CA rental- landlord question & housing price outlook

Parent Cafe
1

*I know there is no legal advise here, but I cannot contact the appropriate people until Tuesday so I’d like some input so at least I can figure out how i want to handle this.

I have my parent’s home rented. Current tenant had a three year lease with no rent increase, which expires October 9th this year. The lease states that tenant shall vacate premises on termination f the agreement unless;1) landlord and tenant have extended this agreement in writing or signed a new agreement; 2) mandated by local rent control law; or 3) landlord accepts rent from tenant, in which case a month to month tenancy shall be created which either party may terminate as specified in paragraph 2a
2a states either party may terminate in writing with 30 says notice (paraphrased)

Last May the tenant and I signed an agreement, rent increased 12.5% and the main verbiage is:
Specifically, the Parties agree to extend the Lease as per Provision 2A/B “Month to month & Lease” The extension to run month to month beginning October 1, 2018 at a monthly rent of $1,800.00 and requires a 60 day notice on the part of either tenant or landlord in order to terminate the agreement. Such notice may be given on any date.

I believe I read the part above that we did 1) by extending the agreement. I believe they are required to give 60 days notice. Anyone see any reason why not? I believe they think they are not having to pay October rent based on her telling me they move Oct 1.

Is it my obligation to point this fact out before Oct 1? I already have their October check, but would not cash it without talking to them, however, I also have their damage deposit with is more than October rent. My initial reaction is to not point this out to them until I know what I am doing. If I decide to rerent immediately, then I would try to rerent in time to refund them some share of the month’s rent.

I need to think through how to handle the house moving forward. Mom is 92 and needing way more care, we’ve added $1000/mo in care assistance just this year and that is not covering a lot of care hours. Having her money in the rental home is good income, but this market in the foothills of the Gold Country is weird. They bought for the low $200ks 25 years ago; in 2006 the house next door sold for over $500k. The crash there began in late 2006 and the house did not sell over a year on the market, so we began renting.Four years after that crash a tenant was interested in buying and the value was only mid-200k, so I decide to wait and try to make the money back on the value of the home as the market increased. Looks like $340-360k now depending how we snazz it up. But the is an area where spring/summer is best for sales.

Now I am looking at 1-2 months rent and then nothing. I can fix up the kitchen and list it this fall. I can skip the improvements and rerent it for 6-18 months. But I pay a rental fee of one months rent.

And this is an area where many people come from the Bay area, I read that the Bay area RE market is slowing down. I don’t want to miss the peak and see the market tank again!

Any ideas or thoughts for me to consider to make my most informed decision?

2

Please clarify…has the tenant given you notice already…and if so…when? My reading is…if they notified you by today…that is 30 days notice.

It sounds to me like the new agreement about 60 days notice begins on October 1…and that’s when the 60 days notice becomes the notice.

I’m not a lawyer…but that is how I would interpret this.

3

They texted me today to ask if I had received their notice.

Hmm, the new agreement beginning at the later date, I had not thought of that perspective! Hence why I ask for input on CC

4

I agree that the old lease is still in effect so a 30 days notice is all that is required.

Not all states allow the security deposit to be used for rent, but only allow it to be used for damages. Check.

Really, they have been tenants for 3 years. They gave you more than a month’s notice. End things on good terms.

5

I was a property manager in Iowa in a past life, so not current on California laws.

Did the rules they agreed to in May start immediately or did the extension state that the new rules start Oct. 1?

If the new rules started immediately I think if you want to be hard nosed about it, you could legally cash their October rent check because they only gave the 30 day notice.

If the new May agreement rules stated an Oct. 1 start date of the rules or did not specify when the new rules (except for increased rent) started, then I can see why they thought the 30 day notice was sufficient.

If they have been good tenants, paid rent on time, kept the place clean with few and minor damages, then I would let them get by with the 30 day notice.

As to when to list for sale and how many improvements to make, I suggest that you consult a RE agent in the area and get their opinion.

6

Yep, realtor coming Tuesday to check it out.

7

Rental market is softening in some areas of CA as cities crack down on vacation rentals and more units become available for long term rental.

Are you currently on the title or is the house in your mom’s name? If you inherit the property you receive the stepped up value as the cost basis. Not only that, California allows you to pay property tax based on the low assessed value of your mom’s current tax rate for the property even if you continue to rent it. In other words, children can inherit their parents low property tax if they inherit the property. Efforts are underway to change the law but it’s unclear whether it will pass.

I would recommend you speak to an elder care estate specialist. I’m not sure if real estate is counted in determining whether she may be eligible for MediCal or other assistance for long term care.

8

House was sold, paper carried, then foreclosed, so not Prop 13 protected :frowning:
The house is owned by the trust and I am the trustee.

Funny, a more real estate centric resource says that whenever we signed the agreement to extend, whether that was 1 day after the least began or 1 day before it ended, we thereby agreed to 60 days notice as the term.

Yah, I don’t want to be a jerk, on the other hand, I wish they would have talked to me before renting elsewhere, I certainly would have extended 6 months. Because of the softening market I would not have been excited to do another two year lease, but now I find myself stuck with an unrented place in the fall :frowning:

Since starting the rental route the house has had a new roof, a completely redone master bath, and a brand new water heater plus a few smaller items. Keeping it means the risk of further expensive 30 year old house fixes.