I started using Google’s Question Hub recently to find questions that readers like you might care about. I am presented only with the search query and am unable to get any facts about the situation outside the Google Search. Today, we attempt to answer the question of whether a landlord can make tenants pay two-months rent “up-front” during the pandemic in California.
When I see the phrase “up-front,” I am lead to believe that the question relates to new contracts. In terms of “up-front” money in a new contract, that can include security deposit as well as rent. Toward the end of the article, we will examine whether a landlord can demand two-months rent when the tenant has an existing contract and already resides at the property.
What follows is a review of California laws regarding the topic of advanced rent payments. I am a law student at the Kern County College of Law. This legal information is provided to you free of charge for your use. Consult an attorney to discuss your specific situation before taking actions that may affect your legal rights and obligations.
What limits exist on new rental agreements during the pandemic?
Upfront payments on new rental contracts may include advanced payment of rent or security deposits. First, we will look at the limitations on security deposits. Then we will look at any limitations on advanced payment of rent. In each section, you will find that landlords may collect more than two-months rent as an upfront payment when entering new contracts. Finally, before we leave the topic of new contracts and venture into the topic of existing contracts, we will look at how the COVID-19 Tenant Relief Act affects new contracts and whether it limits the amount a landlord may collect.
Security Deposit may equal two-month’s rent
Security deposit is limited to two-month’s rent, unless tenant is a member of the armed services. 1(Civ. Code, § 1950.5, subd. (c)(1).) When a person is a “service member,” then the landlord is restricted to one-month’s rent. 2(Civ. Code, § 1950.5, subd. (c)(2).) Security deposit is any money retained by the landlord that is not intended for use as rent. 3(Civ. Code, § 1950.5, subd. (b).) A list of potential uses for security deposit moneys is available in Civil Code section 1950.5 subdivision (b).
A landlord has the option of charging rent in advance. This is a common practice. When the landlord charges one-month’s rent in advance, the total amount collected would equal or exceed two-month’s rent and would be charged up-front.
What limit exists on how much can be collected up front?
For the sake of argument, let’s assume that there is no security deposit, is the landlord allowed to demand two-month’s rent before allowing the tenant to move in? Can the landlord collect more?
Although the California Civil Code does not expressly limit rent, it does address the issue in the statute governing security deposits. There, the Civil Code states that “this subdivision [regarding security deposits] does not prohibit an advance payment of not less than six months’ rent if the term of the lease is six months or longer.” 4(Civ. Code, § 1950.5, subd. (c)(3).) By this paragraph, we see that the legislature contemplates the possibility of a landlord collecting six-months’ rent (or more) when the residential lease agreement is longer than six-months.
In general, California gives tenants and landlords wide latitude to freely contract for any term agreeable to the parties that is not a violation of law. 5(See generally Civ. Code, §§ 1595–1609.)
COVID-19 Tenant Relief Act does not limit landlords creating new contracts.
On September 1, 2020, California enacted the COVID-19 Tenant Relief Act (AB 3088). The California legislature found that a majority of tenants spend more than 30% of their income on rent, and more than 1/4th of California renters spend more than 50% of income on rent. 6(Assem. Bill No. 3088 (2020 Regular Session) § 2, subd. (b).) There is strong evidence that California tenants will be faced with evictions through no fault of their own if they comply with state-mandates. 7(Assem. Bill No. 3088 (2020 Regular Session) § 2, subds. (c) & (d).) Thus, it is for the public benefit to provide relief to California tenants facing eviction. 8(Assem. Bill No. 3088 (2020 Regular Session) § 2, subds. (f) & (g).)
The bill did not relieve tenants of their obligations; any money owed would still be owed, but it prevented an eviction based upon that obligation. 9(Assem. Bill No. 3088 (2020 Regular Session) § 2, subds. (g).) This is evident in the final update to the California Code of Civil Procedure which reads: “This section does not prevent a court from issuing a summons or entering default in an unlawful detainer action that seeks possession of residential real property and that is not based, in whole or in part, on nonpayment of rent or other charges.” 10(Code Civ. Proc., § 1179.01.5, subd. (d).)
