California Landlord-Tenant Laws of 2003

Copyright © 2002 California Association of REALTORS®

A.   60-Day Termination Notice

Effective January 1, 2003 until January 1, 2006, a landlord must provide a month-to-month periodic tenant with an additional 30 days notice to terminate the tenancy if the tenant has lived in the dwelling for one year or more.  Thus, the notice requirement is now a total of 60 days, instead of 30 days.

This 60-day notice requirement has already been in effect since January 1, 2002 for the cities of Los Angeles, Santa Monica, and West Hollywood.  The Legislature has now extended the rule to apply to tenancies throughout the State of California.

The legislative intent of this law is to accommodate tenants who may need more time in this tight rental market to make new housing arrangements.  Hence, the 60-day notice requirement applies to landlords, whereas a tenant who terminates a periodic tenancy may do so with a 30-day notice.

There are certain situations where the 60-day notice is not required.  First, it does not apply if the landlord enters into a fixed-term lease, such as a one-year lease agreement.  Second, a 30-day notice is sufficient for tenants who have lived in the property for less than one year.  Third, landlords selling their properties may give a 30-day notice if all of the following six conditions are met:

1.   The owner has entered into a contract to sell the dwelling or unit to a bona fide purchaser for value;

2.   The buyer is a natural person(s);

3.   The buyer in good faith intends to live in the property for at least one year after termination of the tenancy;

4.   The termination notice is given within 120 days of opening escrow;

5.   The owner has established an escrow with a licensed escrow officer, or a licensed real estate broker; and

6.   The dwelling or unit is alienable separate from the title to any other dwelling unit.

Practice Tip : To terminate a tenancy, you may use C.A.R.’s standard form NTT entitled “Notice of Termination of Tenancy.”

Source:  California Senate Bill 1403 (Kuehl), amending California Civil Code section 1946.1.
 
B.   Landlord’s Entry Into Premises  

To better protect a tenant’s rights when a landlord enters the leased premises, effective January 1, 2003, landlords must give written notice when entering for certain reasons.  Under existing law, a landlord may enter the dwelling unit in the following situations:

1.   In case of emergency.

2.   To make necessary or agreed repairs, decorations, alterations, or improvements, supply necessary or agreed services, or exhibit the dwelling unit to prospective or actual purchasers, mortgages, tenants, workmen, or contractors.  Effective January 1, 2003, the landlord may also enter the premises to conduct a move-out inspection as discussed in section C below.

3.   When the tenant has abandoned or surrendered the premises.

4.   Pursuant to court order.

A landlord must now give the tenant reasonable notice in writing of the landlord’s intent to enter.  Entry must be during normal business hours, unless the tenant otherwise consents.  These written notice and business-hours-only requirements do not apply to cases of emergency, or when the tenant has abandoned or surrendered the premises. 

Twenty-four hours notice is presumed reasonable absent evidence to the contrary.  The written notice may be served in any of the following ways:

1. Personal delivery to the tenant;

2. Left with someone of suitable age and discretion at the premises;

3. Left on, near, or under the usual entry door in a manner that a reasonable person would discover the notice; or

4. Mailed to the tenant.  A notice mailed at least six days before an intended entry is presumed reasonable notice absent evidence to the contrary.

To be prudent, a landlord should serve the entry notice in one of four methods prescribed above.  However, these four methods are all described in the statute as permissible methods of service, and so, a court could arguably interpret the statutory language as allowing other reasonable methods of service as well.

As an exception to the written notice requirement, a landlord selling his or her property can give the notice of entry orally, in person, or by telephone, if all of the following conditions are met:

1.   The purpose of entry is to show the dwelling unit to prospective or actual purchasers.

2.   The landlord or his or her agent has notified the tenant in writing within 120 days of the oral notice that the property is for sale and that the landlord or agent may be contacting the tenant orally to show to prospective or actual purchasers.  Twenty-four hour notice is presumed reasonable absent evidence to the contrary.

3.   At the time of entry, the landlord or agent leaves written evidence of the entry inside the unit, such as his or her business card.

Source:  California Senate Bill 1403 (Kuehl), amending California Civil Code section 1954.

