Why hire a property Manager

With 2024 Winding down and the new year fast approaching, I want to share a brief summary of the new legislation coming out of Sacramento that will affect landlords, the rental market and our role as property managers.

Here is a summary:

* **Contractor Exemption Limit:** Prior to January 1, 2025, California’s contractor licensing law limited the cost for a handyman to work on one project without a contractors’ license to $500. Effective January 1, that limit has been increased to $1,000. This means we can hire a handyman to work on projects in your rental property that cost as much as $1,000 before we need to retain a licensed contractor to do the work.

* **Screening Fee Restrictions:** There are a few changes to how we screen applications for your rental properties. The primary change is that beginning January 1, 2025, we must refund all application fees to any applicant NOT ACCEPTED to rent your vacant property. Prior to January 1, 2025, we invited any applicant who was interested in one of our vacancies to apply through our website. We currently charge $40 per application. This covers the screening fee that we pay to an outside service for a complete Credit, Eviction, Background check and Income Verification. These are hard costs that we have to pay to the screening service. Going forward, we will need to reimburse this screening fee back to the applicant if their application is not accepted. 

The new law also states that we can’t charge a screening fee for a property that is currently unavailable or will not be available within a reasonable amount of time. We must also provide a copy of an applicant’s screening report within seven days. We already meet these new requirements. By the way, effective January 1, 2025, our cost for the screening fee has been increased by $5.00 so we will be charging applicants $45.

* **Move-in, Move-out and Post Repair Photos:** Beginning on April 1, 2025, if we charge a repair cost to a tenant’s security deposit, we will be required to provide photographic documentation of any damage or areas that were not cleaned to the same degree as found prior to their moving in. 

We will also need to provide photographic evidence that the work was completed - all within the 21-day timeframe as required by state law. This means that after a tenant moves out, we are required to photograph any damage caused by the tenant or areas that were not cleaned subsequent to their tenancy and then provide photographs after the repairs and cleaning are completed to justify the expense. 

I believe we meet this requirement as a matter of company policy. Prior to a tenant moving into your rental, we complete a thorough pre-Move-In Inspection, complete with photographs and comments. These inspections take 3-4 hours and consist of hundreds of photographs. We share these inspections with both you, the rental property owner (RPO), and the incoming tenant. We ask the new tenants to sign the pre-move-in inspection and give them the opportunity to complete their own move-in inspection and invite them to take their own photographs which they can add to our pre-move-in inspection and for their records. 

Immediately after a tenant moves out, we complete a move-out inspection, again, with comments and hundreds of photographs. As the work is completed, we take photographs which are added to the respective work orders. These photos can be shared with the tenant. The move-out inspection, along with an itemized statement of charges, are then provided to the tenant within 21 days. 

As a practical matter, when it comes to Security Deposit law, our responsibility to adhere to the law as written, not the desires of the landlord. Security Deposit law is the most contentious issue in landlord/tenant litigation so, as always we will do our best to be fair and impartial to both you as the rental property owner and your tenants,

this law may impact our ability to correctly charge a cleaning charge for example if there are other charges that may take priority. We always to our best to be fair and reasonable to both the landlord and tenants.

IMPORTANT: The law also states that a tenant cannot be charged more than a reasonable amount necessary to restore the premises to the condition it was found at the beginning of their tenancy and the law specifically prohibits charging for professional cleaning services unless absolutely necessary.

* **Security Deposit Law: As a reminder, effective July 21, 2024, the state legislature changed the amount of security deposit a landlord can charge.  Landlords can only collect one month’s rent in addition to the first month’s rent and there is no exception for furnished units. There is an exemption for “Small” landlords, those that own no more than two residential rental properties, anywhere in the U.S., and is a natural person or an LLC. This exemption for a larger security deposit does not apply for applicants who are service members.

Landlords who currently hold a security deposit or those who collected a security deposit in excess of one month’s rent prior to July 1, 2024, may retain the security deposit even though it is more than one month’s rent.

We hope this information is helpful. Please let us know if you have any questions.

Best regards,

Mike