Overview of Lease Renewals in California
California lease renewals operate under the same notice rules provided for initial leases. Written notification is required for all lease renewals. There are different 30-day and 60-day notice periods depending upon the specific renewal, as noted below.
For month-to-month rentals, the landlord or tenant can terminate by providing a 30-day written notice. If the tenant has been in place for one year or more, then the landlord must give a 60-day notice instead.
For a rental of less than one year, the landlord is only required to give notice of a rent as part of a new lease. The new lease can include an increase in the monthly rental payment. If the original rental was already paid by the last of the original lease, and there is a rent increase, the tenant is not obligated to pay the increase until the last day of the month when the lease ends.
Rent increases from a landlord are subject to the same notice period as the cancellation of the lease. Thus, for a lease of less than one year, the landlord must give a 30-day notice for an increase; a lease of one year or longer requires a 60-day notice.
Tenants should understand that even if the landlord fails to provide notice that they are renewing a lease , this may not prohibit the landlord from successfully enforcing the lease in court. Having on-time notice protects both the landlord and the tenant. A tenant failing to give timely notice of plan to vacate usually incurs extra costs in having to pay penalties for failed rent payments. A landlord failing to provide timely notice of non-renewal creates the risk that the tenant will mistakenly believe that payment for the next month’s rent is not owed, and these costs can be in excess of the monthly rental amount.
If the landlord or tenant continues to make the monthly rental payment even after the notice of the lease is ending, the lease is deemed to continue since this is consistent with the intent of the landlord and tenant to remain in their current contractual relationship. There is one exception to this rule. If the original lease provided that it would continue for an additional three years after the initial expiration date, neither the landlord nor the tenant can unilaterally terminate the lease, and provide notice of the desire to not renew the lease, but instead would have to rely on other exit strategies found in California law, such as termination pursuant to a 90-day notice where there is significant repair need of the property.
Key Lease Renewal Legal Requirements
As is evident by the foregoing discussion, there are myriad legal and practical issues involved with a lease renewal. For landlords, in addition to the need to update market rent – which may involve negotiations with the tenant – leasing staff should be mindful of the following legal provisions when renewing a lease:
• On a renewal, a landlord and tenant must comply with the California Department of Public Health regulations and other safety standards issued by the State. See Cal. Health & Safety Code §§17920.3-4; California Code of Regulations Title 25 §§ 36-36.3.
• The written lease must provide "the name and address of the person authorized to receive communications and service of process" on behalf of the landlord. Cal. Civ. Code §§ 1962 & 1962.6. If the landlord’s agent changes from the original lease term to the renewal term, the landlord must serve notice of such change on the tenant. Cal. Civ. Code § 1962.5(a).
• Rental agreements for residential property constructed prior to January 1, 1979 and located within the jurisdiction of a local rent control measure will provide an opportunity for a tenant to find out whether the home is "subject to the terms and conditions set forth in the local rent control ordinance." These lease agreements should provide the names and contact information for the local rent control agency, if any. In addition to rent control, a tenant can obtain the "most recent rental housing information" for the unit from such an agency. See Cal. Civ. Code § 1942.5. Agents for local rent control authority include the City of Los Angeles Housing Department, as well as similar agencies for San Francisco, Berkeley, Oakland, and San Jose.
• Where a change in rent is proposed, the landlord is required to provide the tenant with a "copy of the change of terms of tenancy, including rent increase, which shall be signed by the parties (or a copy of the notice of termination and notice of increase[)]" prior to the expiration of the residential lease. Cal. Civ. Code § 827(c).
• A residential lease should contain addendums regarding lead-based paint (for properties built before 1978) and mold. Cal. Civ. Code §§ 1941.7; & 1942.5. Commercial leases should address both lead and mold by way of an appropriate clause or rider.
• Finally, there are many forms of "free rent" and pro rata rent calculations that are not very transparent to the untrained eye. So it is important that leasing staff apply "the same rental practices" to renewals as are applied to new leases. Cal. Civ. Code § 1938. An explanation of the various forms of "free rent" is found here.
Landlord and Tenant Responsibilities
Tenant rights and responsibilities are often overlooked aspects of lease renewal negotiations. However, understanding what rights a tenant has—and what is expected of the tenant—can help smooth the process and avoid potential legal pitfalls.
