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Court Talk: A Mail Mandate

Sleep EZ v. Mateo Los Angeles County Superior Court Appellate Division

Normally, a payment is not “made” until the creditor receives it; however, if the creditor directs payment by mail, the payment is “made” when deposited in the mail.

This has a significant impact on landlords who are attempting to collect unpaid rent with a three-day notice to pay or quit. In the Sleep EZ v Mateo case, the tenants, the Mateos, had lived at the premises for 30 years. In September 2015, they failed to pay the rent on the first of the month when rent was due. A three-day notice to pay rent or quit was served. When the notice expired and no rent was received, the property manager filed the eviction lawsuit.

The tenants testified that a money order had been purchased and mailed to the landlord’s post office box. They also testified that they had paid their rent in this manner for the three decades they had lived at the property and that they had been told the only acceptable method of payment was by mail.

The landlord argued that he had never agreed that mailing of the rent constituted payment of the rent and that the Uniform Commercial Code states that a money order remains unnegotiated until it is honored. The tenants argued that since mailing was the only method permitted by the agreement of the parties, they had no control over whether the mail was received or not. The tenants relied on Civil Code Section 1476, which states that when a creditor directs the debtor to pay in a certain way, the debt is discharged once the debtor complies with those instructions.

In this case, the court decided that by directing the tenant to pay exclusively by mail, the landlord shifted the risk of loss of the payment from the tenant to the landlord. When a landlord directs a tenant to pay rent by mail, payment is complete when the tenant places the rent check in the mail to the address specified by the landlord. The appellate court agreed and found the tenants were not in default.

Breach Break Equities, LLC v. Lowell San Diego County Superior Court

The landlord is victorious in trial, judgment is entered and possession is restored to the landlord. Now what? Recent case law supports the idea that you must wait before executing the writ of possession until the time for an appeal has expired. This issue was the focus of the case Breach Break Equities, LLC v. Lowell.

The facts of the case are simple. The trial court entered judgment against the tenant and issued a writ of possession. Subsequently, the tenant appealed the judgment. Nonetheless, while the appeal was pending the landlord evicted the tenant from the premises and the property was sold to a third party.

The California Court of Appeal heard the case and reversed the judgment for possession. Moreover, because the landlord prematurely evicted the tenant, the Court of Appeal ordered that the tenant might be entitled to restitutionary damages. Tenants generally have at least 30 days to appeal a decision in an unlawful detainer action. And while possession can be restored to the landlord immediately after the judgment is issued, when an appeal is filed it might be prudent for the landlord to wait. If the landlord elects to remove the tenants from the premises, the appellate court in this case held, a “landlord [who] evicts a tenant before the appellate rights of the tenant have been exhausted… assumes the risk it will be subject to a full accounting and restitution if the judgment granting the writ of possession is reversed on appeal.”

CBM v. Llamas Fresno County Superior Court, Appellate Division

The lease (or rental agreement) describes the rights and responsibilities between the landlord and tenant. Local, state and, sometimes, federal laws also provide some of the rules with which the parties must abide. When you have a tenant engaged in activity that violates the written lease, it is important to serve notices that specifically identify the behavior for which the tenancy can be terminated. Failing to give the tenant notice, even when it could form the basis of the eviction, could prevent you from regaining possession of the unit.

The importance of serving a proper and complete notice is highlighted in the case CBM v. Llamas. In CBM, the tenant, Llamas, was receiving a federal subsidy to offset the cost of rent. She was required to update her income information by December 31 of each year to remain eligible for the program. The property manager worked with the tenant annually to complete the necessary paperwork.

In 2015, Llamas was unable to meet with the property manager until after Thanksgiving because she was living in a 90-day substance abuse program. The property manager had been told not to complete Llamas’s paperwork, even though it wasn’t due until January 1. Because Llamas’ paperwork wasn’t updated, the rent subsidy stopped and she was obligated to pay the entire rent, which she was unable to do.

The property manager served a nonpayment of rent notice and filed an eviction lawsuit on that basis. During the trial, the property manager testified that, in addition to the failure to pay the rent, the tenant was being evicted for other reasons not stated in the lawsuit, including that Llamas’ boyfriend had been arrested in her unit, during which time the police removed stolen property. The judge ruled against Llamas, finding that her completion of the substance abuse program supported an inference of illegal drug use at the premises, which was a violation of her lease, and that she had failed to provide a reasonable excuse for failing to complete the annual paperwork.

Llamas appealed, arguing that the property manager’s refusal to complete the required paperwork was in bad faith and that she could not be evicted based on the illegal activity because the notice on which the eviction lawsuit was based did not clearly specify the conduct that violated the lease. Llamas won the appeal and was allowed to remain in possession of the unit.

Often landlords want to take the path of least resistance; in a jurisdiction where the landlord needs “cause” to evict, nonpayment of rent is that path. But as shown in the CBM case, failing to include all possible bases for an eviction could have unintended consequences.

The information contained in this column is general in nature. Consult the advice of an attorney for any specific problem. Alana Grice Conner and Clifford E. Fried are with Fried & Williams LLP and can be contacted at 415-421-0100. ©2018, Fried & Williams LLP. All rights reserved.

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