C.   Move-Out Inspection Rights 

Effective January 1, 2003, tenants have the right to request an inspection of the premises before they move out.  This new law gives tenants an opportunity to correct any identified deficiencies in the condition of the property, and thereby minimize deductions, if any, from their security deposits.

The new procedures for the move-out inspection are as follows:

1.   Providing Notice of Inspection Rights. Within a reasonable time after either the landlord or tenant gives notice to terminate the tenancy, or before the end of a fixed-lease term, the landlord must give the tenant written notice that the tenant may request an initial inspection, and may be present at that inspection.

Practice Tip: You may use C.A.R.’s standard form NOI entitled “Notice of Inspection Prior to Termination of Tenancy.”

2.   Scheduling the Inspection. If the tenant requests an inspection, the parties must try to schedule a mutually acceptable date and time.  If the tenant does not request an inspection, the landlord’s duties regarding the inspection are discharged.

3.   Providing 48-Hour Notice of Inspection. For a tenant requesting an inspection, the landlord must give at least 48 hours prior written notice of the date and time of the inspection, whether the parties agreed to a mutual time, or could not schedule a mutually acceptable time.

Practice Tip: You may use C.A.R.’s standard form FEHN entitled “48-Hour Notice of Inspection Prior to Termination of Tenancy.”

4.   Conducting the Inspection. The landlord or landlord’s agent must conduct the inspection at a reasonable time no earlier than two weeks before the end of the lease.  The landlord must proceed with the inspection whether the tenant is present or not, unless the tenant withdraws the request for inspection.

5.   Preparing the Inspection Statement. Based on the inspection, the landlord must prepare an itemized statement of repairs or cleaning that are proposed to be the basis of any deductions from the security deposit.  This statement must include the statutory language in California Civil Code sections 1950.5(b) and (d) which set forth, among other things, the items that may be properly deducted from the security deposit, including the following:

a.   Defaults in the payment of rent;
b.   Repairing damages, other than ordinary wear and tear, caused by the tenant or the tenant’s guest or licensee;
c.   Cleaning costs (see section E below for New Cleanliness Standard); and
d.   Future defaults by the tenant to restore, replace, or return personal property as authorized by the rental agreement.

Practice Tip: You may use C.A.R.’s standard form SOI entitled “Statement of Inspection Prior to Termination of Tenancy.”

6.   Delivering the Inspection Statement. The landlord must give the inspection statement to the tenant if the tenant is present for the inspection, or leave it inside the premises. 

7.   Providing an Opportunity to Correct. The tenant must be given an opportunity to avoid deductions from the security deposit by remedying any identified deficiencies in a manner consistent with the rental agreement.

This new law does not change the landlord’s existing duty to give the tenant, within three weeks after the tenant vacates the premises, an itemized statement of the final disposition of the security deposit.  The landlord may use the security deposit for the following purposes: (a) Items set forth in the inspection statement that the tenant failed to correct; (b) Items arising between completion of the inspection and termination of the tenancy; and (c) Items not identified during the inspection due to the presence of the tenant’s possessions.

Additional Considerations. It is unclear from the statutory language whether a landlord carrying out the move-out inspection procedures must also comply with the separate right-of-entry requirements (see section B above).  The move-out inspection rules are primarily set forth in California Civil Code section 1950.5(f).  However, the landlord’s right to enter the leased premises to conduct this move-out inspection has also been incorporated into the right-of-entry statute set forth in California Civil Code section 1954.  Hence, a prudent landlord should, for the time being, comply with both statutes until the courts or the Legislature clarifies the following issues:

1.    Waiver of 48-Hour Notice. Section 1950.5(f) allows waiver of the 48-hour notice of inspection if the waiver is in writing signed by both the landlord and tenant.  However, section 1954 independently requires the landlord to provide written notice of the landlord’s intent to enter to conduct a move-out inspection, and section 1954 does not explicitly allow waiver.  Thus, to be prudent, a landlord should provide written notice of an upcoming inspection, and refrain from invoking the right to waive that notice requirement until the courts or the Legislature clarifies this issue.

