & Stone, LLP, located in Santa Ana, Orange County, California.  He can be reached at (714) 954-0700, or by email.  The practice areas of Morris & Stone include employment law (wrongful termination, sexual harassment, wage/overtime claims), business litigation (breach of contract, trade secret, partnership dissolution, unfair business practices, etc.), real estate and construction disputes, first amendment law, Internet law, discrimination claims, defamation suits, and legal malpractice.