Nothing in the COVID-19 Tenant Relief Act governs the creation of new contracts. 11(Code Civ. Proc., § 1179.01, et seq.; see also Assem. Bill No. 3088 (2020 Regular Session).) With respect to tenants facing eviction, this law only prevents eviction on existing contracts where the tenant faces financial difficulty. 12(Code Civ. Proc., § 1179.01, et seq.)
What this means for tenants seeking new rentals is that they have no special protection until the lease agreement is signed. The landlord and the tenant are free to negotiate any agreement that works for them regardless of whether the pandemic is ongoing.
Can a landlord demand two-months rent upfront if the tenant and the landlord have an existing agreement?
Above, we establish that a landlord and tenant are essentially free to enter any agreement, even one that requires payment of two-months rent in advance of the rental. Here, we review whether a landlord may make a similar demand when the contract already exists. Assume for a moment that you have been renting for three months already, and the landlord now, suddenly, and without provocation, demands advanced payment of multiple-months rent. Can he do that during the pandemic? Can he or she even do such a thing when there is no pandemic?
This question is much harder to answer without having specific information about your situation.
The terms of the contract govern your relationship
Once a contract has been entered, the relationship is largely governed by the terms of the contract. Those terms may be any terms that the parties wish provided that they are not prohibited by law. They may even include terms that change when rent is due or how much may be collected at any given time. For example, it may be possible for a landlord and tenant to agree to a contract which states that “Rent for the entire term of the contract is due at the beginning of the agreement, and the landlord may demand any portion of it at any time.” Given such a term, the landlord may demand any amount at any time, but the landlord here has the tenants express permission to do so within the terms of the agreement.
It is unlikely that such a term exists in your contract, but your contract is the place that you would have to look. Read it carefully. Consult your local court to see if they have a tenant assistance program to help explain the legal nuances of your specific lease agreement.
You might have some protections because of the pandemic
As we discussed above, California passed the COVID-19 Tenant Relief Act on September 1, 2020. This act protects tenants who have rental debts that became due between March 1, 2020 and January 31, 2021. 13(Code Civ. Proc., § 1179.02.) Under this Act, no California court may evict a tenant based on a debt associated with this time period. 14(Code Civ. Proc., § 1179.01.5.) Take note that there are separate rules governing people classified as “high-income” tenants, so check with a lawyer before making any decisions based on this information. 15(Code Civ. Proc., § 1179.02.5.)
Maybe your contract allows the landlord to demand advanced payment. Maybe it does not. If it does, and he demands it, then this becomes an unpaid debt that he could normally use to evict you. However, under the COVID-19 Tenant Relief Act, the court cannot issue the eviction when the landlord uses nonpayment as the reason. 16(Code Civ. Proc., § 1179.01.5.)
You will still owe the money. The landlord will not be happy that you did not pay it, but he or she cannot evict you for not paying.
Be careful! The COVID-19 Tenant Relief Act provides different levels of protection for rent coming due during different dates. If the rent demanded is for months between September 1, 2020 and January 31, 2021, then you must pay at least 25% of those debts before February 1, 2021. 17(Code Civ. Proc., §§ 1179.02.)
Specifically, the COVID-19 Tenant Relief Act says the following: “If you provide the declaration form to your landlord as described above AND, on or before January 31, 2021, you pay an amount that equals at least 25 percent of each rental payment that came due or will come due during the period between September 1, 2020, and January 31, 2021, that you were unable to pay as a result of decreased income or increased expenses due to COVID-19, your landlord cannot evict you.” 18(Code Civ. Proc., § 1179.03, subd. (c)(4).)
Summary: Can a landlord demand more than two-months rent?
Above, we review the law in California. It applies only to California. For new rental agreements, the landlord may demand amounts in excess of two-months rent. For existing rental agreements, tenants must look to their rental agreement. If you are worried about being evicted for nonpayment, see your local court and ask about tenant-assistance programs. Often, California courts have resources available to provide free legal information to tenants.
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