6.1: Notification Periods
Under California law, unless otherwise agreed upon, a landlord must notify the tenant of their intent not to renew a lease at least 60 days— 33 days for mobile homes— before the expiration of the lease term, or the renewal term if one was previously negotiated. If the lease does not specify a renewal term on expiration, the notice period drops to 30 days. For leases shorter than one year but greater than 1 month, the notice period is 30 days. California Civil Code sec. 1943(b).
6.2: Accepting or Rejecting the Renewal Request
A tenant is under no obligation to agree to a lease renewal. They can reject a renewal request verbally or in writing. However, refusing the renewal request will not relieve them of the responsibility of paying rent through the end of the original lease term.
If a tenant wants to extend the existing lease term, they can do so by initiating an acceptance of the offer. If the lease term is extended, the landlord is not allowed to raise the rent during the extension term unless they have a clause in the lease.
6.3: Right to Not Renew
If a tenant does not wish to enter into a new lease, they are not obligated to do so. However, the original lease still exists and the tenant is obligated to pay rent until the end of the term. If the lease is, for example, for a year, notice of non-renewal on day 364 will not allow the tenant to move out until the hundredth day of the next month.
6.4: Non-Renewal Due to Tenant Conduct
A landlord may refuse to renew a lease if the tenant materially breached the lease in some way. A material breach is something substantial—this could involve failing to make timely rent payments or keeping the property in a poor quality. A material breach is generally one that negatively impacts the property in some way.
Requirements for a Landlord in a Lease Renewal
Landlords have several obligations related to lease renewals that are important to understand. If a lessor or landlord wishes to offer a renewal, he must do so reasonably and fairly.
One of the most important things a landlord can do to establish that it has satisfied this obligation is to document exactly what happened during the lease renewal process. It should not come as a surprise that the lessor or landlord must go into some detail about what occurred during the process if there is a dispute. However, if the lessor can document those details, it should have a good case to show that it met the duty of good faith and fair dealing. Examples of how to document such a process include emails, a tenant portal that logs communications, or even written letters.
It is also helpful for landlords to provide at least 30 days written notice of non-renewal. This will provide sufficient time for the tenant to respond if he desires to renew and it will also give the lessor or landlord time to adequately respond if it does not wish to renew.
Finally, if a landlord wants to end the lease pursuant to paragraph 29(f) of the lease, it must do so in a commercially reasonable manner. What is commercially reasonable is subject to the specific knowledge of the lessor or landlord, and typically will be analyzed along with the manner in which other terminations were conducted by the lessor or landlord. It is again important in this section to provide as much detail as possible through documentation as to what occurred during the termination process. If done properly, the lessor or landlord will no doubt have a strong case to show that the duty of good faith and fair dealing was met.
How Rent Control Affects Lease Renewals
Rent control laws vary greatly from city to city in California, with different rules governing the renewal of leases signed after rent control laws came into effect and when leases will automatically convert to month-to-month agreements. The restrictions vary depending on how long a tenant has resided in a rental property and how much they pay in rent.
For example, in San Francisco, the Rent Control Ordinance allows rent-controlled leases to be renewed if the tenant has resided in the apartment since before June 13, 1979, allowing an annual rent increase equivalent to the greater of either the annual change in the San Francisco/Bay Area CPI or 60 percent of the annual changes in the local minimum wage. If the lease is for an apartment that was not tenant-occupied on June 13, 1979, or one that has become vacant since then, the landlord may establish the initial rent. After that initial tenancy, the rent may be increased up to once every 12 months, generally by the greater of either the annual change in the San Francisco/Bay Area CPI, or the annual percentage rate of Consumer Price Index for All Urban Consumers for all items (San Francisco OA), or three percent.
The lessee must provide the landlord a 28-Day Notice of Non-renewal at least 28 days before the termination date established in the original lease . If the aforementioned notice is not received, the lease is self-renewing for 30 days based on the same monthly rental rate, unless one of the parties issues a 28-Day Non-Renewal Notice. However, in cases where a lease is not renewed and the unit is rented to the same or different lessee within 12 months of the original termination date, the owner has the right to collect the difference between a market-rate rent and the higher rent that was established by the original lease. Landlords have the right to reject the renewal of a lease if the tenant has violated any of its terms and conditions, including:
Written notice must be provided to vacate the dwelling unit on the basis that the tenant has violated the terms or conditions of the lease, specifying the lease provision(s) that have been violated. If there are "hoards of trash" in the unit, the landlord should take pictures in order to prove the violation.
