- Always treat your rentals as a business, because they are a business.
- Keep records as if your rentals are a business.
- Always use an application that is at least three pages long, and MUST include three prior landlords, with their full contact information. If you cannot contact even one, then do NOT rent to this individual; check for gaps in dates.
- Obtain a (complete, not summary) Credit Check from each and every applicant, with applicant's signed permission. Applicant should give you a check for $40.64 to pay for the Credit/Criminal Checks.
Inform every applicant that they have a right to make a written request for a copy of their Credit Report, written request!
- Never allow an applicant to obtain their credit report and give it to you. Any tenant who suggests this has something to hide, and they will skillfully alter the credit report so that it looks complimentary to them.
- Keep all Credit Reports for five (5) years.
- Secure Credit Reports, two keys between anyone else and the reports.
- Ask every applicant to authorize you, by their signature, to get a Criminal Check. Applicants who have bad criminal histories, drugs, et cetera, will not usually sign the authorization.
- Be sure that you understand all of the information on the credit and criminal reports. If you do not understand, ask an attorney to review it for you.
- Never make an exception for a friend or relative, they will take advantage of your good nature. They will even tell you that you are a bad person when you evict them for not paying their rent, or not leaving when they had agreed to leave by a certain date. Everyone has a hard luck story.
- Photocopy the applicant's California Driver License or Identification Card. If they do not have one, then they are hiding something. Some attorneys will tell you that copying the identification may give rise to an inference of potential age discrimination. That is hog wash. The Credit Report will have the birth date on it.
- You have a right to know who it is to whom you are giving your rental unit. Car rental agencies will not give you a $5,000 car without identification. Why would you give your million dollar rental unit to an unknown person?
- Establish a fixed list of standards below which you will not accept an applicant, do NOT make exceptions for friends, relatives, or the needy. Criteria may be minimum FICA number, no UDs, no felony convictions. This list may vary from building to building due to different neighbor standards; but the same and only one list should be used for any one building. You may add to or delete from these lists from year to year, but you should always have a written list for any date.
- Currently, you may NOT reject a sex offender based upon information learned from Megan's list, on line. You can and should reject a sex offender, if you learn about it from elsewhere. Be sure that your application has a question on it which reads: "Is there any reason, law, or court order which would prevent you from being permitted to live here?" That way, if they answer, no, and you later find that they are a qualifying registered sex offender, you can evict them for lying on their application, and for violation of law.
- Make a record of WHY you rejected each rejected Applicant, to insure against civil rights claims.
- Carry adequate insurance from a California "admitted" carrier, including wrongful eviction defense rider.
a. If admitted carrier goes bankrupt, CIGA will take over policy defense
and payments.
b. If a non-admitted insurer goes bankrupt, YOU assume costs of defense
and payments.
- Use a San Francisco specific lease, with addenda, no exceptions to signed lease. Never make an exception for a friend or relative.
- Use San Francisco specific forms, Notices, et cetera.
- Always take deposit equal to twice the monthly rental, NOT first and last. But, rather, an amount equal to twice the monthly rental amount. Plus, get the first month's rent, NOT as a deposit item.
- Always use a move-in checklist which is at least two pages long. As you check the boxes, have the tenant initial each page. Preferably, take pictures of each room and have the tenant sign and date the backs of each, when you receive the prints.
- Accept only personal checks. Never accept a money order, cashiers check, or cash in payment of rent.
a. If you do not do this, the renter will leave owing you money that you may
never collect.
b. If a renter does not have and maintain a checking account, the renter will not
have enough money to make rent payments.
c. Photocopy every check that you receive from a tenant. Tenants will use
several checking accounts when they wish to hide their money from you
and from a judgment against them.
- Never give your personal nor business check to a tenant. Always use a cashiers check or money order to pay deposit refunds and annual deposit interest. If you give your check to tenants, they can clone your bank account and steal your identity. You may deduct the cost of a cashiers check from any refunds, but you must show that in an accounting.
- Always serve or post and mail a 3 Day Notice to Pay or Quit on the 2nd of each and every month for each and every tenant who has not paid by the 1st (or the day after due date, if not the 1st).
- It is very much preferable for all of your rental units to have rent due on the 1st of every month. This limits your paperwork. Anyonewho cannot pay by the 1st, and must wait for their payday after the 1st, will eventually be unable to pay, and you will have to evict them.
