An apartment building can be a great investment for a California real estate investor, but it often requires a great deal of maintenance and attention. California law sets numerous standards and requirements for leased residential premises, particularly when a property includes multiple residences. These include ongoing responsibilities for maintenance and management of the property. Rather than duties owed to individual tenants, these are duties owed to all tenants as a group. Here, we offer a general overview for apartment building owners in California.
Minimum Standard of Habitability
A California landlord is bound by the implied warranty of habitability, which holds that a landlord, merely by offering an apartment for lease, is warranting that it is suitable for residential use. California law defines this duty in very general terms, requiring a landlord to “repair all deteriorations…occasioned by his want of ordinary care,” and to “put it into a condition fit for such occupation, and repair all subsequent dilapidations thereof.”
This implied warranty also means ensuring that the premises meet legal requirements under local building codes, state and federal laws regarding accessibility, and laws involving hazardous substances like lead paint. If a landlord fails to meet their obligations under this warranty, a tenant can get out of a lease by claiming constructive eviction.
In the context of an apartment building, a landlord’s duty applies to each unit and to all common areas. The underlying obligation is no different than in a single-family dwelling, except that it is likely to be larger in scope, and to affect multiple tenants at once.
If an apartment building has at least sixteen units, and the building owner does not reside there full-time, California law requires “a manager, janitor, housekeeper, or other responsible person” to live on-site. If the apartment building has more than four, but fewer than sixteen units, the name and address of the owner, or the owner’s agent, must be posted in a prominent location. Failure to meet these requirements can result, under state law, in a fine of up to $1,000 and/or imprisonment of up to six months.
Energy Efficiency Requirements
The California Energy Commission (CEC) recently released its 2019 Building Energy Efficiency Standards, which regulate new construction and modifications to existing buildings and will take effect at the beginning of 2020. The CEC’s 2019 Residential Compliance Manual includes standards for “low-rise residential buildings,” defined as multifamily dwellings with no more than three stories. A separate manual will address standards for high-rise apartment buildings.
Maintenance Obligations vs. Tenant Rights
The implied warranty of habitability gives tenants the right to expect a minimally functional apartment and apartment building. The covenant of quiet enjoyment gives them the related, but potentially contradictory, right to enjoy the use of the leased premises without interference by the landlord. Should repairs or renovations be necessary, a landlord will most likely have to find a way to do them without burdening the tenants too much. Otherwise, this can also lead to constructive eviction claims.
A landlord cannot compel tenants to move out in order to perform repairs, except in specific circumstances that create new obligations. For example, if a court determines that the condition of a property “substantially endangers the health and safety of residents,” § 17980.7(d) of the Health and Safety Code may require the landlord to pay to relocate the tenants temporarily, including the cost of packing, moving, and insuring their possessions.
A California real estate investor should understand the extent of these requirements as part of their due diligence for a potential investment. The specific requirements vary from one local jurisdiction to another.