RENTING PARKING SPACES TO NONTENANTS

California has outlawed all forms of commercial rent and eviction control. Therefore, as renting a parking space to a nontenant, for parking use, is a commercial tenancy, there are no eviction or rent control regulations that apply. This means that the landlord can raise the rent or terminate the tenancy without restriction. Thus, the lease agreement, whether written or oral, dictates the terms of the landlord-tenant relationship. However, should the tenant breach the lease (for example, fail to pay rent), the landlord will still have to resort to legal processes in order to terminate the tenancy and to force removal of the vehicle.

Please note that renting garage spaces to nontenants requires the owner to obtain a business license from City Hall. In addition, the local Business and Tax Regulations Code imposes an annual licensing fee for operators of all "parking stations," even if it consists of one garage space. While many residential landlords may choose to ignore this requirement, there are civil and even criminal penalties that can be imposed onto violators. Finally, your insurance company must be informed that you are leasing part of the property for commercial purposes, as this mixed commercial-residential use affects coverage.In addition, please be mindful of safety issues. Renting a parking space in a residential building to an outside tenant allows a non-resident access into your building. Oftentimes, a landlord is less likely to screen a commercial tenant in the same way a residential tenant is scrutinized. Landlords are usually held liable for harm and injuries that occur to the residents at the premises, so be mindful as to who is using the garage.

In addition, a parking tenant’s use of the garage should not be allowed to compromise the security of the building, so ensure that the car owner keeps access doors locked at all times.

Landlords are understandably drawn to the practice of renting garage spaces to nontenants. As parking privileges leased to residents are covered by both price and eviction control, a landlord has no ability to raise parking rent beyond the strict rent limitations; in addition, with recent changes to the rent law, parking usually cannot be severed from the tenancy even with a corresponding rent reduction. Not surprisingly, these factors have led many owners to lease their spaces to outside users. In sum, if you are inclined to pursue this practice, use a well written parking agreement such as the SFAA Parking Lease, screen your tenants, notify your insurance carrier, and comply with all local licensing and tax regulations.

DW