SFAA v. CCSF (2022): Court of Appeal Affirms San Francisco’s Eviction Control Authority in Prohibiting Rent Increases that Coerce a Tenant To Vacate

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“Plaintiffs contend the amendment is preempted by Costa Hawkins because it seeks to regulate the rent a landlord may charge on exempt properties. The city contends and the trial court agreed that the amendment at issue here is a valid exercise of the city’s authority to regulate evictions. We agree that the amendment is designed to deter landlords from attempting to avoid local eviction rules by imposing artificially high rents in bad faith, and thus is a reasonable exercise of the city’s authority to regulate the grounds for eviction, which is not preempted. Accordingly, we shall affirm the judgment.”

The Court of Appeals upheld the San Francisco Real Property Court’s denial of the petition of San Francisco Apartment Association (and others) for a writ of mandate, enjoining Ordinance 5-19 – an amendment to the tenant harassment ordinance prohibiting increases for units exempt under Costa-Hawkins, if the increase coerced a tenant to vacate.

Petitioners argued that Costa-Hawkins’ preemptive effect on local price controls displaced local authority to circuitously discourage a landlord from exercising their rights. The panel was particularly focused, however, on the specter of the hypothetical “$1 million dollar a month” rent increase (which does not appear to have ever actually happened). It questioned why a local government would not have the authority to protect tenants from displacement, when the rent increase itself wasn’t the true goal. The ruling undercuts Costa-Hawkins and turns ordinary market transactions into jury questions. Landlords would be wise to obtain market advice from qualified experts – and perhaps even negotiate with tenants – before imposing increases.


Lara v. Menchini (2021): Appellate Division of San Francisco Superior Court Affirm’s Landlord’s Ability To Reject Coerced Creation of Rent-Controlled Subtenancy Following Rent Default

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“When Menchini failed to pay the rent for February and March 2019 before the three-day notice to pay rent or quit expired, he forfeited the lease, and the landlord was entitled to possession as against the sublessee. Lara was not required to accept rent from Menchini’s subtenants. (See Civ. Code, § 1947.3, subd. (a)(3)(A) [‘A landlord . . . is not required to accept the rent payment tendered by a third party unless the third party has provided to the landlord . . . a signed acknowledgment stating that they are not currently a tenant of the premises for which the rent payment is being made and that acceptance of the rent payment does not create a new tenancy with the third party.’]. Had Lara accepted rent directly from the subtenants without such a signed acknowledgment from them, she may have inadvertently created a new tenant-landlord relationship with them.”

In Lara v. Menchini, a landlord prosecuted an unlawful detainer for non-payment of rent, following non-payment by the master tenant. Subtenants approached the landlord in response to her initial rent demand, attempting to pay their rent directly to her. She refused.

The landlord prevailed at trial and the subtenants appealed on the basis that unlawful detainer law and Civil Code §1947.3 required her to accept their rent to cure the notice. The court of appeal rejected this contention.

It held that the non-payment of a master tenant effected the forfeiture of the lease, except in previous, distinguishable cases, where the landlord demanded rent from the subtenants. Further, Civil Code §1947.3 (which allows third party rent payers to help tenants avoid default) did not apply, because the landlord was permitted to require that they declare they are not “occupants”. (After all, occupancy coupled with payment of rent to the landlord creates a tenancy.)

Of course, the subtext of this dispute is that the subtenants were attempting to usurp their departed master tenant’s rent control, but without a basis for doing so. The court concluded that the landlord was entitled to demand the subtenants enter a new lease at market rent if they were going to remain in possession and then to proceed in unlawful detainer, when they declined.


Small Property Owners of San Francisco Urge Voters To Vote “No on Prop. 21” This November

The Small Property Owners of San Francisco asked two of its board members, Paul Utrecht of Utrecht Lenvin, LLP and Costa-Hawkins.com’s own Justin Goodman of Zacks, Freedman & Patterson, PC, to discuss November’s Proposition 21 – a statewide ballot initiative to effectively repeal the Costa-Hawkins Rental Housing Act and allow cities to impose vacancy control.

Paul and Justin discussed existing law and the nuances of Proposition 21 – this year’s effort to repeal the operative provisions of the Costa-Hawkins Rental Housing Act (succeeding a previous effort by Michael Weinstein in 2018, and a legislative effort in 2017).

