Question: Does temporary displacement due to extensive repairs eliminate a tenant’s right to reoccupy the property?

Answer: No. But structuring the lease appropriately is key to avoiding confusion and extra costs when the worst occurs.

Landlords have a duty to maintain safe, sanitary and habitable conditions for their tenants. But tenants don’t always (read: rarely) take care of the landlord’s property as if it was their own. Therefore, landlords need to protect themselves and their bottom lines from property damage.

Temporary displacement

If the property is destroyed or made uninhabitable, the landlord will need unhindered access to the property to fumigate or make the necessary repairs. [Calif. Civil Code §1954]

When this occurs, the tenant may terminate the lease. When the tenant does not terminate the lease, the landlord will repair the property and prorate the rent for the days the property is uninhabitable.

The landlord will request the tenant vacate the property for a certain number of days. [RPI Form 588]

Mutually agreed-to terms are set out in writing by the landlord and tenant when the landlord needs to repair or fumigate a property requiring temporary displacement. Unless otherwise agreed to, the landlord is responsible for the tenant’s costs of temporarily relocating, including the costs of:

  • a hotel;
  • pet boarding;
  • meals if a kitchen at the replacement accommodation is not provided; and
  • any other expense incurred due to the displacement.

Case study

Consider a rental unit subject to local rent control laws.

A landlord serves a tenant of a rent-controlled apartment a 60-day notice requiring the tenant to temporarily vacate the premises for the landlord to make necessary city-mandated repairs. The tenant refuses to vacate, and the landlord files an unlawful detainer (UD) action to remove the tenant. The tenant enters into an agreement giving the landlord possession of the premises on the condition the landlord pay the tenant’s relocation expenses and allow the tenant to reoccupy the property within 90 days as provided by rent control ordinances for completion of repairs.

When the tenant tries to return after 90 days, the landlord refuses to allow the tenant to retake possession. The landlord claims the tenant has forfeited their tenancy since the tenant agreed to give the landlord complete possession of the unit only in response to the landlord’s UD action.

The tenant claims the landlord wrongfully retained possession of the unit. They demand the landlord pay the difference between the rent they were paying the landlord and the future rents they will be charged in a new apartment as a result of being forced to permanently relocate.

Did the landlord’s UD action eliminate the tenant’s right to reoccupy the property once repairs were complete?

No! The UD action did not constitute a permanent relinquishment of the leased property necessary to terminate the tenancy.

The course held the landlord needed to pay the tenant a sum equal to the difference between what the tenant would have paid for the remainder of the tenancy under rent control and the amount the tenant would pay at a new apartment. [Chacon v. Litke (2010) 181 CA4th 1234]

Tenant insurance

A prudent landlord requires their tenants to carry an insurance policy to cover the loss of goods, business and property. This insurance policy also needs to cover injury or loss of life occurring on the premises.

The landlord is never responsible for the tenant’s personal property, nor does the landlord’s insurance cover the tenant’s property. The tenant needs to insure their personal property against loss.

Commercial tenants need to obtain insurance against loss of business in case of a fire or other event affecting the property that causes them to temporarily shut down operations.

The landlord includes a provision in the lease agreement requiring the tenant to obtain insurance, naming the landlord as the additional insured. [RPI Form 550 §7]

The landlord may require the tenant submit proof of renter’s insurance within a certain timeframe of occupying the residence to ensure this has actually taken place.

Landlord insurance

Residential landlords may be tempted to rely on homeowners insurance to cover their rental property, but homeowners insurance is usually insufficient to fully cover a rental property.

Landlords maintain insurance on the property, to cover the replacement cost of:

  • the building;
  • tenant improvements;
  • alterations; and
  • the landlord’s personal property, including fixtures.

The insurance policy also covers loss of rent due to fire, vandalism and any other circumstances which make the property temporarily uninhabitable. It does not cover loss of rent when the tenant simply decides to vacate or when a replacement tenant cannot be obtained.

The landlord’s insurance also includes liability insurance, which protects the landlord from injuries occurring on the property. The tenant’s insurance includes this protection, but it’s important for the landlord to also carry liability insurance, as this type of insurance covers landlords when tenants or their guests injure themselves on the property and seek compensation from the landlord.

Renting to tenants brings with it many risks, including the loss of rent and unexpected repairs. But maintaining a robust insurance policy, and requiring tenants to do so too, will lessen the financial loss when these sorts of shocks occur.