QUESTION: I live in Lake Forest in a condominium, but I am considering relocating out of state. Since small condos like mine are not selling too well now, I am thinking about renting it out to cover expenses, like the mortgage and condo association dues.
I have heard frightening horror stories about landlord/tenant squabbles and lawsuits. In fact, the unit next to mine is now a rental and the first two renters were horrible neighbors.
The second renter didn't pay the rent and caused the owner to have to evict him. The renter lost the case, but left raw chicken behind the dryer in the utility room when he left.
It seems to me that being informed would be a good way to begin. Do you have a "starter kit" for new landlords? Any information or advice you can provide would be appreciated.
ANSWER: Information, it seems, is the key to success in today's business world. And that's just as valid in the rental housing business as any other.
Membership in an apartment association, like the Apartment Assn. of Orange County (AAOC), is your best, first step toward avoiding problems like the foul fowl behind the dryer. Owners in Los Angeles County would contact the Apartment Assn. of Greater Los Angeles (AAGLA).
The cost of AAOC membership is nominal: $89 for the first year for a one-unit owner, and the benefits often can save you more money than the cost of the dues. Among the most valuable are low-cost tenant screening services.
Thorough tenant screening, before renting the unit, is one of the best precautions you can make to protect your investment. While most renters are honest, responsible people, there are a few bad eggs out there who can cost you thousands in lost rent, legal fees and damages, unless you never rent to them in the first place.
Comprehensive tenant screening usually will reveal past transgressions so you can avoid these problems.
I am having an information packet mailed to you that more fully explains how to avoid rental problems and the benefits of AAOC. For more information about AAOC, call (714) 638-5550. For AAGLA membership information, call (213) 384-4131.
Interest Sometimes Paid on Security Deposits
Q: Three years ago, I moved to Manhattan Beach from Boston, where I had rented an apartment for five years. When I left my Boston apartment, my full security deposit was refunded to me plus the accrued interest for five years.
That is the law in Massachusetts. I am wondering whether California has a similar law. If so, who determines the interest rate?
A: There is no state law in California requiring housing providers to pay interest on security deposits. However, some cities, including the city of Los Angeles, have local ordinances that require interest payments on some security deposits. For instance, the L.A. law only applies to rent-controlled properties in the city.
The interest rate is determined by the city. In the city of L.A. that rate is 5%. According to a representative from the Manhattan Beach city clerk's office, the city follows state law with respect to security deposits, meaning no interest payments are required in Manhattan Beach.
Demand of Lump-Sum Payment Is Illegal
Q: I have lived in the same Los Angeles apartment for the past 22 years. In October, I wrote to the management company seeking payment of the 5% interest on my security deposit as required by law. The law, which became effective in November 1990, requires payment of the interest at least every five years, or in November 1995.
I got a letter back from the management company requesting a payment of $168.30 to bring my deposit equal to my current rent of $520. The current deposit is $351.70. The letter says they will pay me the interest only after I send them a check.
While the management company increased the rent each year in accordance with the rent control law, it did not increase the deposit.
I don't think I should be penalized because of the company's error in not increasing the deposit when it increased the rent. Is it legal for the management company to request this lump-sum payment at this time?
A: According to the city of L.A.'s rent-control law, the security deposit and last month's rent may only be increased at the same time, and by the same amount, as the monthly rent. That is 3% at this time. The request for the lump-sum payment is not legal.
As for the interest payment, the landlord may pay it monthly, yearly or ". . . in no event less than once every five years." He also may opt to give you a rent credit rather than a check for the interest payment.
You should make the management company aware of these laws. If it still won't pay up, you may sue in Small Claims Court.
A Survival Guide for Renters
"The Best of Apartment Life: How to Survive Apartment Living and Ownership," a 154-page compilation of columns printed in The Times over the past few years, provides answers to 85 of the most frequently asked questions about apartment living, managing and ownership.
The 23 chapters include "Nightmare on Elm Street: Tenant Screening," "Water, Water Everywhere: Rules for Pools" and "When the Party's Over: All About Moving Out."
The book sells for $12.75, which includes tax, postage and packaging. Checks, made payable to the Apartment Assn. of Greater Los Angeles, should be sent to AAGLA, c/o Kevin Postema, 621 S. Westmoreland Ave., Los Angeles, CA 90005. Allow two weeks for delivery.
Postema is the editor of Apartment Age magazine, a publication of AAGLA, an apartment owners' service group. Mail your questions on any aspect of apartment living to AAGLA, 12012 Wilshire Blvd., Los Angeles, CA 90025.