Paul and Justin also contemplated the likely unintended and perverse consequences of once again allowing the vacancy control that Costa-Hawkins eliminated at the state level back in 1996. We at Costa-Hawkins.com rarely take political stances on potential changes in law, but if for no other reason than we would need a new domain name (and that the change in law would authorize misguided rental housing policy statewide), we urge you to donate and vote!

SPOSF’s mission is to provide owners of small rental properties in San Francisco with the tools and information necessary to conduct business successfully in a difficult regulatory climate, through educational programs, publications, and workshops that seek to help members better understand their rights and obligations, how to work constructively with city and state officials, and how to deal effectively with their tenants. SPOSF also seeks to protect the rights of small property owners against unfair and burdensome regulations through legal advocacy.

SPOSF holds monthly meetings at St. Mary’s Cathedral, located at 1111 Gough Street in San Francisco. You can join SPOSF by clicking here. Members have access to the full monthly newsletter.


Owens v. City of Oakland: Court of Appeals Fleshes Out Meaning of “Dwelling or Unit” under State Law

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“When the owner of a single-family home rents bedrooms in the home to separate tenants, does the Costa-Hawkins Rental Housing Act exempt each of the tenants’ rooms from local rent control because the home is considered an exempt dwelling under the Act? Jonathan Owens rented out bedrooms in his home to three unrelated individuals. He contends the City of Oakland’s Housing, Residential Rent and Relocation Board (the Rent Board) and the trial court erred when they determined the rented rooms are subject to Oakland’s rent control ordinance. We agree with the Rent Board and the court and affirm the trial court order denying Owens’s petition for writ of mandamus.”

Landlord Jonathan Owens owns a single-family home in Oakland. He lives in the home and rents three individual bedrooms to three unrelated tenants. One tenant filed a petition at the Oakland rent board “alleging her housing became unsuitable due to disruptive construction work and hazardous conditions on the premises [and that] Owens failed to provide required notice of the Rent Adjustment Program and retaliated against her by terminating her lease when she complained about the construction work and sought a reduction in rent.”

Owens responded that her tenancy was exempt from the jurisdiction of the rent board because the entire property was “alienable, separate from the title of any other dwelling unit” – a status that would exempt the property from local rent controls under Costa-Hawkins.

What happened next was procedurally bizarre. The hearing officer dismissed the petition on a finding that the tenant was in arrears on rent without justification. However, for some reason, the hearing officer made a gratuitous finding that the tenancy was not exempt because the rental of individual rooms meant that no dwelling was “separately alienable”.

Owens appealed to the rent board commission – presumably to avoid any collateral estoppel effect of this determination and renewed his argument for exemption under Costa-Hawkins/ The rent board unanimously affirmed the decision. Owens then petitioned for writ of mandate in the superior court, and the court affirmed as well, on the narrow issue of Costa-Hawkins preemption. The First District Court of Appeal affirmed.

The decision is problematic for several reasons. First, the broad scope of the petition related to many things having nothing to do with rent adjustments. As a result of the judicial powers doctrine, the rent board likely lacked the jurisdiction to render any relief. To render such a determination on a dismissed petition compounded the overreach. Finally, to the extent that most of this was about eviction controls (which Costa-Hawkins does not regulate), it is puzzling that Owens did not raise the argument that Section 8.22.350E of the Oakland Municipal Code exempts owner-occupied homes from eviction controls, if the owner shares “kitchen or bath facilities” with the tenants. While the opinion does not discuss whether Owens shares such facilities, it can almost be assumed from the description “single family home” that he and all the tenants shared the same half-and-half carton when making their coffees.

The rule of law is also somewhat hollow. The purpose of eviction controls is to prevent landlords from circumventing rent controls by the expediency of terminating the existing tenancy and raising rates on a new one. A finding that this is a multi-dwelling property for rent control purposes has little effect if Owens can capriciously terminate tenancies whenever he wants to increase the rents. Further, from a policy perspective, it is inconsistent that the institutional landlord of a single-family home can escape rent control, but a mom-and-pop owner-occupying landlord cannot. Nonetheless, Owens is a warning that landlords should be particularly cautious in renting multiple rooms under different leases.


Justin Goodman Featured in SF Apartment Magazine Legal Q&A for December 2019

Justin Goodman was featured in the Legal Q&A for the December 2019 issue of SF Apartment Magazine – the official publication of the San Francisco Apartment Association.

Justin evaluated a landlord’s obligations (to provide a habitable premises and to avoid disrupting a tenant’s right to quiet enjoyment) at times when PG&E is using rolling blackouts to preserve the power grid.

