A refresher on preparing and serving 3-day notices to demand delinquent rent

It’s the end of 2024 and with few legal developments to report, let’s get back to the basics and talk about 3-day notices demanding rent. Many housing providers who know their tenant hasn’t paid rent and believe they have a slam-dunk case become horribly disappointed to learn they lost an unlawful detainer (eviction) action because of a defective notice.

Having a properly prepared notice is all the more important when the tenant gets free legal representation from one of many groups. There are brilliant tenants’ attorneys who may not be the best litigators but are adept at discovering procedural errors in notices - they will find mistakes like a heat-seeking missile.

Knowing that landlords can lose months of rental income if the notices are wrong and we have to start the process all over again, let’s talk about getting them right the first time.

What is rent anyway? 

Seems like a simple answer, but we find that in many 3-day notices to pay rent or quit, there are demands for the tenant to pay other obligations that are unrelated to rent.

Think late fees, fees for bounced checks, utilities, parking space charges, and other miscellaneous charges that are not rent. The notice should only list the rent owed and not a penny more.

Ideally, housing providers are aware of their numbers and how much rent has been paid, but this is not always the case. Maybe a landlord accepted partial payments and the accounting is a little off - the exact amount of rent is unknown. In these cases, the landlord can shave some money off of the dollar amount demanded; housing providers don’t get into trouble for under-demanding rent but for asking for more than what is owed.

Let’s talk about the individual, “fill in the blanks” details of what should be contained in the notice in a bulleted fashion.

 

 

More commentary on these points may be instructive.

 

Method of Payment

The tenant needs a physical address to deliver the rent. It’s acceptable to have a P.O. Box or a drop box, or perhaps hand over payment to a resident manager. The point is the tenant needs a physical address to fulfill their obligation to pay the rent.

Some housing providers like their tenants to make direct deposits into a bank account by going to a local branch. If this option is made available, the account number should be specified, along with the address of the nearest branch within five miles of the property.

Zelle and other electronic payment methods have risen in popularity and while this is a viable option to pay rent, it cannot be the only option available.

Contact information of the landlord or property manager

We want to list the landlord’s name, whether it is an individual or a business entity like XYZ Company, LLC. This is who the tenant pays. Yet we still need the name of a contact person. A company name is not an individual. Also, be sure to include a contact phone number. Without it, the case can be lost.

A word about partial payments and electronic payments

Once the notice is served, the tenant is obligated to pay the full amount of rent demanded within three days (excluding weekends and judicial holidays). A partial payment does not satisfy the notice. After the three days expire, the landlord can refuse to accept a partial payment. Yet some landlords want to work with the tenant and choose to get paid in drips and drabs.

That is their prerogative, but what housing providers need to understand is that when a partial payment is accepted, the notice is no good; when payment exchanges hands, the notice is waived. In this event, another 3-day notice demanding rent would have to be served.

Conversely, a landlord is duty-bound to accept full payment of the rent if it is paid in the three-day window.

A relatively new phenomenon we encounter is when a tenant deposits money into the landlord’s account after the three days expire and the deposit is not welcome or authorized. So, for example, a 3-day notice has been served and the tenant has not paid the full amount due. The landlord has perfected their right to evict. Yet the tenant takes it upon themselves to make an electronic payment.

In this scenario, the landlord can return the money with a kind note informing the tenant that the rent is not accepted. If the funds can be returned back electronically, great. If not, a check can be written to the tenant.

How many days does it take to count to three? 

Lawmakers believed that tenants broadsided with a 3-day notice to pay rent or quit need more time to understand their rights, formulate a defense, or come up with the funds necessary to make a full payment. So a law was enacted excluding weekends and judicial holidays from the 3-day count. Let's use December 2024 as an example and assume that the rent was due on December 24th, the day before Christmas.

The notice is served on Tuesday the 24th, which is Day Zero. The 25th is a judicial holiday, so this day does not count. Thursday the 26th is Day One. Friday the 27th is Day Two, but now we enter the weekend with Saturday and Sunday not counting.

Monday the 30th is now the next business day and represents Day Three. The tenant has until midnight to pay the full amount of rent owed. As you can see in this example, it will take several days for the 3-day notice to expire.

Why the number of bedrooms? 

Certain locales like Oakland and Berkeley have done something extraordinary by requiring rent to reach a certain threshold before a 3-day notice to pay rent or quit can be served. Let’s take an example.

As of the date of this writing, the “Fair Market Rent” for a one-bedroom apartment, as determined by HUD, is $2,131. But let’s say that the actual rent is $1,850. The tenant doesn’t pay the $1,850 rent owed. Can the landlord serve a 3-day notice demanding rent? No, because there is not enough rent owed. We’ll have to wait until the tenant owes the Fair Market Rent of $2,131.

We believe this is a terrible policy and penalizes housing providers who have low rents. Ironically, lawmakers calling for affordable housing have ensured that rents will be raised to what the government deems to be fair. Indeed, Bornstein Law recommends that landlords understand this metric of Fair Market Rent and on unit turnover, set new rent equal to or more than this dollar amount.

It's expected that these new laws will be challenged in the courts but unless they are, we'll have to comply with them.

Parting thoughts

As you may be aware by now, a new law going into effect in 2025 will afford tenants 10 days to respond to an unlawful detainer action (again, excluding weekends and judicial holidays). This is a topic we took on here.

A more elongated eviction process, coupled with a phalanx of tenants’ attorneys looking to identify mistakes in notices means that housing providers need to be extra vigilant in preparing airtight notices when demanding rent and serve them without procrastination.

Of course, this is the domain of Bornstein Law and we are glad to assist.