Handling an Unauthorized Pet

It happens. It is frustrating, irritating, and even maddening. You place a tenant in the property and the rental agreement documents "no pets/animals." You counsel the tenants that this is a binding agreement. Then a vendor goes out to a property to repair something and reports back there is a man eating dog! Or there is a drive-by the property and a cat is spotted sitting in the window. A neighbor reports a dog that is continually barking. Generally, if a tenant moves in an unauthorized animal, the information comes out in some form or another. Now what is to be done?

The first step is to find out exactly what situation is occuring in the property. It could turn out that they are "temporarily" keeping an animal for friend or family. It's possible a stray wandered onto the property and they simply adopted it. They may have decided they wanted a dog or kitty for their children and just think they only have to pay more in a deposit. And, of course, it may be they deliberately planned to move in a pet from the beginning even though they they knew the property owner would not accept one. Knowing the mindset of the tenant is a big key in figuring out what to do.

The next step may be one of the following.

• A letter documenting the situation is sent notifying the tenant they have violated their rental agreement and they have to resolve the situation with their property management company and owner; they are required to contact us to meet to review the animal.
• By telephone, we request a walk-through to see the condition of the property, see the animal in question, and discuss the violation of their agreement.

It is important to find out exactly what type of pet they have moved into the property. It could be something simple such as a gerbil or hamster. It could also be a snake, a parrot, a cat, a small dog, a large dog, etc. Whether it is small or large, any animal can cause damage and it could even be one that is illegal to keep in the residence, such as barnyard animals in residential housing. The zoning of the property determines what animals are allowed in the property as well as the preferences of the property owner.

It could be that it is a temporary problem, a pet that is suitable, or a situation where the unauthorized pet is simply unacceptable. This dictates what steps need to be taken and every situation is different. Here are some scenarios.

• The situation IS temporary and after receiving a notice from their property manager, the tenant removes the pet. A followup walk-through confirms this.
• The tenant, after notification from their property manager, removes the animal because they do not want to incur poor rental history or pay an increase to their deposit.
• The tenant has chosen a reasonable pet, they are being responsible for its care, it has not affected the condition of the property, and it is acceptable to the property owner. In addition, they are willing to sign documentation with increased security deposit.
• The pet is not an acceptable situation for whatever reason and a notice is sent to the tenant to remove the pet immediately.

We find that the majority of tenants will respond and work to resolve the issue of an unauthorized pet. There are situations where it can require an eviction. In that case, we normally find that it is in the best interests of the property to take the steps to remove this tenancy and a destructive pet.

Refinancing Your Income Property

With historically low interest rates we have seen a large influx in clients refinancing their mortgages. If it's been a while since you've refinanced, or maybe even if you have recently, you can probably benefit from refinancing your existing mortgage.

Speak to your loan officer or mortgage expert to see if a refi is right for you.

If you think the time is right to refinance and you need an appraisal, please have the appraiser call us directly. We will arrange with the tenant and meet with the appraiser and make sure everything goes smoothly.

Internet / Email Outage

Dear Clients and Tenants:

Due to superstorm Sandy affecting servers on the east coast, we are experiencing some service issues on email servers and our website. We will respond to any emails that we receive but please understand that delivery of some emails may fail or reach us later than normal.

Thank you for your patience. For any urgent matters please call our main line at (408) 377-3000.

Sincerely,

The Cornerstone Property Management Team

New Rental Housing Laws for 2013

California Apartment Association has released information regarding new bills signed in by Governor Jerry Brown. Below are summations of the bills and CAA's position on each bill. Please feel free to leave a comment and tell us what you think!

Rental Housing Bills to Become Law in 2013

The California Legislature has closed its 2011-2012 session and sent hundreds of bills to the Governor’s Desk. On September 30, 2012, the Governor finished his review of all bills. Here is a look at those rental housing bills that he signed and will become law beginning January 2013.

Security Deposits - AB 1679 (Bonilla, D-Concord) – CAA Position – Support - This is CAA’s sponsored legislation that allows property owners to deposit any remaining portion of a tenant’s security deposit directly to a bank account designated by the tenant and allows property owners to provide a copy of the itemized security deposit statement along with supporting documents to an e-mail account provided by the tenant. Current law only allows the return of the money and the supporting documents by first class mail.

Tenant Relocation San Francisco: Rent Control AB 1925 (Ma and Yee, D-San Francisco) – CAA Position - Support. This bill, sponsored by the California Apartment Association, provides that in San Francisco, a landlord cannot be forced to pay more than $275 per day plus actual moving expenses (if it is necessary for the landlord to move the possessions of the tenant household) for temporary relocation. The landlord will have the option to provide a comparable dwelling unit and pay any actual moving expenses, in lieu of the daily rate. The tenant shall remain responsible for the payment of rent.

Animals at Rental Property – SB 1229 (Pavley, D-Agoura Hills) – CAA Position – Support - This bill prohibits a landlord who allows a tenant to have an animal on the premises, from advertising or establishing rental policies that requires a tenant or a potential tenant with an animal to have that animal declawed or devocalized as a condition of occupancy.

Rental Payments Electronic Funds – SB 1055 (Lieu, D-Torrance) – CAA Position - Support. SB 1055 prohibits a landlord from requiring electronic funds transfer (EFT) as the only form of rental payment or security deposit.
 
