California Appellate Court Clarifies Requirements of Valid Three Day Notice to Pay Rent or Quit

In Foster v. Williams, decided on September 9, 2014, a landlord brought an unlawful detainer (eviction) action against a tenant for nonpayment of rent. The Three Day Notice to Pay Rent or Quit (the “Notice”) required the tenant to pay $1,350.00 for the month of June 2013. The Notice also provided, “Your rent payment should be made payable to: Guest House Management and payment shall be delivered to: Name: Rick at the following address: www.erentpayment.com,” and listed a telephone number.

At trial, the tenant argued that the Notice was defective because it included a web address for payment of rent rather than a physical address. The tenant conceded that he had been given prior instructions to pay rent through the internet and had been doing so since June 2012. The trial court entered judgment for the landlord. The tenant appealed. On appeal, the Los Angeles Superior Court Appellate Division held that the Notice was defective and ordered the trial court to enter judgment in favor of the tenant.

Under California law, a valid notice is a prerequisite to an unlawful detainer action based on nonpayment of rent. Because of the summary nature of an unlawful detainer action, a notice is valid only if the lessor strictly complies with the statutorily mandated notice requirements. In addition to stating the amount of rent due, a Three Day Notice to Pay Rent or Quit must state one of the following: (1) The name, telephone number, and address of the person to whom the rent payment must be made, (2) The number of an account in a financial institution, located within 5 miles of the rental property, into which the rental payment may be made, and the name and street address of the institution or (3) If an electronic funds transfer procedure has been previously established, that payment may be made pursuant to
that procedure.

In this case, the Appellate Division held that the Notice was defective because it failed to include the physical address of the person to whom the rent payment was to be made; a web address is insufficient. The Court also concluded that Notice failed to comply with the third option listed above because it failed to specifically state that payment could be made pursuant to a previously established electronic funds transfer procedure.

This case highlights that fact that unlawful detainer actions are highly technical. It should be noted that there is no mention that the tenant was willing or able to pay June 2012 rent. The tenant prevailed solely because the landlord failed to include the required information concerning the mechanics for payment of rent in the Notice.

When a tenant is represented by a lawyer, losing an unlawful detainer action can be costly because most residential leases contain a provision entitling the prevailing party to recover its reasonable attorney’s fees from the losing party. In the vast majority of cases, the landlord prevails and is entitled to recover attorney’s fees and costs. However, when a tenant prevails, the tenant is entitled to recover reasonable attorney’s fees and costs from the landlord. The attorney’s fees are not calculated pursuant to a court schedule, but rather by multiplying the number of hours expended by the attorney defending the action by a reasonable hourly rate. The proper procedure for recovering attorney’s fees is for the prevailing party to file a post-judgment motion to fix attorney’s fees. In addition to attorney’s fees incurred in defending the action, the tenant is entitled to attorney’s fees and costs incurred in connection with the motion. Such attorney fee awards can range from a few thousand dollars to tens of thousands of dollars depending on the amount of time the tenant’s attorney reasonably expended. Where a tenant demands a jury trial, fee awards can be in the neighborhood of $25,000.00.

In order to limit potential exposure, many landlords include a provision limiting the amount of attorney’s fees that may be awarded by the court. Because residential landlords seldom incur attorney fees over $1,000.00 in connection with eviction proceedings (exclusive of court costs), many landlords choose a $1,000.00 limit.

Under the Protecting Tenants at Foreclosure Act of 2009, its California state law equivalent or a local rent or eviction control law, a lender who purchases real property at a foreclosure sale often becomes a landlord by operation of the law stepping into the shoes of the prior landlord. Due to the complexities of California laws and increasing percentage of contested evictions, it is more important than ever for lenders and property owners to retain the advice of an experienced eviction attorney before commencing an eviction action against a tenant in California.

Wallace, Richardson, Sontag & Le, LLP represents institutional and private lenders, landlords, property management companies, employers and insurance companies throughout the State of California in real estate, business and employment litigation, from expedited unlawful detainer (eviction) actions to complex class action lawsuits. The firm has built a reputation on providing superior legal representation and service. For further information, please contact us at (949) 748.3600 or visit our website at www.rwclegal.com.