Welcome to Apartment Building Trader

Question:

An applicant and his wife signed a rental agreement for a one- year lease yesterday. Today his wife decided she does not want to move here. I have a $2,000.00 deposit from him. Am I obligated to refund it? I informed him that I would make every attempt to rent the home and would refund any remaining amount beyond the daily rent deducted from his deposit. Is this legal?

Answer:

There is no “cooling off” period in real estate. If you sign a lease, you are responsible for the full term of the lease. A landlord must use his best efforts to migrate the tenant’s loses by trying to re-let the premises. You should send a security deposit letter indicating that the tenants owe for the full term of the lease and you will be using their entire deposit. You should explain that their liability would be lessened, when a new tenant is found.

Author
~Dennis Block: Source

Question:

I have obtained a duplex through a foreclosure proceeding. The property is located in Los Angeles and would be subject to rent control. The tenants are paying very low rent. Since I took ownership through a foreclosure, am I subject to rent control limitations? I would like to raise the rent to market level.

Answer:

Unfortunately the tenants are protected under rent control. You can only raise the rent in accordance with rent ordinance. I have seen cases where an owner, who is going through foreclosure, purposefully make a “sweetheart” deal with a tenant. If you are buying a foreclosure in a rent control area, you should be very cautious.

Author
~Dennis Block: Source

Question:

My property is in the city of Los Angeles and is subject to rent control. I know that the rent increase for July 1, 2007 was 5%. Has the city decided what the increase will be for July 1, 2008?

Answer:

Yes they have. The City, in their ultimate wisdom, has decided to lower the rent increase to 3% effective July 1, 2008. This decision was made behind closed doors without any discussion from the apartment industry.

Author
~Dennis Block: Source

Question:

I plan on renovating my building, which is under rent control for the city of Los Angeles. Is it proper grounds to request that my tenants vacate? The building is really dilapidated and this renovation is quite necessary. I need to upgrade all the plumbing, electrical and roofing. The heating system must be replaced in addition to painting and replacing old appliances. This work cannot be performed with tenants in possession.

Answer:

Incredulously, that is not grounds for eviction for the City of Los Angeles. The City, by its actions, is encouraging buildings to become degraded. You can ask the tenants to leave for a temporary period of time. You would have to apply under the program entitled, “Tenant Habitability Plan”. You would have to pay for your tenants to be relocated. This would entail paying for alternate housing and other accommodations. After the tenants return, you would have to apply for a capital improvement rent increase. This is based on the cost of your renovation, amortized over a five-year period and divided between the units in the building. There is limitation to the amount of this increase. Based on these criteria, there is not an economic incentive for a landlord to upgrade.

Author
~Dennis Block: Source

By Kevin Postema,
October 14, 2007

Question:
I live in Los Angeles, and I always have paid my rent on time. I just got a notice from my landlord that he had sent me a late rent notification last March for paying that month’s rent late. The notice said that I would be charged a late fee amounting to 5% of the March rent. He charged me the fee even though I don’t believe the rent was late. For the record, I have proof that my rent check cleared the bank on March 2.

I would like to know what a landlord is allowed to charge a tenant in late fees for a late rent check. Can he charge 5%? Is that 5% per day, which would be 60% of the rent if one was a month late in paying the rent?

Is there no grace period required by law for paying the rent a day or two late?

Answer:
A check cashed on the second is not necessarily received on the first. Your rent may have been received and cashed on the second. A landlord can charge a 5% late fee for a late rent payment if it is written into the lease.

Although the law does not specify precisely how much landlords can charge for late fees, 5% per day would be excessive. In our current economy, up to 6% per month is allowed by most courts. In the late ’70s, when we had double-digit inflation, most courts allowed late fees of up to 10%. Generally, late fees have to bear some rational relationship to the costs one incurs as a result of them.

There is nothing in the law requiring a grace period for late rent payments. They are strictly at the discretion of the owner. Many renters are confused about this because many landlords voluntarily give their tenants grace periods, even writing them into their leases or rental agreements.

Kevin Postema is the editor of Apartment Age magazine, a publication of the Apartment Assn. of Greater Los Angeles, an apartment owners’ service group. Send letters to aptlifeaagla@aol.com

By Kevin Postema,
October 14, 2007

Question:
We rent a single-family home in West Hills on a one-year lease that ends Nov. 14. The owner of the house is not renewing the lease, opting to let it automatically convert to a month-to-month rental agreement. He also is raising the rent at the expiration of the lease and has given notice of the raise, effective Dec. 14.

We have decided to move rather than pay the increase, and we will give him a 30-day notice to quit, effective Dec. 14, before the rent increase kicks in.

We’ve done many repairs over the years, and the place is now in better shape than it was when we moved in. We would like to get our $6,000 security deposit refunded as soon as possible. We’ve left the owner about 20 voice mails, but he is not returning our calls. Should we let the 30 days run out and wait for our security-deposit refund, or should we do something now?

Answer:
State law requires the owners of residential rental property to refund security deposits to renters within three weeks (21 days) after they move out of their rentals. There is no law requiring the owner to refund the security deposit before the renters move out or before the 21 days have elapsed.

You say in your letter that the house is now in better shape than when you moved in. If that’s true, and there are no cleaning fees, unpaid rent or damages that exceed “normal wear and tear,” you should get a full refund of your deposit by Jan. 4, within the legally required, three-week time frame. If you do not get the refund by Jan. 4 — or a partial refund and a written explanation of how some or all of it was used to pay for damages, cleaning or unpaid rent, the things for which the owner can deduct money from the deposit — you can send me a letter asking about the refund, or if you can afford it, have a lawyer send him a letter on his or her letterhead, which tends to be more effective.

If all else fails, as a last resort, you can sue the owner in Small Claims Court for up to $7,500.

Kevin Postema is the editor of Apartment Age magazine, a publication of the Apartment Assn. of Greater Los Angeles, an apartment owners’ service group. Send letters to aptlifeaagla@aol.com

Is it possible to utilize a 1031 exchange on a vacation home?

This may come as a surprise to most sellers but the answer to the above question is probably “yes”.

Thanks to a new tax court decision (Barry E. Moore v. Commissioner, T.C. Memo 2007-134) you may now be able to defer paying capital gains by implementing a 1031 exchange on your vacation home. As long as you, the seller taxpayer, can verify that your primary objective was to use the relinquished property primarily for investment and only incidental personal use (generally less than 14 days a year or less than 10% of the time rented), you may be eligible for this new program.

It is crucial that you seek advice from your tax advisor to properly plan your exchange.

If you would like further information please feel free to ask your apartment building trader advisor!

Posted By
Stephanie Moskowitz
Stewart Title
525 N. Brand Blvd
Glendale, CA 91203
(818) 486-7745

Question:
My tenant is clogging up the toilet by throwing in paper towels and foreign objects. Last time my plumber discoverd a scissor in the plumbing pipe. I know which tenant is clogging the plumbing pipe. How can I prove it is her as the tenants all share the same sewage pipe?

Answer:
The court system works on that which you can prove. If you cannot determine which tenant is causing the blockage, then you cannot proceed.

Author
~Dennis Block: Source