Animals at Rental Property – SB 1229 (Pavley, D-Agoura Hills) – CAA Position – Support - This bill prohibits a landlord who allows a tenant to have an animal on the premises, from advertising or establishing rental policies that requires a tenant or a potential tenant with an animal to have that animal declawed or devocalized as a condition of occupancy.

Tenant Notice – Owners in Default - SB 1191 (Simitian, D-Palo Alto) – CAA Position – Support - This bill requires a property owner (1 to 4 units) who has received a Notice of Default on the payment of the mortgage from the mortgagee, trustee, or other person authorized to take the home to foreclosure sale to inform any new prospective tenant that a Notice of Default has been filed against the property.

Tenant Disclosure – New Owner - AB 1953 (Ammiano, D-San Francisco) – CAA Position: Neutral - AB 1953 would prohibit a property owner from proceeding with an eviction during the time a new owner is out of compliance with the notice provisions required under the law. Those notice provisions require a new property owner to provide the tenant with the owner’s name and the location where rent is to be paid. The tenant, however, is not relieved from the liability to pay rent for an owner’s failure to provide this notice timely.

Tenant Abandoned Personal Property - AB 2521 (Blumenfield, D-Van Nuys) – CAA Position: Support - This bill increases from $300 to $700 the value of a departing tenant’s abandoned personal property, a threshold that requires an owner to take added steps before disposing of the personal property (storage or public sale). If the value of the property is less than $700, the landlord may dispose of the property in any manner or retain it for his/her own use.

Building Accessibility for the Disabled - SB 1186 (Steinberg (D-Sacramento) and Dutton (R-Inland Empire)) – CAA Position: Support - This bill prohibits an attorney or a person from issuing a demand for money to a building owner or from receiving any payment, settlement, compensation involving a claim that the building is not accessible to individuals with disabilities.

Foreclosures – Termination Notice to Tenants - AB 2610 (Skinner, D-Berkeley) – CAA Position: Support - AB 2610 is sponsored by the California Attorney General. Just like Federal law, the bill will provide protections to tenants who are in place at the time of a foreclosure. Among other things, this bill will do the following:
• Require the property owner to provide at least 90 days’ notice of termination to a month-to-month tenant.
• Honor the lease of a tenant until the end of the lease term, unless the property is sold to a buyer who will occupy the premises as his or her primary residence. In that case, the tenant is entitled to 90 days’ notice.
These notice provisions do not apply to:
• Tenancies where the tenant is the child, spouse, or parent of the mortgagor;
• The lease or tenancy was not the result of an arms-length transaction; or
• The rent is substantially less than fair market rent for the property.
 
Smoke Detectors - SB 1394 (Lowenthal, D-Long Beach) – CAA Position: Neutral - This bill requires that on or before January 1, 2016, an owner must ensure that smoke alarms are located in each bedroom. Those smoke alarms may be battery operated.

Treating Your Rental Property As a Business

Did you make a conscious decision to purchase investment property? 

If so, be realistic about rentals and projected expenses when doing projections on any potential investment. Inflated figures will not help if the economic market does not cooperate. It is important to expect a reasonable vacancy factor when owning a rental. Remember that in most cases the property is a long-term investment and that the expenses are tax deductible, increasing the bottom line or return on investment (ROI). 

Did you become a landlord because you must rent your home rather than sell because of a poor economic market? 
This can make it more difficult to view your personal home as a business investment. Make a special effort to think of your home now as a "rental property" and view it from the perspective of a potential tenant. Even while you were living in the property, it required maintenance and repairs. 

Review these ten good practices for all property owners/investors:

1. Treat the property as a long-term investment even if you do not plan to keep it long-term - you never know what will transpire.
2. Be aware of legislation and legal practices that affect your rental property - ignoring them can mean losses to your bottom line.
3. Always be realistic about the current market and rental prices - this can reduce vacancy time.
4. Practice preventative maintenance - this can reduce or eliminate major repairs and maintenance.
5. Plan for long-term maintenance - properties have life expectancies on all major components of the property, such as roof, paint, heating and air units, plumbing, and more. Eventually these systems will fail and/or deteriorate.
6. Be prepared for all types of emergencies - tenant problems, maintenance, or natural disasters. Maintaining a good rental insurance policy is a big key for that preparation.
7. Do not rent the property "just" to generate income - wait for the right tenancy. The wrong tenant can generate many unwanted expenditures and headaches.
8. Remember that even the best of tenants can have problems that can interrupt the payment of rent. It is important to remain objective and fair instead of reacting emotionally.
9. Use professional services when necessary - maintenance, accounting, legal, and more. This expense can reduce liability, aggravation, and unnecessary expenses.
10. Consult with your property management company regularly and discuss any concerns you have regarding your investment.

Take the time to develop a "business" plan for your investment. Review long-term expenditures and plan when and how you will handle them over the period of ownership. This should include good insurance coverage, a savings plan for maintenance/emergencies, and professional services when necessary. This preparation can help maintain a business attitude when any stressful event occurs. 

As your management company, we can assist you with realistic rental prices, maintenance expenditures, professional services, tenant problems, legal issues, and any other services required. Our support will help you to maintain a "business" attitude for your investment.