I recently had to fire a client I’ve been working with for over two decades. I terminated the relationship because we had been contracted to place a tenant in their available rental property. We’d found an applicant who was genuinely qualified: solid rental history, excellent income, credit scores well above what we expect. However, the owner – my client – instructed me to find a way to turn them down. The only reason was because of the tenant’s intention to operate a Licensed Child Care Home in the residence.
California Health and Safety Code 1596 and 1597 cover the operation of Licensed Child Care Homes, whether a “Small” home or a “Large” home. A landlord cannot prohibit a tenant who is already in residence from opening and operating a licensed child care home. A landlord also cannot use an prospective tenant’s intention to operate a Child Care Home as the sole reason to decline that applicant.
The laws are very clear. You might argue that a Child Care Home constitutes a commercial use of the property. However, California Health and Safety Code specifies that this use is classified as a residential use of the premises. The underlying philosophy supporting this position is that children should be cared for in an environment that is as close as possible to a recognized “home” environment. Accordingly, the laws related to licensed child care have been created specifically with the welfare of children in mind.
Additionally, landlords often express concern that this use of the premises might somehow jeopardize their existing insurance policy on the premises. California Insurance Code 676 states that an insurance company cannot terminate a policy simply because your tenant is operating a Licensed Child Care Home.
Child care is undoubtedly a necessity of life for many working parents in California and beyond. According to CHSC, a licensed home provider must operate their business “in their residence,” they can’t do so at the local community center, for example. However, the code does not specify the operator must own the residence. Therefore, your rental property is considered an acceptable site for your tenant, the provider, to care for children.
Please understand this fact: declining an applicant, or retaliating against an existing tenant, who has expressed intention to operate a Licensed Child Care Home in your residence is a formula for very bad circumstances. You will undoubtedly find yourself in a very difficult situation. To make a bad scenario worse, if you take retaliatory action and you end up getting sued, your liability insurance might not cover you, arguing that your decision was an “intentional act” and therefore you don’t have coverage.
Licensed child care homes are protected by a variety of different regulations and agencies within the state of California, and you have to recognize that they are an acceptable use of your rental property. In a separate blog, we’ll talk about what you can do to provide some protections for yourself, your property and your tenant. If you have any questions on this or other issues associate with property management, contact us at DeDe’s Rentals.
