Shifting a tenant’s possessory interest in real estate

A landlord, by using a proper notice, can create a different tenancy relationship from the one they initially conveyed to the tenant. A tenant’s possessory interest in real estate can shift from one type of tenancy to another due to:

  • a notice;
  • expiration of a lease; or
  • by conduct.

A classic example involves a change in the type of tenancy which arises when a holdover tenant becomes a month-to-month (periodic) tenant.

A landlord who accepts any rent from a holdover tenant under an expired lease has elected by their conduct to treat the continued occupancy as a periodic tenancy. [Peter Kiewit Sons Co. v. Richmond Redevelopment Agency (1986) 178 CA3d 435]

Thus, the prerequisite to an unlawful detainer (UD) is the service of a proper notice to vacate on the holdover tenant who paid rent for the continued occupancy – rent the landlord accepted to create a periodic tenancy. [Colyear v. Tobriner (1936) 7 C2d 735]

If a landlord accepts rent from a holdover tenant after a fixed-term tenancy expires, the expired lease agreement is renewed on the same terms except for the period of occupancy, which is now periodic. [Calif. Civil Code §1945]

On expiration of a fixed-term lease, the landlord’s continued acceptance of rental payments does not renew the tenancy for another term equal to the term of the original lease. Rather, the tenancy is extended as a periodic tenancy for consecutive periods equal to the interval between rent payments — hence, one month if rent is paid monthly. [Calif. Civil Code §1945]

A landlord who wants to terminate a periodic tenancy they created by accepting rent after expiration of a lease needs to serve the tenant with the proper notice to vacate and let it expire. On expiration of the notice, the tenant who remains in possession of the premises is unlawfully detaining the premises and the landlord may file a UD action to evict them.

Transient occupants and their removal

Relatedly, transient occupancy is the occupancy of a vacation property, hotel, motel, inn, boarding house, lodging house, tourist home or similar sleeping accommodation for a period of 30 days or less. This type of occupant is classified as a guest, also called a transient occupant.

A transient occupant occupies property known as lodging, accommodation or unit, not space or premises. The property is not called a rental. The term “rental” implies a landlord/tenant relationship exists. Further, landlord/tenant law does not control transient occupancy.

The guest’s occupancy is labeled a stay, not possession. During a guest’s stay in the lodging, the owner or manager of the property is entitled to enter the unit at check-out time even though the guest may not yet have departed.

The contract entered into for the lodging is usually called a reservation agreement, but never a rental agreement or lease agreement. [See RPI Form 593]

Guests pay a daily rate, not a daily or weekly rent. They arrive at a pre-set date and time for check-in, not for commencement of possession. Likewise, guests depart at an hour on a date agreed to as the check-out time. Unlike a tenant, a guest does not vacate the premises; they check out.

When a guest fails to depart at the scheduled check-out hour on the date agreed, no holdover tenancy is created. Thus, an unlawful detainer does not exist as with a tenancy conveyed by a rental or lease agreement. A UD action or court involvement is not required to remove the guest. [CC §1940(b)]

However, for the owner or manager to avoid the landlord-tenant UD eviction process, the guest, when checking in, needs to sign a notice stating:

  • the unit is needed at check-out time for another guest who has been promised the unit; and
  • if the guest has not departed at check-out time, the owner or manager may enter, take possession of the guest’s property, re-key the doors and clean up the unit for the next guest. [CC §1865; see RPI Form 593]

Property manager’s self-help to remove guests

To remove a guest who fails to timely depart the unit and remains in the unit after a demand has been made to leave, the manager can intervene to remove the guest, a solution called self-help. If the manager’s intervention might cause a breach of the peace, the manager may call the police. The police or the sheriff will assist, without the need for a court order, to remove the guest and prevent a danger to persons or property during the re-keying, removal of possessions and clean up for the arrival of the next guest. [Calif. Penal Code §602(s)]

Transient occupancies include all occupancies that are taxed as such by local ordinance or could be taxed as such by the city or by the county.

Taxwise, the guest occupancy is considered a personal privilege, not a tenancy. Time share units when occupied by their owners are not transient occupancies and are not subject to those ordinances and taxes. [Calif. Revenue and Taxation Code §7280]

Transient units do not include residential hotels since the occupants of residential hotels treat the dwelling they occupy as their primary residence. Also, the occupancy of most individuals in residential hotels is for a period of more than 30 days.

Also, the operator of a residential hotel may not require a resident to change units or to check out and re-register in order to avoid creating a month-to-month tenancy which would place the occupancy under landlord/tenant law. A residential hotel operator violating this rule is liable for a $500 civil penalty and attorney fees. [CC §1940.1]

A broker or any other person who manages “vacation rental” stays for owners of single family homes, units in a common interest development (condominium project), units in an apartment complex or any other residence subject to a local transient occupancy tax, is to maintain accounting records.

Further, the property manager needs to send a monthly accounting statement to each landlord they represent and make the records available for inspection and reproduction by the owner. They need to also comply with the transient occupancy tax regarding collection, payment and record keeping. [CC §1864]