Both Santa Monica and Berkeley have specific grounds for which landlords may exercise their right to issue a Notice of Non-Renewal to the tenant. Unlike in other cities, tenants have the right to appeal the decision to terminate the lease. In these two cities, tenants are also entitled to a relocation payment if a lease is not renewed.
Resolving Disputes on Lease Renewals
Even the simplest of lease renewals can lead to disagreements between landlords and tenants. These disagreements can include: Wage vs. rent: Some States do allow a tenant to legally apply his or her wages toward a rental payment. However, California is not one of these states. Under California law, the rental agreement must be in writing. The answer is "no" when a tenant wishes to apply wages toward the rental payment. They may still be able to use their wages to pay the rent but it must be agreed upon in writing by both parties. Evictions: While you and your landlord may feel ready to sign the lease extension, the landlord may not have the same view in mind. If the landlord has indicated that he or she does not want to extend the lease, you may be required to leave. In this case, you’re being evicted. Make sure you are prepared for this process, and check to see if you need to take any special steps to move out. If you currently owe rent, you might lose a part of your deposit to a non-returnable fee. The landlord may also sue you for any unpaid rent for the rest of the term. If the landlord does not have a signed written agreement with you after your lease has expired, the judge may order you to leave. However, if you have an agreement that extends your lease, you may be able to stay. When you and your landlord cannot seem to agree on a renewal, sometimes hiring a third party to mediate between the two of you is the best option. It does not have to be a formal mediation process such as the ones that can be found in a courtroom. The only requirement is that both of you agree to use them. An unbiased person will act as neutral ground for both of you and should listen to both sides without favoring one over the other. Whether this mediation is informal or not, when it is done right, you should have a fair and balanced resolution. Formal mediation will even prepare you for any legal repercussions that may occur should the negotiation fail. Sometimes, though, mediation will not work. In this case, taking care of the dispute may be as simple as appealing to the landlord’s good nature. But if it fails to solve the problem, litigation may become necessary. Litigation for a wrongful lease renewal may include non-eviction actions. For instance, if you and your landlord have a dispute over the increase in the rent for the new lease, and negotiation fails, the court may intervene. It generally addresses the issue. For instance, the court may require an agreement for rent in an amount less than the landlord sought. Even if the landlord has a right to establish the lease terms, the court expects him or her to act in good faith. (Cal. Civ. Code § 1942.5(b).)
Frequently Asked Questions About Lease Renewals
Q: How much notice does a landlord need to give a tenant before a new lease goes into effect?
A: California law does not require a specific notice period for a new lease. However, if the tenant is month-to-month and the landlord is requesting that the lease automatically renew, the landlord must provide the tenant with written notice at least 30 days before the renewal date.
Q: Does automatic renewal still apply if either the landlord or tenant requests a new lease?
A: No. The automatic renewal clause in your lease is only applicable if neither party wishes to modify the lease agreement terms.
Q: When does an automatic renewal agreement NOT apply?
A: Automatic renewal agreements do not apply in the following instances: Automatic renewal agreements also do not apply for tenancy agreements over a year.
Q: Should I have an attorney review my lease renewal before signing and agreeing to the renewal?
A: Unless you are familiar with the terms of the lease agreement, you should always consult with a California attorney. The attorney will ensure that the lease renewal adheres to California laws and that your rights are protected.
Q: Is there any recourse if I signed a lease renewal before knowing the tenant was not satisfied with their lease terms?
A: Unfortunately , no. Once you sign the lease renewal you have agreed to the terms whether or not the tenant understood the lease agreement. You should always ask the tenant if they have any questions before signing the lease renewal to ensure mutual understanding.
Q: If a tenant missed their rent payment within the lease renewal time frame, will they still be subject to the lease renewal?
A: Yes, unless you were informed of the tenant’s failure to pay rent within the lease renewal timeframe. If the tenant provided you with written notice of their failure to pay rent, you must provide the tenant with 30 days’ written notice to terminate the lease agreement and allow the tenant time to pay rent.
Q: Does a tenant have the right to leave the premises if they did not receive 30 days’ notification of the lease renewal?
A: The tenant must abide by the customary 30-day notice. If the tenant does not receive the 30 day notice of the lease renewal, the tenant can address the issue with the court system.