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Money Judgment Advantages

KTS-Law — Tue, 22 Jun 2010 14:00:35 +0000

Unless your unlawful detainer case went to trial, you have the option of obtaining a monetary judgment after your tenant vacated the property. There are several compelling reasons to continue the action to obtain a money judgment.

A money judgment can be collected even from an uncooperative former tenant.
Without a judgment, an unpaid balance can be collected from a former tenant only using the collector’s powers of persuasion and threats of reporting unpaid debt to credit reporting agencies. However, if the landlord has a money judgment, the former tenant’s cooperation is no longer necessary; with a money judgment, an arsenal of involuntary collection tools becomes available. These involuntary collection tools include wage garnishments, bank account levies, vehicle seizures, seizure of other non-exempt personal property, till taps and keepers, and judgment debtor examinations.

A money judgment extends the time period for collection.
The statute of limitations for breach of a written lease is four years. Therefore, if a landlord does not obtain a money judgment, the landlord must cease collection efforts after four years. A money judgment extends the time period for collection to 10 years or more; a money judgment is effective for 10 years and can be renewed for additional 10 year periods.

It is not uncommon for a person’s financial situation to change significantly in a 10 year period. Many landlords who have obtained money judgments have been pleasantly surprised when they are paid years after a tenant’s breach of a lease, when the tenant is required to pay off a money judgment in order to qualify for credit to purchase a home or car.

Interest accrues on a money judgment.
Simple interest, at a rate of 10%, will accrue on the judgment amount. This 10% interest rate is a better return than a landlord can earn from many other investments.

The landlord’s right to collect 10% interest on the judgment amount may encourage the former resident to pay the judgment to avoid responsibility for interest in addition to the principal amount due. The ability to assess interest at a rate of 10% also gives a landlord collection leverage; a landlord can reduce or waive interest, (and avoid discounting the principal balance); as a tool to encourage voluntary payment.

A final money judgment prevents a tenant from disputing the amount owed.
Once a money judgment is final, (after the time period to appeal has expired), a former tenant cannot successfully challenge the judgment’s validity or the amount due. A money judgment definitively establishes the amount of the debt.

A money judgment decreases a former tenant’s credit score.
This may motivate the tenant to pay amounts due. Credit reports include judgment information, and a former tenant’s credit rating will be affected by a money judgment. A former tenant may not qualify for credit (including future housing) if a money judgment is decreasing the former tenant’s credit score. This may motivate a former tenant to satisfy the money judgment to avoid being denied credit (or charged a higher interest rate because of a lower credit score).

A judgment avoids potential landlord liability for the tenant’s court costs and/or attorney’s fees.
If a landlord dismisses before entry of judgment, even if the dismissal is the result of the tenant vacating, a tenant may claim to be the prevailing party, and attempt to collect attorney’s fees and costs from the landlord.

A money judgment ensures that the landlord will be found to be the prevailing party, and eliminates the possibility that the landlord could be held responsible for the tenant’s attorney’s fees and/or costs.

A money judgment will ensure that the tenant will be financially responsible for the landlord’s court costs and attorney’s fees.
An unlawful detainer money judgment will be comprised of rent owed up to the time of possession is returned to the landlord for uncontested cases, (up to the date of trial for contested cases), and court costs. Typical court costs awarded in California can include the following:

$220.00 – Filing Fee
$45.00 – Process Service Fee (per defendant)
$25.00 – Writ Fee
$125.00 – Sheriff Fee
$415.00 – Total

An unlawful detainer money judgment will also include attorney’s fees if the lease or rental agreement has an attorney’s fee provision. Attorney’s fees are generally determined under a court schedule, based on the amount of the judgment for rent. For instance, if the amount of rent owed is $1,100.00, a typical attorney’s fee award would be $300.00. If the rent owed is $2,200.00, a typical attorney’s fees award would be $450.00. The attorney’s fee schedule may vary between courts. A money judgment can help ensure the landlord’s recovery of attorney’s fees and costs from the former tenant.

