2014 New Smoke Detector Law for Landlords

Starting January 1, 2014, Health and Safety Code 13114 and 13113.7 states that battery operated smoke detectors must be manufactured with non-removable, non-replaceable, 10-year life batteries and several other features.  All smoke alarms installed in residential rental units must be on the State Fire Marshal’s list of approved devices. In order to be on the list of approved devices, the smoke detector must:

1.     Display the date of manufacture on the device

2.     Provide a place on the device where the date of installation can be written

3.     Incorporate a hush feature

4.     Incorporate an end-of-life feature that provides notice that the device needs to be replaced

5.     Contain a non-replaceable, non-removable battery that is capable of powering the smoke alarm for a minimum of 10 years (this last requirement applies only if the device is battery operated)

Currently only landlords of multi-unit dwellings are responsible for testing and maintaining smoke detectors. Starting January 1^st, landlords of both single family and multi-family units will be responsible for annual testing and maintaining smoke detectors in all units.

In order to facilitate the owner’s obligation to test and maintain the devices, owners or their agents are permitted to enter the unit for the purposes of installing, repairing, testing, and/or maintaining the devices. However, owners are required to provide tenants with reasonable notice, in writing, of their intent to enter the unit prior to going in. Reasonable notice is generally considered to be 24 hours in advance of entering.

When performing your next annual test, rather than replacing batteries, it may be wise to replace the devices with the new 10-year battery equipped detectors.  Also, when putting a new tenant into a unit, take the opportunity to update the smoke detectors.

If you apply for any type of building permit for work exceeding $1,000, you will need to demonstrate that your smoke detectors are on the Fire Marshalls list of approved devices. Failure to comply with the law can result in a fine of $200 per violation.   

Landlord Tip: Security Deposits that include Last Month’s Rent

In my November 1, 2012 blog entry we discussed the importance of adjusting your rents annually to current market levels.  Over the past 12 months rents throughout the Bay Area have risen dramatically. Take note, do some research and adjust your rents accordingly at the next available opportunity.

This raises an interesting question if you have labeled a portion of the security deposit as the last month’s rent.  If a long term tenant gives notice to move out and has paid the last month’s rent when he moved in, can you charge the tenant for the difference between the initial rent amount and the current rent amount?

This is a grey area of the law. If your lease or rental agreement labels part of the upfront payment as "last month's rent", then the tenant has a strong argument that he paid the last month's rent when he moved in.

To avoid this situation change your lease or rental agreement to read "security for last month's rent". This will give you a strong argument that the tenant has not actually paid the last month's rent, but has only provided security for it, giving you a case for collecting the difference between the deposited amount and the current rent amount. 

Maximize Your Rent Income by Specializing in the 65+ Market

The amount you can charge for rent is pretty much regulated by the supply and the demand for housing in your particular neighborhood. Perhaps the rent you can charge for your fourplex units is limited because of some large apartment complexes nearby. 

Consider tailoring your units where feasible,and/or buying units  to serve the ever growing 65 and older crowd. Here you will be moving into a market of great demand and limited supply.

The U.S. 65-and-older population will more than double by 2050 to nearly 90 million*, growing at a rate far faster than any other age group. According to Census data, by 2050, one in five Americans will be over the age of 65. Some estimates put the figure even higher.

A recent study** showed that older Americans prefer housing that is close to resources such as shopping centers and medical facilities. The top five home amenities they prefer are:

1. A washer and dryer within the apartment
2. Adequate storage space
3. Windows that easily open
4. Being on the ground floor
5. A thermostat that is easy to use.

* National Housing Conference

** National Association of Home Builders and the Metlife Mature Market Institute

Pet Friendly Rental or Not?

Many landlords allow pets, as pet owners are willing to pay an extra monthly pet fee on top of the rent. In addition, turnover is typically lower (even when rents are raised) because pet owners have fewer options.

However, allowing pets on your property can pose risks, such as additional property damage or issues with other tenants. If you allow pets, require your tenants, even those without pets, to sign a “pet agreement” that has been designed to minimize your risks.