Justin and his colleague Shoshana Raphael also wrote a feature article “Up in Flames“, which explores a landlord’s duties to tenants and their rights and obligations to the City when their apartment building catches fire.

SFAA is dedicated to educating, advocating for, and supporting the rental housing community so that its members operate ethically, fairly, and profitably. SFAA’s is a trade association whose main focus is to support rental owners by offering a wide variety of benefits that address all aspects of rental housing industry.


Justin Goodman Featured in SF Apartment Magazine Legal Q&A for November 2019

Justin Goodman was featured in the Legal Q&A for the November 2019 issue of SF Apartment Magazine – the official publication of the San Francisco Apartment Association.

Justin explored how to navigate a Costa-Hawkins increase against subsequent occupants, when the landlord suspects that the last original occupant has passed away, but the subsequent occupants continue to tender rent on their behalf.

SFAA is dedicated to educating, advocating for, and supporting the rental housing community so that its members operate ethically, fairly, and profitably. SFAA’s is a trade association whose main focus is to support rental owners by offering a wide variety of benefits that address all aspects of rental housing industry.


“Proposition 10: 2.0”: Michael Weinstein’s Second Effort To Repeal Costa-Hawkins at the Ballot Box

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Proposition 10 boldly failed in the November 2018 election (with only a couple bay area counties voting “yes” in a majority). The battle over Proposition 10 was one of the most expensive in California history, and the “no” camp was ultimately successful in arguing that expanding rent control would “increase the states housing shortage, exacerbate overall affordability issues and hurt the investments of single-family homeowners”.

Not to be deterred, Michael Weinstein of the AIDS Healthcare Foundation is back with Proposition 10: 2.0:

Titled the Rental Affordability Act, it would seek to expand the authority of cities to regulate rents by changing several provisions of the Costa-Hawkins Rental Housing Act (including the name of the act itself, which must be synecdoche for “statewide unaffordable rental rates” for tenant advocates by this point.)

It would remove the “new construction” exemption, in favor of a 15-year phase-in period for newly built units. It would remove a lesser known provision that grandfathers in exemptions in local ordinances that pre-dated the act. Most sweeping, it would eliminate the language of “vacancy decontrol” and replace it with a state-wide policy authorizing local rent control ordinances. (This language would mostly be symbolic, given the landmark decision Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, where the Supreme Court first recognized this authority.) Finally, for cities administering a rent control ordinance, the Rental Affordability Act would restrict the rental rate to 15% above the rate for the previous tenancy (with no provisions evaluating the fairness of the previous rate – e.g., if it was leased to a family friend at a steep discount).

Unsurprisingly, the California Apartment Association has taken a position against the new initiative.


San Francisco Legislative Update (2019): Prohibition Against Tenant Harassment via Rent Increases


San Francisco has amended the Rent Ordinance to add to the definition of “tenant harassment” and “misdemeanors” certain rent increases “imposed in bad faith with an intent to defraud, intimidate, or coerce the tenant into vacating the rental unit” in circumvention of the just cause for eviction provisions. This will include circumstances where:
(1) the rent increase was substantially in excess of market rates for comparable units;
(2) the rent increase was within six months after an attempt to recover possession of the unit: and
(3) such other factors as a court or the Rent Board may deem relevant.

According to the Board of Supervisors, this legislation was prompted, in part, by specific cases in recent years with headline-grabbing rent increases. Whether justified by comparables or not, the tenants in those anecdotes chose to vacate, rather than pay the rent (although, at least one sued over the same theory that the City has now codified).
Continue reading “San Francisco Legislative Update (2019): Prohibition Against Tenant Harassment via Rent Increases”


California Proposition 10 (2018): Voters Reject Repeal of Costa-Hawkins


SF Gate reports on the defeat of Prop. 10 at the ballot. The measure to repeal the Costa-Hawkins Rental Housing Act “fell behind early and continued to trail by a margin of about 65 percent to 35 percent throughout the night”.

Proposition 10 followed AB 1506 (2017), a legislative attempt at repeal, which failed to get out of committee.

For now, cities remain capable of implementing new rent control ordinances. However, Costa-Hawkins will continue to limit the extent of local price controls (as cities cannot impose price ceilings on “new construction”, apply “strict” vacancy control to empty units, or extend rent control to new tenancies in single family homes and condominiums).