Money judgment advantages.
As explained above, there are a number of very good reasons for landlords to pursue money judgments. The cost to obtain a money judgment is very reasonable, and many landlords and property managers have found that obtaining money judgments in all of the unlawful detainer matters is a wise investment that helps them maximize their collections, improve their bottom line and keep their owners happy.

Kimball, Tirey & St. John LLP is a full service real estate law firm representing residential and commercial property owners and managers. This article is for general information purposes only. Before acting, be sure to receive legal advice from our office. If you have questions, please contact your local KTS office. For contact information, please visit our website: www.kts-law.com. For past Legal Alerts, Questions & Answers, and Legal Articles, please consult the resource library section of our website.

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California 2010 Legal Update: Legislation and Case Law That Will Effect Rental Property Owners and Managers

California 2010 Legal Update: Legislation and Case Law That Will Effect Rental Property Owners and Managers

KTS-Law — Thu, 04 Mar 2010 15:00:11 +0000

As 2010 gets under way, it is important for property managers and owners to be aware of new legislation, case law and legal trends that will significantly impact our industry. Below is an overview of the most significant laws and trends for this year.

New Legislation

Lead-Based Paint Renovation Law
Effective April 22, 2010, all individuals (including your maintenance staff), who will be performing renovation work that could potentially disturb lead-based paint in homes, child care facilities or schools (pre-1978 properties), will need to take an EPA-approved training class and become certified. The new certification requirement applies to renovation, repair, or painting activities where six or more square feet of lead-based paint is disturbed inside the premises, or 20 square feet on the exterior of the premises. In addition, landlords are required to provide residents with the new EPA brochure entitled “Renovate Right” prior to commencing any such renovation or repairs. The text of the new rule, as well as links to available training and the “Renovate Right” brochure are available at http://www.epa.gov/lead/pubs/renovation.htm.

Water Conservation Bill (SB407)
Effective January 1, 2014, all pre-1994 residential, multi-family and commercial properties must replace non-compliant plumbing fixtures (including toilets, faucets, and shower heads) with water-conserving fixtures when making certain improvements or alterations to a building. Final inspection/certificates of occupancy will not be issued until these plumbing fixtures are compliant. By 2017, all single family homes must replace non-compliant plumbing fixtures, and by 2019, all multifamily and commercial buildings must have compliant water-conserving plumbing fixtures in place.

Public Swimming Pools: Anti-Entrapment Devices and Systems (AB2010)
By now, you are probably very familiar with the Federal Virginia Graeme Baker Pool and Spa Safety Act that took effect on December 19, 2008. With the passage of AB2010, California has incorporated the Federal Act into state law.

Clarify pls. If your pool is already deemed in compliance with the Act, you will also be in compliance with AB2010. The intent of AB2010 is to standardize enforcement. This law prevents local health departments from adopting new or additional safety standards relating to public swimming pools. In addition, it limits the fees that local and state agencies can charge to determine compliance with AB2010.

Meth Lab Remediation (AB1489)
In 2005, the legislature passed SB536 setting forth very stringent remediation standards that had to be met before a home previously used as a meth lab could be rented out again. AB1489 changes these existing methamphetamine remediation standards. The law raises the acceptable level of residual contamination from the previous standard of 0.1 micrograms to 1.5 micrograms per 100 square centimeters on any indoor surface area. This change is intended to make it easier (and less costly) for a property manager or owner to remediate a rental unit previously used as a meth lab.

Controlled Substances and Firearms (AB530)
In several cities, including Los Angeles, city prosecutors can file an unlawful detainer against a tenant on behalf of the owner when the tenant has committed a crime involving illegal weapons or drugs. AB530 extends this pilot program to additional cities throughout California, including San Diego, Sacramento, Long Beach and Oakland.

