An Overview of California Residential Lease Agreement Negotiations for Landlords and Tenants
April 19th, 2023
A residential real estate lease is a contract between a tenant and landlord. It allows the tenant to have the right to live in the property for a certain amount of time in exchange for rent. It also specifies the conditions with which both parties must comply, the circumstances under which the lease can be terminated, and defines the rights of the parties. While a good lease will help ensure the interests of both parties are protected, there are a number of considerations when it comes to negotiating and drafting an effective residential lease agreement in California.
What Provisions Can Tenants Negotiate in a Lease Agreement?
Finding the perfect home to rent can feel like a daunting task. But once the ideal rental has been found, it’s critical to consider the provisions that must be negotiated. When negotiating a lease, a tenant should consider much more than just the cost of monthly rent. Depending upon the type of property, a tenant might be able to negotiate the following:
The length of the lease — While most landlords expect tenants to sign a 12-month lease, they may be open to a shorter lease term at a higher rate.
Security deposit — A tenant may be able to negotiate the amount of the security deposit, within reason.
Property maintenance — Many landlords delegate the responsibility of certain low-cost repairs to the tenant, while remaining responsible for more expensive maintenance issues. Tenants should negotiate such items before signing a lease and ensure they understand all items which they will be responsible for maintaining.
Start date of the lease — If a tenant cannot move in right away, they might consider asking the landlord to push the start date off. If the landlord will not push it up a full month, they may be willing to compromise and allow a mid-month move-in date while prorating the rent.
Upgrades — A tenant might consider negotiating aesthetic upgrades into the lease agreement or renewal. This can include things like appliances, heat and air conditioning, or painting.
It’s essential for tenants to pay attention to the fine details in their lease before signing. For instance, tenants should consider the landlord’s pet policy and sublease policy. Both parties should also be clear on who pays for what — such as routine pest control, landscaping, and utility services, such as water, sewer, and trash. Additionally, although some landlords will include heat and hot water with the lease, a unit can sometimes have an individual meter or a shared meter that tracks usage. These things should all be considered during the process of lease negotiations.
Landlord Considerations and Obligations for a Residential Lease Agreement
Investing in a rental property can be a smart financial move — but it also comes with a significant amount of responsibility. For a landlord, it’s vital to look beyond the provisions in a standard boilerplate lease agreement and tailor clauses that will meet their needs. Landlords should carefully consider their obligations in connection with the following when entering into a rental agreement with a tenant:
Security deposits — While a tenant might try to negotiate the amount of a security deposit, landlords must be aware of the state and local laws that govern them. In California, a security deposit cannot be more than two months of rent, or three months if the apartment is furnished. Landlords in certain cities, such as San Francisco and Los Angeles, must abide by the Rent Stabilization Ordinance, which requires landlords to pay their tenants interest along with the security deposit. A security deposit must be returned to a tenant within 21 days and can only be held for unpaid rent or damage to the property beyond normal wear and tear.
Payment requirements — A landlord can take any form of payment for monthly rent, but they are not permitted to request rental payments be made in cash. However, there is an exception to this rule if the tenant’s check bounced in the last three months. In such cases, the landlord is entitled to rent payment in cash.
Fees associated with late rent payments — A provision should be included in the lease addressing late rent fees. But it’s important to be aware that under state law, late rent fees must be reasonable and cannot be used to punish the tenant.
Rent increases — It’s critical for a landlord to consider adding a clause addressing rent increases. In California, rent increases are usually subjected to a 5% cap. Some cities have their own requirements concerning rent increases, which a landlord must follow.
Disclosures — A landlord must be aware of the legal disclosures they are required to provide tenants, including those concerning environmental hazards and Megan’s Law. A landlord must also include a disclosure statement if the tenant’s unit is not individually metered for gas or electricity to ensure the renter is aware of the cost for these utilities each month.
A rental agreement should be well-drafted and clearly specify the parties’ expectations. However, issues can arise when landlords inadvertently or willfully include illegal clauses in a residential lease agreement — such as those involving a waiver of landlord responsibility to ensure the premises are maintained in a habitable condition. It’s crucial to have the guidance of a skilled real estate attorney who can assist with lease negotiations and drafting to help avoid various disputes.
Contact an Experienced California Real Estate Attorney
Negotiating a California residential lease agreement can be challenging, and it’s best to have a knowledgeable real estate attorney by your side to guide you through the process. From drafting effective leases, to negotiating terms, and handling any disputes that arise, the experienced residential real estate attorneys at White and Bright, LLP provide capable representation to tenants, landlords, and other parties in connection with residential real estate matters. We welcome you to contact or call us at (760) 747-3200 to learn more about our legal services.
