Property Management - Part 3 - Chapters 79-81

Question 1

Properly implement the rules for use of a three day notice to pay rent or quit

Answer 1

A property manager may serve a tenant, residential or commercial, with a three day notice to pay rent or quit when the tenant defaults on their rental or lease agreement. The tenant defaults when they:

• fail to pay rent or
• fail perform other nonmonetary significant obligations called for in a rental or lease agreement.

The three-day notice states the exact amount of:

• delinquent rent unpaid
• other delinquent amounts owed to the landlord and unpaid

Question 2

Understand the consequences of notices to pay rent or quit served on tenants

Answer 2

After a landlord serves a tenant with a three day notice to pay rent or quit, the tenant needs to cure the breach in three business days to avoid forfeiture and eventual eviction in an unlawful detainer UD action.

The three-day notice contains a “Declaration of Forfeiture Provision”. The Declaration of Forfeiture Provision states the tenant’s failure to pay the delinquent rent before the notice expires gives the landlord the right to possession of the property.

Question 3

delinquency

Answer 3

A DELINQUENCY is a tenant or borrowers failure to pay the agreed amount on or before the due date or expiration of any grace period. To cure a delinquency in a rental or lease agreement, the tenants delinquent rent payment needs to actually be paid to the landlord.

Question 4

due date

Answer 4

A DUE DATE is the date provided in the rental or lease agreement on which rental payments are due. Rent needs to be delinquent before a 3 day notice to pay or quit may be served.

Rent becomes delinquent:

• the business day following the due date, unless a grace period is established in the rental or lease agreement
• the business day following the last calendar day of the grace period established in the rental or lease agreement

If no grace period exists, when the last day scheduled for payment of rent falls on a legal holiday, the payment is not delinquent if it is tendered before or on the next business day. For purposes of paying rent, legal holidays include:

• Saturdays and Sundays
• state and federal holidays

Question 5

grace period

Answer 5

A GRACE PERIOD Is the time period following the due date for a payment during which payment received by the lender or landlord is not delinquent and a late charge is not due. A Grace Period is set and defined in a rental or lease agreement.

Question 6

incurable breach

Answer 6

Some non-monetary defaults by a tenant cannot be cured. These are known as INCURABLE BREACHES. Incurable reaches include:

• waste to the premises
• alienation of the leasehold
• significant criminal activity which has occurred on the property

The landlords remedy for an incurable breach is to serve notice on the tenant to quit the premises within 3 days after service of the notice. The tenant has no alternative but to vacate. Here, a declaration of forfeiture provision accompanying the three-day notice is unnecessary, and if included, is ineffective since the failure cannot be cured and the tenancy cannot be reinstated.

Question 7

material breach

Answer 7

However, only a MATERIAL BREACH allows the landlord to forfeit the tenants right of possession. A forfeiture of possession does not interfere with the landlords right to collect rent under the rental or lease agreement. A forfeiture does not also cancel the agreement. Failure to pay rent or perform other significant obligations called for in the rental or lease agreement is also considered a material breach. A material breach is a significant contractual breach that prevents the completion of the agreed-upon activity.

Question 8

minor breach

Answer 8

Conversely, the tenants failure to pay late charges, interest penalties, bad check charges or security deposits are MINOR BREACHES, which do not justify a 3 day notice to cure or quit. Thus a UD, unlawful detainer, action cannot be based on a minor breach by the tenant. A minor breach is failure to pay late charges, interest penalties, bad check charges or security deposits.

Question 9

Differentiate between a curable breach a tenant can resolve and an incurable breach a tenant cannot correct

Answer 9

A breach which can be remedied by action from the tenant during the notice period is known as a curable breach. A breach which cannot be remedied by action from the tenant during the notice period is known as an incurable breach.

The THREE DAY NOTICE to PERFORM or QUIT requires the tenant to either:

• perform under the breached lease provision or
• vacate the premises

The tenant breach of a provision in a rental or lease agreement needs to be a significant breach, called a material breach, to justify serving a three day notice. A minor or trivial breach by the tenant will not support a 3-day notice.

For a tenant to avoid a forfeiture of their right of possession, they need to be given an opportunity to reinstate the rental or lease agreement if the breach can be cured in 3 days. If the tenant cures the breach before the 3 day notice expires the breach is eliminated and possession continues as though no breach occurred. If the tenant fails to cure the breach or vacate as required after the service of a three day notice to perform or quit containing a DECLARATION OF FORFEITURE PROVISION, the landlord may initiate a unlawful detainer action to have the tenant removed. Since the Declaration of Forfeiture provision exists in a three day notice, the tenant is barred from reinstating their possession after the 3 day notice expires.

Question 10

Identify the proper three-day notice to serve on a tenant for a non-monetary material breach of a rental or lease agreement

Answer 10

Depending on the nature and extent of the tenant breach, one of the following types of 3-day notices may be served:

• a three day notice to pay rent or quit
• a three day notice to perform or quit
• a three day notice to quit

When a tenant breach is a failure to pay rent or other money obligation which is due, the tenant is served with a 3 DAY NOTICE to PAY RENT or QUIT. This type of breach is known as a monetary breach and is curable by paying money.

When the lease provision breached is not for rent or other money obligations and the breach can be quickly corrected, the tenant is served with a 3 DAY NOTICE to PERFORM or QUIT. This type of breech is known as a non-monetary breach and is not curable by paying money.

A 3 DAY NOTICE to QUIT is used when the tenants material breach is:

• an incurable breach or
• a statutory breach, like

Incurable breaches and statutory breaches automatically forfeit the tenants rights of possession.

