Some Rent Deposits Don’t Earn Interest
QUESTION: I live in Canoga Park, and I am moving out of my apartment of seven years. When I called the property management company to ask about being paid interest on my security deposit, I was told that they were exempt from the law. Can this be true?
ANSWER: It could be. The law requiring residential landlords to pay interest on security deposits applies only to rent-controlled rentals in the city of Los Angeles.
Many types of housing accommodations are exempt from the law. Your unit could be one of them. Exempted units include “commercial units, housing accommodations located in a structure for which the first certificate of occupancy was issued after Oct. 1, 1978, single-family dwellings, where only one dwelling unit exists on the lot, governmentally subsidized housing, nonprofit accommodations, nonprofit housing, luxury units issued a Rent Stabilization Division certificate and substantially renovated units issued an RSD certificate.”
To find out if your unit is registered and whether you are entitled to interest on your security deposit, call the RSD Registration Section at (213) 847-7490.
Mortgage Loan Note Now Belongs to Heirs
Q: In 1990 I bought a 10-unit apartment in Los Angeles from an elderly gentleman. I made a 24% down payment on the property, and he agreed to carry the balance of the loan as an “interest only” loan for five years. At the end of the five years, try as I might, I was unable to refinance because of the collapse of the real estate market. I owed more on the property than it was worth.
The seller agreed to continue our interest-only arrangement for an additional two years. We signed a note to that effect. Now, I believe, this gentleman has passed away.
If he has died, am I still obligated to continue the monthly payments? My agreement was with him only, no one else. In my mind, if he is deceased that should void and nullify the note. I am also assuming that I am no longer responsible for the balance of the note. What is my legal responsibility in a case like this?
A: According to Trevor Grimm, general counsel to the Apartment Assn. of Greater Los Angeles, “The promissory note is an asset of the dead seller’s estate. The decedent’s heirs must pay federal estate taxes on its value [the full principal amount plus accrued interest] as of the date of death. Seek competent legal help to determine all of the implications of this situation.”
Leasing Administrator Has Right to Hike Rent
Q: I have been living in my Redondo Beach apartment complex with my roommate for the last five years. We recently got a letter from the leasing administrator notifying us that we are not on a lease (it expired in August 1995) and that we are paying significantly less rent than the market value of the apartment.
The letter goes on to say that new policy dictates that they must now raise all rents to the market rate and anyone not on a lease must pay higher rent, $25 over market. We never got any notice that our lease was up and didn’t realize it. Was it our responsibility to inform the management that our lease was up and that we wanted to sign a new one? Can they raise the rent like this?
A: If a lease is offered, you have the option to sign or not to sign. Leases are bilateral agreements between owners and renters and no law requires owners to offer them, just as nothing requires renters to sign them. The owner, however, may require you to sign one as a condition of your tenancy.
In some cities, like Los Angeles, rent control laws do allow owners to evict renters if they will not renew their leases, but that’s not the case in Redondo Beach.
As for the rent level, the management company may raise it to the market rate with a 30-day notice of change of terms of tenancy, and you may stay or move at your discretion.
If you’re planning on staying at the apartment for the next year, you may as well sign the new lease and save the $25 monthly rent surcharge.
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Postema is the editor of Apartment Age magazine, a publication of AAGLA, an apartment owners’ service group. Mail your questions on any aspect of apartment living to AAGLA, 12012 Wilshire Blvd., Los Angeles, CA 90025.
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Apartment Group to Host Trade Fair The Apartment Assn. of Greater Los Angeles will host a trade fair at its office at 621 S. Westmoreland Ave., Los Angeles. Apartment owners, managers and management companies are invited to attend the free show.
Six seminars will be presented during the day. For more information, call Angela Sapien at (213) 384-4131.