Your pet agreement should advise the tenant that other tenants may have pets and therefore their presence and normal, reasonable behavior shall be tolerated. Your pet agreement should then define the type and quantity of pets allowed, pet related rules and pet fees.

Also, check you’re your insurance agent and make sure your landlord insurance covers liability claims associated with a tenant’s pet.

Here are typical items that you may want to cover in your pet policy:

1.     Pets are limited to standard domestic animals suited for urban living, such as dogs, cats, rodents, fish and birds. You should specify the exact animals you will allow and how many of each. For example, you may only have 1 dog or cat; or a maximum of 2 hamsters; or no more than 2 birds.

2.     You can ban dogs on the dangerous breeds list. This list will vary so check with your insurance company. Dangerous breeds generally include Pit Bulls, Rottweilers, Doberman Pinschers, Chows, Akitas, Alaskan Malamutes, German Shepherds, Siberian Huskies, St. Bernard’s, Wolf Hybrids, and a mix of any of the above.

3.     You can set a weight limit, for example, dogs must be no more than 20 pounds.

4.     All pets will have the required shots, licenses and tags, including name tags. Check with your state to determine the vaccines and licenses required locally.

5.     All dogs will be on a leash at all times outside of the apartment.

6.     Other animals, such as birds and hamsters, will be appropriately caged.

7.     The tenant is responsible for cleaning up any “accidents” their pet has left inside the apartment, inside the building or outdoors.

8.     Tenants cannot take in animals from friends or family. Make it clear you have to approve any animal that will live in the apartment.

9.     Tenant shall be liable for any damage or injury caused by the pet(s). Tenant agrees to indemnify, hold harmless, and defend against liability, judgments, expense, or claims by third parties for injury to a person or damage to property caused by tenant’s pet(s).

10.  If any part of the pet agreement is violated, or the pet becomes a nuisance or a hazard to others, property management can require the pet be removed or can terminate tenancy. If only the pet is removed, this will have no effect on the validity of the signed lease agreement, which the tenant will still have to adhere to.

11.  State that you have the right to make changes to the pet agreement as long as you give proper notice, at least 30 days. This protects you in case, for example, you decide not to allow dogs in the future.

12.  The property owner should ask for and be provided with the names of veterinarians and substitute guardians in the event of an emergency.

By defining your pet policy in writing from the very beginning, your tenants will understand what is expected of them as pet owners, as well as the consequences if they do not follow the rules.

*You should consult legal counsel to determine the appropriate wording for your pet policy.

What’s Going on Underneath Your Property?

When was the last time you had the crawl space under your investment properties inspected? For most property owners it was when the property was purchased. If a tenant has a leak in an upstairs bathroom they will surely let you know as the water will eventually be seeping through the ceiling below. But, what about the first floor bathrooms and kitchen? Leaks in water lines, drain pipe, toilets or tubs can go undetected for years.

A minor plumbing leak under your home may cost a few hundred dollars to repair. However, should it go undetected, it can cause thousands of dollars of damage to your property.  Moist wood and soil in the cool dark area is an ideal breeding ground for subterranean termites and wood destroying fungus. Both will cause significant deterioration of your sub-floor, girders and joists.

An easy inexpensive solution is to schedule a Wood Destroying Pest and Organisms Inspection, also known as a termite inspection, once every 2-3 years. An inspection for a duplex cost less than $200. The inspector will check the interior of your bathrooms, kitchen, laundry room, and water heater closet for leaking plumbing, deteriorated caulking and signs water damaged walls and floors. He will check all your windows and ceilings for signs water penetration. He will examine the entire perimeter of your crawl space and under the bathrooms and kitchen for leaks, fungus damage and dry rot. After the inspection you will receive a comprehensive report that identifies active wood destroying problems (section 1 items) and preventative maintenance recommendations (section 2 items). Most inspection companies will also provide an estimate for repairing the section 1 items.

At less than $200 for a duplex every 2-3 years, this inspection is a bargain. Early detection and timely repairing of water leaks will prevent serious structural damage to your property, saving you thousands of dollars. If you are interested in having your property inspected I will be happy to recommend a professional.