Utility Services at Foreclosed Properties (SB120)
If the foreclosed owner previously paid for utilities, this new law allows a tenant residing at a foreclosed property to make the utility payment in place of the new owner and deduct the amount of the payment from the rent. The tenant must provide a copy of the payment receipt when making the rent payment to prove that the utilities were paid.

60-Day Notice Requirement (SB290)
This law makes permanent the requirement that the owner serve a 60-Day Notice to terminate a month-to-month tenancy when the occupants have resided in the unit for more than one year. Whenever a new tenant (such as a new roommate) moves into the unit, the clock resets again. This means that a 30-Day Notice can be used until all occupants of the unit have lived there for one year or longer.

New Tax Withholding Requirement
Effective January 1, 2010, property management companies are required to withhold approximately 7% of gross rent receipts each month if the owner of the property is not a California resident. A corporation, LLC or LP which is registered with the California Secretary of State, or which has a permanent place of business in California is considered a resident owner. The management company must forward the funds to the Franchise Tax Board. This is a new withholding requirement, not a new tax. Property managers should keep in mind that the penalty for non-compliance becomes the obligation of the property management company, not the owner of the property. The CAA website has detailed information regarding this withholding requirement, along with forms.

Court Furlough Days
Beginning in September of 2009 and continuing through at least June of 2010, California’s courts will be closed the third Wednesday of each month. Property managers should be aware that any notices served on a resident (such as a 3-Day Notice to Pay Rent or Quit, a 3-Day Notice to Perform Covenant or Quit or a 30 or 60-Day Notice of Termination) cannot expire on a court furlough day. The resident must be given through the next business day to comply with the notice.

Screening Fee Amounts for 2010
The maximum amount landlords can charge as a screening or application fee for 2010 is down from last year to $41.72. The reason for the lower amount is that the CPI for 2009 dropped, and the increased or decreased amount is based on the CPI. More information is provided in CAA’s Issue Insight at http://www.caanet.org/AM/Template.cfm?Section=Operational_FAQ&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=20477.

Note that the $41.72 is the highest amount that can be charged. By law, landlords must be able to justify whatever amount they charge, including both hard and soft costs.

DRE License Number Disclosure
Effective July 1, 2010, California real estate agents and brokers must disclose their DRE license number on all “solicitation materials intended to be the first point of contact with consumers” and on real property purchase agreements when acting as an agent in those transactions. An article with more detailed information is available on our website www.kts-law.com.

Significant Case Law

Landlord Liability for Criminal Acts
In a case where a resident was injured during a carjacking in an open parking lot of an apartment complex, an appeals court ruled that three prior violent attacks by strangers in the common areas were sufficiently similar to the most recent carjacking to be considered foreseeable and therefore to impose a duty on the landlord to act reasonably under the circumstances. The case was remanded (returned) to the trial court to determine whether the landlord had a duty to install a security gate and fence around the open parking lot to reduce possible future criminal attacks.

Fair Housing: Accommodating Residents with Motorized Scooters
In August of 2009, the Department of Justice announced a settlement to resolve a housing discrimination lawsuit regarding motorized scooters in apartment communities. The alleged violation was that the landlord violated the Fair Housing Act by prohibiting the use of motorized wheelchairs and scooters in residents’ apartments and in the common dining area of the property. The settlement required the landlord to pay approximately $250,000 in fines and penalties. Disability continues to be the most common basis for discrimination complaints and the cases are costly, even if you win. It is crucial that every employee who works directly with residents and applicants has fair housing training. KTS now offers Fair Housing training online for your convenience. Information on our online classes can be found on our website www.kts-law.com.

