State Rules and Regulations for California Rental Properties and Landlords

State laws governing California rental of residential property and landlord-tenant obligations and agreements are contained in Cal. Civ Code §§ 1940 – 1954. This article is designed to help both tenants and landlords better understand California Rental Law and their rights under the law.

Housing Discrimination and California Law

Under the Fair Housing Act, a federal law, it is illegal for landlords to discriminate against protected classes of people. These California rental laws are enforced by HUD. Landlords may not deny housing on the basis of:

• Race
• Nation of origin
• Religion
• Sex or gender
• Familial status
• Disability

There are two California State laws that also prohibit housing discrimination. Those are:

• The Fair Employment and Housing Act (FEHA)
• Unruh Civil Rights Act

These statutes are enforced by the Department of Fair Employment and Housing (DFEH). California interprets claims made against landlords more broadly than they would be at the federal level. In other words, California statutes are more inclusive when it comes to issues of discrimination.

FEHA specifically mentions that it is unlawful to discriminate on the basis of:

• Sexual orientation
• Ancestry
• Familial status
• Source of income

This is in addition to the protections offered by the Fair Housing Act.

The Unruh Act has been added to include personal beliefs, traits, or characteristics. This act prohibits landlords or sellers from:

• Refusing to sell, rent, or lease
• Refusing to negotiate the sale, rental, or lease
• Saying the house is not available when it is available
• Withholding housing accommodations
• Harassing a person for housing accommodations
• Canceling or terminating a sale for illegal reasons
• Segregating tenants on the basis of protected characteristics
• Placing an advertisement that indicates a discriminatory preference

While there is no specific statute governing how selections of tenants are to be made, the best practice for landlords is to select the first qualified tenant.

Landlords are legally allowed to prohibit smoking on the premises, but this must be contained within the lease.

Security Deposits and California Law

The majority of statutes related to security deposits are located in California Civil Code §§ 1950.5g. Under California law, they include:

• A security deposit cannot exceed a maximum of two months rent for unfurnished dwellings and three months rent for furnished dwellings.
• There are no statewide statutes concerning interest on security deposits. However, some municipalities within the state have rent control ordinances that do require landlords to pay interest on security deposits.

In addition, landlords may withhold security deposits for the following reasons:

• To secure unpaid rent
• To restore a rental unit to the level of cleanliness it was at when the renter moved in
• To repair damages caused by the tenant (does not include normal wear and tear)
• To repair or replace furnishings or other property belonging to the rental unit

If the total amount of damages exceeds $126, then a landlord must prepare an itemized list of damages to the tenant that includes receipts. If the landlord submits a bad-faith claim on a security deposit, the landlord may liable for up to two times the value of the deposit.

While there is no state statute regarding depositing the security deposit into a bank, it is still best practice for landlords renting in areas that require interest returned on deposits.

Leases, Rent, and Fees Under California Law

California statutes that relate to the payment of rent, lease agreements, and govern the exacting of fees related to late payments and other issues are spread across the California Civil Code.

Landlord restrictions and rights related to fees and payments are as follows:

• Most leases will state that rent is due at the beginning of the month. Unless there is a contract stating otherwise, California law assumes that rent will be paid by the end of the month. ( Code §§ 1947) and (Civ. Code §§ 1962).
• A landlord can increase rent on 30 days notice only if the increase is less than 10% of the lowest rental payment made by the renter in the last 12 months. If the landlord wishes to increase the rent more than 10% or more than 10% of the lowest monthly payment made within a year, the landlord must give the tenant 60 days notice.
• Landlords can charge tenants the first month’s rent before they occupy the apartment.
• If a tenant bounces a check, the landlord can charge the tenant a sum equal to the bank fee. The landlord can also charge a “service” fee of $25 for the first time and $35 each time thereafter.
• A landlord can charge late fees so long as he or she abides by rent control ordinances, the fees are reasonable, and the language is contained in the lease agreement. Landlords must warn tenants of late fees in order for the late fees to be enforceable.
• A landlord can charge a prospective tenant an application fee. However, the maximum allowable amount for an application is capped in accord with a Consumer Price Index. As such, this number changes each year.
• A landlord is required to allow a tenant at least one form of payment that is neither an electronic transfer of funds from a bank account or cash. If, however, a tenant bounces a check or stops payment on a money order, the landlord can force the tenant to pay in cash only.
• In the event that a lawsuit ensues from a rental arrangement, landlords are allowed to collect court and attorneys fees. The landlord, however, is also expected to make an honest effort to reduce damages to renter. This includes attempting to re-rent the property and not charging them excessively for an unoccupied rental unit.

Tenants rights and obligations are as follows:

Landlords rent apartments under the “implied warranty of habitability.” This means that they have certain responsibilities to the tenant. A tenant may withhold rent until these responsibilities are met. Habitability includes a tenant’s right to essential services such as water, heat, and electricity. In addition, a tenant can repair damages to the rental property related to habitability and remove the cost from the rent. The cost, however, cannot exceed the value of one month’s rent.