Statutory breaches being incurable include:

• unauthorized subletting or assignment of the premises
• maintaining a nuisance on the premises
• unlawful use of the premises

Question 11

nonmonetary breach

Answer 11

A NON-MONETARY BREACH is a tenant breach of any obligation other than an obligation to pay money. When the provision breach is not for rent or any other money obligation and the breach can still be quickly corrected, the tenant is served with a three day NOTICE TO PERFORM OR QUIT. This type of breech is known as a non-monetary breach.

Please note when a tenant is in default for a failure to pay rent as well as a curable non-monetary breach, a three day notice to perform or quit is used. The demand to pay rent is then listed as an additional monetary breach to be cured under the notice to perform or quit.

Question 12

monetary breach

Answer 12

A MONETARY BREACH is a tenant failure to timely pay rent or other money obligations due. When a tenant breach is a failure to pay rent or other money obligation which is due, the tenant is served with a THREE DAY NOTICE to PAY RENT or QUIT. This type of breach is known as a monetary breach which is curable by paying money.

Question 13

nuisance

Answer 13

A NUISANCE is an action which is injurious to health, offensive to the senses, or obstructs the use and enjoyment of the surrounding property. A tenant may be evicted for maintaining a nuisance or unlawful use of the premises, even if these activities are not prohibited by the lease agreement.

A tenant’s unlawful use of the premises under the statute includes violations of local laws or ordinances affecting the property, such as non-compliance with zoning ordinances restricting the use of the premises. The leasehold is forfeited automatically due to the statutory violation.

The three-day notice is required only as a prerequisite to an unlawful detainer action when the tenant remains in possession. However, before the unlawful use justifies service of a notice to quit, the use needs to:

• threaten the physical safety of the property
• stigmatized the premises
• impair the landlord’s continued receipt of rent

Question 14

retaliatory eviction

Answer 14

A RETALIATORY EVICTION is a tenant whose tenancy is sought to be terminated for lawfully exercising any rights. A retaliatory eviction occurs when a residential landlord attempts to evict a tenant for:

• exercising their right to file a complaint regarding the habitability of the premises
• orally complains to the landlord about the habitability
• filing documents to initiate a Judicial or arbitration proceeding regarding the habitability
• organizing or participating in a tenant association or in association for tenants rights
• lawfully exercising any rights, such as the refusal to authorize credit reports or personal investigation after vacating the premises

Question 15

statutory breach

Answer 15

A STATUTORY BREACH is a breach of a lease agreement which automatically forfeits the tenants right of possession. A three day notice to quit requiring the tenant to vacate without alternative is served when the tenant breach is:

• impossible to cure in 3 days or
• a statutory breach

Incurable breaches and statutory breaches automatically forfeit the tenants right of possession. These breaches either cannot be remedied within the notice period or are incurable by statute.

Statutory breaches being incurable include:

• unauthorized subletting or assignment of the premises
• maintaining a nuisance on the premises
• unlawful use of the premises

Question 16

waste

Answer 16

WASTE is the intentional destruction or neglect of property which diminishes its value. Waste to the leased premises by a tenant is a breach that cannot be cured. Waste terminates the tenants rights of possession. The tenant needs to vacate if a landlord serves a 3 day NOTICE to QUIT.

However, waste is grounds for eviction only when the value of the leased premises is substantially or permanently impaired due to the tenant conduct. Waste occurs when a tenant:

• intentionally damages or destroys the leased premises
• neglects the premises and impairs is value by failing to care for and maintain it as agreed

Question 17

Determine a landlords and tenants correct use of a notice to vacate to terminate month to month tenancies

Answer 17

A residential or commercial landlord terminates a month-to-month tenancy by preparing and serving the tenant with at least a 30 day notice to vacate.

Question 18

Differentiate the circumstances under which a landlord uses a 30, 60, 90 day notice to vacate

Answer 18

A 30-day notice to vacate is used when a residential or commercial landlord terminate a month-to-month tenancy by serving the tenant with a notice to vacate.

A residential or commercial tenant who intends to vacate and avoid further liability under a month-to-month rental agreement gives at least 30 days advance notice to the landlord.

A 60-day notice to vacate is used by a landlord if their tenant has resided in the residential property for more than one year. However if a tenant has materially breached the rental agreement, a landlord may use a 3 day notice to quit to terminate the tenancy.

A 90-day notice to vacate is used: when an owner by foreclosure of residential property is required to serve a bona fide tenant occupying the property at the time of the foreclosure sale with at least 90 days notice before the tenants right of possession is terminated.

Question 19

bona fide lease agreement

Answer 19

A BONA FIDE LEASE AGREEMENT is a lease agreement with a fair market rent held by a residential tenant when ownership of the property is transferred by a foreclosure sale. A bona fide lease agreement is one entered into by a tenant and the prior owner which needs all of the following criteria:

• the lease agreement is an arms-length lease agreement, meaning the tenant is not a parent spouse or child of the prior owner
• the lease agreement calls for payment of a fair market rent at the time entered into.

Question 20

owner by foreclosure

Answer 20

A OWNER BY FORECLOSURE is the winning bidder at a trustee sale who takes title to the property sold by a trustee’s deed. Once again, at a trustee sale the high bidder takes title to the property as the new owner by foreclosure.

Question 21

Section 8 Housing

Answer 21

SECTION 8 HOUSING is a government housing program for low-income households which provides qualifying tenants with rent subsidies and minimum habitability standards. A landlord is normally not required to state their reason in a notice to vacate, or even have good cause for evicting a month to month tenant.

However if the tenants unit is subject to rent control, or a tenant’s rent is subsidized by the HUD Department of Housing and Urban Development SECTION 8 HOUSING, the landlord needs to set forth a good cause as the reason for termination. The good cause is documented in the 30-day notice to vacate. Thus, the tenant is given notice so they can prepare their defense to avoid eviction.