Potential Landlord Liability for Second-Hand Smoke
In recent years, we have seen several lawsuits filed by residents against landlords regarding exposure to second-hand smoke on the rental property. Most of these lawsuits claim the landlord failed to abate a nuisance on the property or breached the implied warranty of habitability by allowing residents to smoke on the premises. In Birke v. Oakwood Worldwide, an apartment complex owner allowed smoking in all common areas. An appellate court ruled that a lawsuit could proceed based on nuisance claims against the owner for failing to eliminate second-hand smoke in common areas. This case involves a minor with asthma and other breathing difficulties. The child’s father claims that the property’s failure to prohibit smoking in the common areas exacerbated his child’s condition. The court has not yet ruled on ultimate liability in this case.

Section 8 Vouchers
There are two cases making their way through the courts that involve participation in the federal government’s Section 8 Housing Choice Voucher Program. In the first case, residents are arguing that if a landlord is not willing to accept vouchers, he is violating a resident’s right to be free of source of income discrimination. In the second case, a resident is claiming that the landlord must accept a voucher as a reasonable accommodation based on disability. Both cases are being litigated at the appellate level, but there is no final ruling as yet.

Trends for 2010

Local Smoking Ordinances
In addition to the lawsuits mentioned above, many cities (including Belmont, Burbank, Calabasas, Dublin, El Cajon, Glendale, Loma Linda, Novato, Pasadena, San Mateo, and Temecula) have passed anti-smoking laws. Some of these laws require the landlord to set aside a certain percentage of units as “smoke-free.” Other laws call for an outright ban on smoking anywhere on the premises (including the inside of residents’ units) or a limit on where residents and guests can smoke on the premises. A database of California smoke free laws is available at http://ccap.etr.org/index.cfm ?fuseaction=policydb.home. This website is updated monthly. Property managers should take care to monitor any local anti-smoking laws that pass in their cities as the landlord may be required to enforce them.

Medical Marijuana
Last but certainly not least, the use of “medical marijuana” by residents continues to create problems for landlords. In 1996, California voters passed the Compassionate Use Act which legalized the cultivation, possession, and use of marijuana for medicinal purposes in the state. This has lead to some residents claiming they have a right to smoke medical marijuana in their units as a “reasonable accommodation” for disability. Although “medical marijuana” is legal under California Law, it is still a violation of Federal Law. Property managers are put in a difficult situation as they try to comply with both fair housing disability laws and their duty of care to other residents who may be complaining about the use of marijuana by a neighboring resident. If your community is a project-based HUD subsidized property, you should be able to prohibit the use of marijuana on the premises, even if your resident is using it for medicinal purposes. For those communities that are not project-based HUD subsidized, the question of whether a landlord would be required to allow a resident to use medical marijuana as a reasonable accommodation under California Law is not clear. If such a request is made and the resident can provide verification that he or she needs to use marijuana because of a disability, contact our fair housing department at (800) 338-6039 for legal advice on how best to handle the situation and the potential risks involved with each potential course of action.

Kimball, Tirey & St. John LLP is a full service real estate law firm representing residential and commercial property owners and managers. This article is for general information purposes only. Before acting, be sure to receive legal advice from our office. If you have questions, please contact your local KTS office. For contact information, please visit our website: www.kts-law.com. For past Legal Alerts, Questions & Answers, and Legal Articles, please consult the resource library section of our website.

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Work Place Violence Restraining Orders – An Effective Tool in the Prevention of Workplace Violence

KTS-Law — Tue, 12 Jan 2010 15:00:54 +0000

Our law firm is experiencing a dramatic increase in the number of calls we receive concerning an irate tenant who is displaying signs and threats of violence. These threats are directed at on-site management, maintenance personnel or even independent contractors hired to perform work on the property. This article addresses one unique course of action that is available in these disturbing situations: The Work Place Violence Restraining Order.

Under California law, the employer can request a judge to issue an order to protect an employee from suffering violence or “credible threats of violence.” These orders are called Work Place Violence Restraining Orders (“WVROs”). This law differs from other civil harassment laws in California that permit victims to petition the Court for civil harassment orders where the victim of the harassment must file for the harassment order themselves.