2.    Normal Business Hours. In the event that the tenant wants a move-out inspection but the parties cannot mutually agree to a date and time, the landlord must unilaterally set a date and time for the inspection, and notify the tenant accordingly.  A landlord should err, if necessary, on the side of caution by making sure that any unilaterally scheduled date and time are during “normal business hours” as required by section 1954.  There is no statutory definition for “normal business hours,” but some practitioners interpret it as excluding evenings and weekends.

3.    Methods of Service. Section 1950.5(f) does not provide any specific methods of serving the required notices.  However, because section 1950.5(f) has been incorporated into section 1954, a prudent landlord should deliver the inspection notices in one of the following ways: 

a.   Personal delivery to the tenant;
b.   Left with someone of suitable age and discretion at the premises;
c.   Left on, near, or under the usual entry door in a manner that a reasonable person would discover the notice; or
d.   Mailed to the tenant.  A notice mailed at least six days before an intended entry is presumed reasonable notice absent evidence to the contrary.

Source:  California Assembly Bill 2330 (Migden), amending California Civil Code section 1950.5(f) and 1954.

D.   New Definition for Security Deposit 

Effective January 1, 2003, there is a new definition for a “security deposit.”  A “security” used to be defined as any payment, fee, deposit or charge, including those imposed as an advance payment of rent.  Under the new law, a security deposit also includes any charges imposed at the beginning of the tenancy to reimburse the landlord for costs associated with processing a new tenant, other than application screening fees (discussed below).

This new definition is significant because a residential landlord may only collect a security deposit equal to two months of rent for unfurnished units, and three months of rent for furnished units.  For example, for an unfurnished residential property at $800 per month under a month-to-month agreement, the maximum amount that the landlord can collect up front is $2,400, or $800 rent for the first month, plus $1,600 as a security deposit.  If the landlord charges a $20 general processing fee, effective January 1, 2003, that $20 is considered as part of the $1,600 security deposit.

A landlord cannot try to collect more than the allowable security deposit by labeling the funds as for something else, such as a move-in fee, pet fee, cleaning fee, or last month’s rent.  There are, however, five exceptions to the rules limiting the amount of a security deposit:

1.   Application screening fees for actual, out-of-pocket costs for obtaining information about a rental application, such as credit reports and reference checks.  However, the screening fee cannot exceed $30 per applicant, plus annual CPI-adjustments after January 1, 1998.

2.   Advance payments of not less than six months of rent for residential leases with a term of six months or more.

3.   Separate fee agreements between the landlord and tenant for structural, decorative, furnishing, or other similar alterations, but not for cleaning or repairs.

4.   For waterbeds, an additional one-half of one month’s rent as a security deposit, plus a reasonable administrative fee.

5.   These security deposit limitations do not apply to commercial properties.

Source:  California Assembly Bill 2330 (Migden), amending California Civil Code section 1950.5(a).

E.   New Cleanliness Standard

For all tenancies beginning after January 1, 2003, a landlord incurring costs to clean the premises after a tenant moves out, may only deduct from the security deposit the cleaning cost “necessary to return the unit to the same level of cleanliness it was in at inception of the tenancy.”  For tenancies that began January 1, 2003 or earlier, the cleaning standard is more generally stated; that is, the landlord can deduct from the security deposit “the cleaning of the premises upon termination of the tenancy.”

Source:  California Assembly Bill 2330 (Migden), amending California Civil Code section 1950.5(b)(3).

F.   Bad Faith Claims of Security Deposits 

Under the previous law, a landlord who acted in bad faith in claiming or retaining a security deposit was subject to statutory damages up to $600, plus actual damages.  Effective January 1, 2003, this statutory penalty will be changed from $600 to twice the amount of the security deposit, plus actual damages.  A court may impose a statutory penalty against the landlord, even if the injured party does not specifically request such relief.  The landlord bears the burden of proving the reasonableness of the amount of security deposit claimed.

Source:  California Assembly Bill 2330 (Migden), amending California Civil Code section 1950.5(l).

See our Referral Directory (the "Good Guys" list) for a list of attourneys that specialize in this area.