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Not All Rent Deposits Earn Interest


Question: I heard from a friend who manages an apartment building that in California, I am entitled to a 5% simple interest kickback for a deposit that has been held for more than five years.

I have lived at the Studio Colony, situated in Studio City, for 13 years, but the property managers here say that the law doesn't apply. The property is not under rent control. Who is right?

Answer: Assuming that the property is not under rent control, the property managers are right. The law you are referring to applies only to rent-controlled properties in the city of Los Angeles. It does not apply statewide.

Under the city law, tenants must live in the apartment for a minimum of one year to qualify for the interest payments (not kickbacks). Interest accrues at 5% simple interest per year and must be paid every five years; owners have the option of issuing rent credits to renters in lieu of payments.

The 5% interest rate is scheduled to be reduced in the near future pursuant to a City Council motion directing the city attorney's office to revise the ordinance so that it is more in keeping with the interest rates apartment owners receive from banks.

Tenants Add Relatives, Delay Rent Payments

Q: I manage a small apartment building in West L.A. Recently, the owner and I found out that one of the long-term tenants has seven people living in a small two-bedroom apartment. The lease was signed with only two tenants.

Since they moved into the apartment, they have had two children, whom we accepted without raising the rent. Now, the father-in-law, brother-in-law and sister-in-law have all moved into the apartment. The apartment needs more maintenance and has more plumbing problems than ever, and they have four cars and lots of junk that takes up storage space in our building. I also have to call them every month to remind them that the rent is due.

We have overlooked the situation for some time now in the hopes that the additional people would eventually leave on their own, but they haven't, and it has become too much for us and the other tenants to take. What is our position in removing these people from the building?

A: Your letter doesn't say whether the property is covered by the city of Los Angeles' rent control law. That makes a big difference in how you evict the tenants, if you can evict them at all.

If the property is not under rent control, you may serve the tenants with a 30-day notice to vacate without citing any cause for asking them to leave. If they don't move at the end of the 30 days, you may have to evict them to get them out.

If the tenants are under rent control, you must cite one of the 10 reasons listed in the city's Just Cause Eviction section in order to evict them.

One of the reasons for which you may evict renters under the rent control law is for having too many renters, more than agreed to in the rental agreement or lease. However, the rent law provides that you must allow a tenant's first or second new dependent child (multiple births count as only one child regardless of the number of children born) or sole additional adult tenant without any eviction repercussions.

You may evict renters for getting additional new subtenants, over and above those outlined above. You must first serve them with a three-day notice to perform covenant (live up to the provisions of the agreement) before evicting them. If the extra subtenants move out of the apartment within the three days, you may not evict them.

If you don't want to, or can't, evict the tenants, you may raise their rent by up to 10% per added occupant (except for the first dependent child) with a 30-day notice of change of terms of tenancy. For you, that translates into a 40% rent increase (the first child is free and you get 10% for each of the others).

You also don't say in your letter how long the extra subtenants have lived in the apartment, which is very important. If they have lived there for several months, sometimes as few as even two months, and you accepted rent and did nothing to remedy the situation, you may have waived your right to evict them.

In cases such as this one, you can wave goodbye to the eviction as some judges have ruled that under the legal concept of "waiver," the owner has waived his right to evict the tenants for having extra subtenants by accepting rent and allowing the situation to persist for as few as two months. You must act quickly to enforce your rights, within the first month to be sure of preserving your case, in these situations.

The best cause for eviction under rent control is nonpayment of rent because the facts are seldom in dispute. Next month, if the tenants don't pay the rent on time, you could serve them with a three-day pay or quit notice. If they don't pay within the three days, you may proceed with an eviction for nonpayment of rent.


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.

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