Employee Requirement
WVRO’s are only appropriate if the party who is to be protected is an “employee” of the employer. However, a WVRO may also be obtained for volunteers or independent contractors who perform services for the employer at the employer’s worksite.

Scope of Protection
Once a WVRO is obtained, its protections are quite broad. The WVRO can be effective for up to three (3) years for the employee and for up to fifteen (15) days for certain family or household members.

The court can order that the restrained Defendant refrain from contacting the employee by telephone, sending correspondence or email to the employee, stalking, battering or following the employee during work hours.

In addition, the court has broad discretion to issue stay away orders and can order that a restrained Defendant must stay away from the employee’s workplace, residence, vehicle, school or place of child care of children of the employee and other locations frequented by the employee. Violation of the WVRO can result in a fine and imprisonment for up to one year.

One caveat is that the violence or threat of violence must “reasonably be construed…to have been carried out at the workplace.” However, this doesn’t mean that the threat or violence has to necessarily occur in person at the workplace. For instance, a credible threat which the employee receives on a work email may form the basis for a WVRO.

Activities Not Protected
Also, it is important to note which activities are not protected under WVRO law. While annoying and bothersome behavior can interfere with employee performance and productivity, WVRO law expressly protects against violence or credible threats of violence only. Behavior or incidents that don’t meet this litmus test should be addressed in other ways.

Steps Required to Obtain a WVRO
To obtain a WVRO, the employer must file a petition with the court that asks the court to issue the order and informs the court of the basis of the WVRO. Along with the petition, the employer can request that the court issue a temporary restraining order, which makes the WVRO effective pending a court hearing on the matter.

After the petition is filed, the court will set a hearing date for the matter within fifteen (15) days from the filing of the petition. The Defendant will have a chance to file papers contesting the WVRO and can appear at the hearing to argue against the issuance of the WVRO. The hearing itself is conducted in a manner similar to any court trial where counsel, or the parties themselves if unrepresented by counsel, are given an opportunity to testify, cross-examine witnesses and present documentary evidence. After the presentation of all evidence, the court decides whether or not the WVRO should be issued. If the court finds “by clear and convincing evidence” that the Defendant engaged in unlawful violence or made a credible threat of violence, then the court will issue the WVRO.

Records and Documentation
Documentation is especially important when attempting to obtain a WVRO. This can mean keeping a log or creating a report whenever an employee is threatened with violence. Any threatening letters, emails or other correspondence should also be retained. In this regard, it is important for the employer to have policies in place to document and retain all reports of violence or threats of violence in the workplace. These records can eventually be used as evidence at the WVRO hearing and can be used to bolster testimony and create a more convincing case.

Develop a Program to Prevent Workplace Violence
An idealistic policy statement, in isolation, is woefully inadequate to address and prevent violence in the workplace. Indeed, each employer should have a comprehensive program in place to prevent workplace violence. The components of a workplace violence prevention program can include:

A statement of the employer’s “no threats and violence” policy and complementary policies, such as those regulating harassment and drug and alcohol use;

A physical security survey and assessment of risks on the workplace premises;

In-place procedures to address threats and threatening behavior and may include policies addressing when the employer should consider obtaining a WVRO on behalf of a threatened employee;

Designation and training of an incident response team;

Crisis response measures; and

Consistent enforcement of behavioral standards, including effective disciplinary procedures.

Any workplace prevention program should also include follow-up measures to constantly integrate new employees into the program and make them aware of the contents of the program. Also, periodic or yearly assessments of the program should be conducted to promote continuous improvement. While WVRO’s are a powerful tool in the prevention of workplace violence, they are just one piece of an effective workplace violence prevention program.

Kimball, Tirey & St. John LLP specialize in representing real estate and business entities in all of their legal issues, including employment law. For more information, please contact KTS at 800-564-6611. Our website address is www.kts-law.com.

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