- Always mail move-out deposit refund 16 days after the tenant vacates so that it will arrive by the 21st day after departure. Provide an accounting and receipts for any deductions from deposit. If the work needed has not been done, include a copy of a contractor's estimate. The Rent Board has a pamphlet describing what repairs or maintenance or cleaning may not be deducted; but are, rather, considered to be "fair war and tear". Use it.
- All communications with tenants must be in writing. Never say, "That's okay" or "I'll take care of that." When tenants ask you for something, in person, tell then to write to you so that you do not "forget it", or say your lawyer makes you do it that way.
- Use of a "guarantor" is very risky. Never accept a guarantor who lives outside of California. If the tenant defaults, you will have a near impossible chore trying to get money from an out-of-state guarantor.
- Never make rent reductions, not even for a single month. They may become the new Base Rent, and the SF will not allow you to restore the prior rent rate.
- If a tenant advances money for you or makes repairs, or makes a purchase for the rental unit (all of which are bad ideas from the beginning), provide them with a reimbursement cashiers check; NOT ever a rent reduction not even for one month.
- Give each new tenant a copy of each and every pamphlet and notice required by law. Have them sign a receipt that they received them. Penalties could be and have been $10,000 for each notice missing.
- Raise the rent every year, in the amount allowed by the Rent Board. Send the increase notice by mail 35 days before the anniversary date.
- Have all tenants who move in at the same time sign the lease. You cannot use Regulation 6.14 to raise the rent to market value until all of the initial tenants have move out.
- Subsequent tenants should NOT be added to lease, but must be given a 6.14 notice.
- Subsequent (substitute) tenants must inform you, in writing, of their intention to move in before or not later than 14 days after they move in. They must complete and sign an application and consent for Credit/Criminal Checks, and you must decide if they are acceptable substitute tenants 14 days after you receive their notice.
- If you have a Certificate of Occupancy, and pay rental business taxes to the City and County of San Francisco, be sure to collect the pass-through to your tenants; allowable amounts usually published by the Rent Board in November.
- Call the police for any instance of a disturbance or other appropriate situation, involving any of your tenants, or your rental property; whether of your own observation or when reported by another tenant. Ask for an Incident number and request a copy of the police report or field incident/response report.
- Call the fire department whenever there is a chemical odor, i.e. illegal drug manufacture; whether of your own observation or when reported by another tenant. Request and obtain a report from the fire department.
- For each and every incident, write a letter to the involved tenant(s), addressed individually, for each such police or fire department response; and be sure to include that repeat occurrences or failure to correct the breach of covenant will result in eviction. Start eviction after the second or third such incident; sooner if there is a danger to your other tenants.
- When hiring a contractor to do work on your rental property, check that contractor's license with the Contractors State License Board. If the web site states that the contractor is exempt from workers compensation insurance because he has no employees, then the contractor must do ALL of the work himself, with no helper nor assistant. If the contractor brings anyone on site without workers compensation insurance, you become the insurance company for that helper.
- Ask for and receive a Certificate of Insurance for both liability and workers compensation insurance before allowing any contractor to enter your property to perform any work beyond an estimate.
- If you rent to smokers or pet owners, you will have clean up costs that you will not be able to recover, ever.
- Smokers can burn your rental building to the ground. Can you afford to rebuild? What is your deductible? You have a right to prohibit smoking anywhere and everywhere on the premises, inside and outside.
- If a pet on the premises is known to be dangerous, any person injured by that pet can sue you for injuries.
- Smokers can injure other tenants and those other tenants can sue you for their injuries from being exposed to the smoker's smoke.
- If you use an Ellis Act or Owner Move In provision to evict tenants, and place the rental unit(s) back on the rental market in less than 3 years, send such notification to the displaced tenants, at their last known address.
- Have a qualified attorney review all Home Owners Association (HOA) Covenants, Conditions and Restrictions (CC&Rs).
- Remember, if any person stays in your rental unit for even one day, and pays you just one dollar, according to San Francisco law, you are required to provide a rental unit to that person or those persons for the rest of their lives, even if they live longer than you do; even if the building is destroyed by fire or earthquake. Be careful before you allow anyone to occupy your valuable investment.
- Bad tenants or problems are like toothaches, they do not get better if you ignore them. Act promptly.
- Remember, too, no good deed goes unpunished.
- Always change the lock/keying for each rental unit which is vacated, either voluntarily or by eviction.
This is NOT legal advice. No legal advice can be given until all of the facts concerning a particular situation are discussed, and all documents examined.
