North 7th Street Associates v. Constante

Facts: A landlord enters into an oral month-to-month rental agreement with a residential tenant on an unpermitted property that lacks a certificate of occupancy. The tenant falls behind on rental payments and the landlord serves the tenant a three-day notice to pay rent or quit which calculates the past-due amount as the monthly rent multiplied by the number of months the rent was not paid. The tenant fails to pay the past due amount and the landlord attempts to recover the property under an unlawful detainer (UD) action.

Claim: The tenant seeks to retain possession of the unit, claiming the landlord may not recover possession under a UD action since the tenant had no obligation to pay rent on an unlawful unit and thus the three-day notice alleging past-due rent is fatally defective.

Counter claim: The landlord seeks possession of the unit, claiming the tenant’s right to possession is terminated by the UD action.

Holding: A California Appeals Court holds the landlord may not recover possession of the unit since, as there was no valid rental agreement to compel the payment of rent, use of the three-day notice to pay rent or quit which referenced a past-due amount did not support the UD action. [North 7th Street Associates v. Constante (November 16, 2016)_CA4th_] 

Editor’s note — Here, the rental agreement was void as the property was not authorized to be used as a dwelling. As the landlord was not entitled to collect any rent from the tenant, the three-day notice referencing any past-due amounts was defective.

However, the landlord was not without remedy. A housing inspector previously issued a Notice of Abatement which directed the landlord to either demolish the unapproved unit or obtain the required certificate of occupancy. The landlord could have regained possession on these grounds, though instead improperly sought possession through use a UD action premised on a three-day notice to pay rent or quit.

When a valid lease or rental agreement exists, the Three-Day Notice to Pay Rent or Quit – With Rent-Related Fees published by RPI (Realty Publications, Inc.) may be used by a landlord or property manager when a tenant defaults on amounts due under an agreement, to notify the tenant of the amount of the delinquent rents and related fees payable within three days or vacate and deliver possession. [Calif. Code of Civil Procedure §1161(2); see RPI Form 575]

Alternatively, a residential landlord may choose, due to the discretion of local UD judges, to use a three-day notice to pay or quit form which does not include rent-related fees. [See RPI Form 575-1]

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