Daniel talks about how he sowed his roots in landlord-tenant law, the calculus of removing squatters from a rental unit, tough love when transitioning out family members, the mindset of vetting prospective tenants, and creating a culture of good citizenship in a rental community, among other topics.
You are hyper-focused on landlord-tenant law. What was your thought process when you decided to focus your practice in that area?
You could come out of law school and be a civil attorney and immediately help people in this space because there are so many disputes involving tenant matters and once you get comfortable in this area and you do good work, the business keeps cascading and cascading.
The beauty of being an attorney for housing providers is that people come to you because they have a thorn in their head, which is they have a failed relationship that they thought was going to be a great relationship. It failed and until you resolve it, they can’t really relax and so so I’m very proud of being able to resolve disputes and allow people to function post-dispute healthy without the anxiety and thereafter, I’ll see them 5, 10 years later when they have another dispute, but hopefully, it’s a long distance between each time.
Let’s talk about tenant screening. Many landlords and property managers think that technology is a panacea. Is it?
I agree the biggest decision is who you allow into your building and sometimes, looking at a piece of paper and checking boxes and not actually having that dialogue with a person is a foolish choice because once you put someone in, it’s very hard to get them out.
Communication and treating people with dignity is key because there is a sense that everyone we are interacting with is in the same boat - you’re providing housing and I want to be a good citizen and my expectation is that you’ll be a good citizen and you know, by and large, 85% of the time that’s how the experience is but there fissure points in this relationship that create opportunities for disputes and that’s where, of course, I’m available, but my strong preference is to resolve disputes as quickly and as cheaply as possible.
And you know, I will tell you there’s two different types of attorneys. There’s one type of attorney who likes disputes and it’s like they get a rise out of them and there’s other attorneys who don’t like disputes and want to resolve them as quickly as possible. I find myself in the second category where I really want to get a dispute resolved so that the client can move and usually it’s good practice to try to do so as efficiently as possible. Enlarging a dispute is not a good choice and I would imagine the best resolution of a dispute is not to have a dispute in the first place. If you can avoid it, avoid it.
The goal always is to have quality relationships at all times, especially with those people who are inside your building, and treating them with the level of dignity and respect that you would expect if you were in that building when you do that, you engender an environment that reduces the risk of conflict.
What can property owners do about squatters?
The word squatter doesn’t tell me enough about that person for me to determine what you can and can’t do. If there’s a burglar who broke into your unit or is a trespasser, then you may be able to call the police and have them arrested. However, here’s the problem: if you call a local police officer and say, ‘Hey, there’s someone who’s inside my unit who did not have permission to be there’ and the police officer shows up at the door, rings the doorbell, and the person says, ‘look, I have rights here’ and shows them a bogus piece of paper that says that they have a landlord-tenant relationship, the police officer is trained to treat that as a civil matter and suggest you hire an attorney to handle the landlord-tenant eviction.
So that’s really frustrating when you have a situation where someone did not have a landlord-tenant relationship and just has camped out in the unit because they took advantage of maybe the vacancy. My general suggestion to you is if someone breaks into your unit, call 911 and say there’s an active burglary going on, someone broke into the unit, and the squad cars will come, it will be more of a scene, but you’re likely to get them removed as opposed to having the police officer say to you it’s a civil matter.
Now, if someone’s been in your unit actively for five, six months and you’ve done nothing about it, then that may not be a trespasser anymore and may be characterized somewhat differently and if they added their name to utility bills, you got yourself a bigger problem. That person probably we would consider a licensee, someone who had a de facto permission to be there and then you have to rescind permission; they’re not a tenant, they’re a licencee, and you rescind permission by writing a formal letter rescinding the right to occupy and if they’re still there after you rescind permission, then you have to file a lawsuit and that’s typically no different than family members who have a child that’s not doing well - an adult child - and they offer them the use of a house that they own.
They’re not a tenant because there’s no landlord-tenant, contract, there’s no lease agreement, they are only there out of love and they are family and given the opportunity to live in a house and that person never got their life together and have been enjoying the benefit of that house without any sort of expectation of compensation and they continue to live there until you’re so frustrated that you want them out.