Notices, Entry of Residence, and Eviction Under California Law

This section covers a landlord’s obligations when terminating a rental agreement, initiating an eviction, or entering a tenant’s residence.

Terminating a tenancy:

• A tenancy can be terminated without notice if the lease runs out. However, it is best practice for a landlord to inform the tenants that currently occupy the rental unit that they would prefer to have new tenants as opposed to continuing their rental arrangement. The landlord should inform the tenants two months prior to the lease running out.
• If all of the tenants occupying the rental property have lived there for a year or longer, then the landlord is required to give the tenants 60 days notice.
• If the rental agreement is month-to-month, then the landlord is required to give 30 days notice, while the tenant need only give seven days notice.

Landlords are only allowed to terminate a tenancy in the event that a property is sold when the lease is month-to-month. They still must give the tenant 30 days notice. In addition, there are other rules and regulations that govern the process of terminating a tenancy when the property has been sold. Those include:

• The landlord has sold the rental unit to someone who intends to occupy it for the next year.
• The landlord has opened escrow with a licensed real estate broker or escrow agent.
• The 30-day notice must have come no later than 120 days after opening escrow.
• The rental unit can be sold separately from other rental units occupying the same building. For instance, a condominium or a house are examples of these kinds of units.

Notice of entry by landlord into a rented property:

• If a landlord wants to conduct an inspection when a tenant moves out, the or she must give the tenant 48 hours notice.
• If a landlord needs to conduct repairs or any other reason, he or she must give the tenants 24 hours notice before entering the property.
• A landlord cannot enter the rental property during a tenant’s extended absence.
• A landlord may enter the rental property without any notice given in the event of an emergency. 

Eviction Statutes:

• In the event that a tenant does not pay rent owed, the landlord must give the tenant a three-day notice before filing for an eviction.
• If a tenant has violated some term of the lease, the landlord can give the tenant a three-day notice to remedy the situation. If the tenant does not remedy the situation within three days, the landlord can file for an eviction.
• A landlord can summarily declare a tenant in violation of the lease for subletting a rental unit without permission. They can also declare a tenant in violation of a lease if the tenant is conducting illegal activities on the premises. The landlord can then issue a three-day notice.

However, there are some restrictions on what a landlord can do during eviction proceedings. A landlord may not:

• Lock a tenant out of the rental unit
• Shut off utilities in the rental unit

Landlord Disclosures Under California Law

Under California rental law, landlords are required to disclose certain conditions or issues to a tenant prior to their occupying of the rental unit.

• Bedbugs or other pests: A landlord cannot show, rent, or lease a vacant rental unit that contains bedbugs. In addition, landlords must provide a written notice to prospective tenants concerning bedbugs. This notice must include a procedure for reporting bedbugs to the landlord. Landlords must eradicate any bedbug infestation. This includes conducting followup treatments on infected areas until the infestation has been eliminated. Landlords must notify tenants of the infestation within two days of receiving a written report concerning a pest control expert’s findings. Finally, if a landlord is having the premises treated for any other pests, the landlord must disclose to the tenant the pests and the chemicals used to eradicate the infestation.
• Utilities: When a tenant’s utilities are connected to common areas or other rental units in a building, the landlord must disclose this information to the tenant. The landlord is expected to explain how the costs are divided among tenants.
• Mold: As governed by Health and Safety Codes, landlords must disclose knowledge of any mold on the premises that poses a threat to occupants.
• Pending demolishment: A landlord must notify a tenant if a rental unit is set to be demolished before taking their money.

Domestic Violence Statutes

A tenant who is the victim of domestic violence may terminate a lease agreement within 14 days. A landlord cannot refuse to renew a lease or end a tenancy based on the knowledge that the occupant is a victim of sexual assault, domestic violence, or stalking. A victim of these crimes can demand that a landlord change the locks on a rental unit. The landlord must comply with that request.

The landlord, however, is entitled to proof that the resident is a domestic violence, sexual assault, or stalking victim. (Civ. Code §§ 1941.5, 1941.6, 1941.7)

Other Disclosures

The landlord must inform a tenant of ordinances surrounding sex offenders and leases are required to contain specific language under Megan’s Law. Landlords must also disclose the location of ordinances in a neighborhood.

Retaliation

Under California rental laws, landlords are prohibited from retaliating against a tenant who files a complaint against them. This includes:

• Raising rent
• Terminating lease
• Reducing services
• Bringing a cause of action

The courts will assume that a landlord has acted in a retaliatory manner if he or she does any of the aforementioned with 180 days of a tenant filing a complaint.

Business Licenses for Landlords

There is no California statute that requires landlords to have business licenses. However, some cities do require landlords to have business licenses if they rent out a property that they are not also residing in.