Tenant Must Pay in Money Order Failure

QUESTION: I live in Venice and I recently paid my $850 monthly rent with a couple of general money orders. Three days later, the news reported that the money order company from which I paid the rent had gone bankrupt.

My landlord has since returned the money orders to me. He told me they are no good. He says it’s not his responsibility, and understanding that I cannot afford to pay the rent again, he has suggested that I pay $100 per month until I repay the $850.

If I don’t pay, he says he’ll give me a notice to pay the rent or move out of the apartment. Is this legal? Is it my responsibility to file a claim? The claim form I got says there is no guarantee that I’ll retrieve the total value of the money orders.

Can I take the landlord to court? Can I at least wait to pay the disputed rent until I settle with the money order company?

ANSWER: The Apartment Assn. of Greater Los Angeles (AAGLA) has fielded numerous questions lately in connection with the failure of General Money Order last December. (When seized by the state, the firm was unable to reimburse about $3.16 million of its money orders.)

In this unfortunate situation you are still responsible for paying the rent, even though you had nothing to do with General’s problems. You cannot wait until you settle with the money order company because the owner can evict you for nonpayment of rent.

According to AAGLA General Counsel Trevor Grimm, “Legally, payment connotes both delivery of a negotiable instrument (check, money order . . . something other than cash) and its negotiation, meaning its conversion to cash by the receiver.

“Unfortunately, while you delivered the money order for rent payment, it could not be negotiated, meaning the rent is not paid. As such, you would be well-advised to take the owner up on his payment plan.”

Minimum Tenancy Rule Binding If Signed

Q: I had already decided to rent an apartment in Glendale when, as I was filling out the rental agreement with the owner, he told me there would be a 12-month minimum tenancy required or I would forfeit my $500 security deposit.

I foolishly signed the agreement because I was tired of looking at apartments and I don’t move often anyway.

The problem, noise, began as soon as I moved in. The walls are so thin that I have no privacy whatsoever. Of course, I can also hear every noise my neighbors make.

As you may have guessed by now, I want to move out before the 12-month period expires, but I don’t want to give up my $500 security deposit.

The agreement I signed with the owner says “Standard Month to Month Rental Agreement” but contains a 12-month minimum tenancy provision. Is that legal? What do I have, a one-year lease or a month-to-month rental agreement? Can I get my security deposit back or am I simply out of luck?

A: As you say, your agreement has features of both a lease and a month-to-month rental agreement. It is entitled Standard Month to Month Rental Agreement, yet, section “G”, which was explained to you, contains the 12-month minimum tenancy requirement to which you refer.

Courts generally interpret contracts against the people who drafted them. If a court were to find an “ambiguity” between the agreement’s title and its minimum tenancy provision, you would win.

However, the minimum tenancy provision was explained to you. You accepted it because you were tired of apartment hunting, and you may well have to live with its consequences.

Legitimate deductions the landlord may make from your security deposit include payments for unpaid rent, damages or cleaning. Within two weeks after you move out of the apartment, he is required by state law to refund your security deposit, or balance thereof, less such costs, which he is required to itemize for you.

You are, of course, still required to furnish the owner with a 30-day written notice of your intent to vacate.

If a dispute arises over the amount or timing of any security deposit refund due to you, you will have to sue the owner in small claims court to recover any excess money that you believe was withheld.

Interest on Deposit Legality Not Settled

Q: My question to Apartment Life is one that many of my Los Angeles neighbors also want answered. We were under the impression that our landlord was supposed to pay us interest last November as the result of a 1990 law that was passed in the city of Los Angeles. Are we correct? Does the landlord owe us the interest?

A: The Los Angeles City Council passed an interest-on-deposits law in late 1990 that would have required apartment owners of rent-controlled units within the city to pay such interest to their tenants.

The law required the owners to pay interest every five years, or annually at the owner’s option, or upon a tenant’s vacating of the unit after at least one-year’s occupancy.

On July 31, 1991, in a lawsuit brought by the California Apartment Law Foundation (CALIF), on behalf of AAGLA, Los Angeles Superior Court Judge Carol J. Fieldhouse ruled Los Angeles’ security deposit interest law to be unconstitutional.

Although the city has appealed the decision, no security deposit interest is payable at this time.