Once again, you rescind permission and thereafter, if you send them a rescission of their right to occupy and they are still in the unit, you would file what’s called a forcible detainer action and it’s a different type of eviction but the process is pretty much the same.
So, in essence, we have a trespasser, we have someone who burglarized the place, then we have people who have a license to occupy the premises who are not tenants and then we have bona fide tenants.
Let me bring up this nuance. This decision to treat someone as a licensee is a fork in the road because if you choose to call them a licensee and say they’re not a tenant, you’ve got to be very careful because if you choose that route and you’re wrong and they prove that they’re a tenant, you lose your case. Oftentimes, we think of a tenancy as someone who has a written lease, paid a security deposit, and pays monthly rent, but that’s not always the case.
The definition of a tenant under certain local jurisdictions can be work for hire, it can be paying utility bills, it can be a very low threshold and so sometimes, you can get into a dispute as to whether the person has a tenancy or whether they have a license, in which case it’s easier to transition the licensee out.
A beneficiary can also be a tenant if they have a written lease and they’re paying rent - they are both a beneficiary and a tenant and wield a lot of control, especially if you’re dealing with just cause eviction jurisdictions such as Santa Monica, San Francisco, Oakland, or what have you. So you need the consulting of an attorney to figure out what their status is and once you take that leap of faith, if you are proven wrong then you’ve got to start the process over.
What about tenants who have an undisputable landlord-tenant relationship, but stopped paying rent because the owner died and they want to take advantage of the situation and think they are getting a free ride? Perhaps the tenant claims that the deceased owner was responsible for maintaining the building and the renter made repairs themselves.
Having done this for over 30 years, I have seen everything but every once in a while I get surprised. The lost lease agreement when there’s a transition is often very helpful for a tenant who casually doesn’t have a lease and there’s new ownership and the tenant starts sending you reduced rent payments and there is no history of what the rent payments are.
One thing I will say. One solution I often suggest to people is when you’re purchasing a property and there’s rent debt that has accumulated before you became the owner is part of the escrow.
Have the seller assign you the right to collect the debt that has accumulated because if you have that debt and you know it’s five months of rent debt at $2,000 a month, you become the owner, you write them a letter and say be advised, I’m an assignee of the rent debt that hasn’t been paid. Ask something like before the 15th of March, please pay the $10,000 and if not, I’ll formally demand it and you can recoup that fund so as a buyer, you want to always have the assignment of the rent debt that has accrued that hasn’t been paid if it’s discernable and knowable.
There is a lot of free tenant legal representation available and it seems that anyone with the initiative to go to court will have legal aid waiting. For instance, I recently witnessed an eviction case where it was alleged that there was overcrowding in the rental unit; the tenants exceeded occupancy limits.
Well, in Northern California, by and large, tenants get access to free legal representation and tenants’ attorneys will create risk for you. Remember, it’s not a math problem when two plus two equals four and therefore you win the case and therefore you recover possession in a situation where you have overcrowding.
You also have tenant rights to be part of an integrated family, right? And instead of believing that the law is like a math problem where there’s only one answer, remember there are competing narratives. Conceded, it could be overcrowded. On the other hand, they’re all family members and the optics are not good to displace a family who has five kids and two adults when they’re struggling in a town that’s progressive.
It’s tricky and so oftentimes I’m having to caution people that what you think is going to happen isn’t in fact how it’s going to happen. Avoid the dispute. If you bought the building because a seller didn’t know what to do with an overcrowded unit and you bought the building for a quarter million dollars less than what it would be worth vacant, take $25,000 and offer it to that family to transition them out and you’ve avoided the risk of them going to an attorney that raises habitability issues like leaks or a rodent infestation.
You are using money to make money, you’re not using money to have a dispute and you find an attorney who’s looking to make your life easier by maximizing the value out of your real estate and not looking for a dispute, but avoiding it, that’s where you have a good relationship.
There’s still more.
Daniel talks about changing locks, the nuances of commercial properties making concessions to preserve cash flow, illegal units, and more. Watch the entire video here.
