Supervisor Ronen Promises New Regulation To Penalize Excessive Rent Increases in Deregulated Rental Units

The SF Chronicle reports that Supervisor seeks to introduce an amendment to the Rent Ordinance that will add to the definition of “tenant harassment” an “excessive rent increase” that is intended to “defraud, intimidate or coerce the tenant into vacating” a rental unit. The proposed legislation would make it “unlawful for a landlord to endeavor to recover possession of a rental unit . . . by means of a rent increase that is imposed in bad faith with an intent to defraud, intimidate, or coerce the tenant into vacating the rental unit in circumvention [San Francisco’s eviction control laws].”

The proposed legislation would address the part of the “venn diagram” of tenant protection law where single family homes are subject to eviction control (if they are built before June 13, 1979) but are exempt from rent control if the tenancy commenced after 1995 (under the Costa-Hawkins Rental Housing Act). The logic of this law is that landlords can increase rents in these units without local restriction, but if they increase rents with the intention of causing their tenants to vacate, then the “real” purpose is to avoid eviction controls, not to get market rate rent.

The Chronicle cites a local tenant attorney, quoted as saying his firm “takes 50 to 100 cases a year where landlords force a tenant out and avoid paying relocation fees by simply raising the rent far above market rate” and would often “win wrongful eviction cases” until the San Francisco Superior Court “reversed course” and stopped allowing such cases to go forward.

The “course reversal” was a ruling by now-retired Housing Court Judge Quidachay, who sustained a landlord’s demurrer to a tenant complaint for wrongful eviction based on a rent increase. The lawsuit was premised on the service of a rent increase notice for tenants in a single family home, which is exempt from rent control at the state level, by the Costa-Hawkins Rental Housing Act. The theory of the demurrer was that, if the state law preempts local regulations in price, a landlord must be able to actually serve such a rent increase without fear of knee-jerk lawsuits when tenants prefer to move rather than pay the new rent.

The Ronen legislation would focus on “excessive” rent increases, but the definition of “excessive” would seem to be in the eye of the beholder. Presumably, San Francisco bureaucracy would not fill the role of “appraiser” (nor should it, where such units would be exempt from local price controls to begin with). And whether or not a landlord sought an appraisal before serving a notice, this would not immunize her from liability, as this would remain a factual dispute that must be presented to a jury (at great expense).

As a trial court ruling, Judge Quidachay’s ruling is not “precedent” on other cases. And Judge Quidachay’s retirement could presumably invite a new determination by a new law and motion judge. But the new ordinance would appear to do no more than vocalize San Francisco’s dissatisfaction with the state law that preempts it. In other words, the Superior Court of California should theoretically come to the same result about the price-setting privileges afforded by the preemptive state law, with or without this legislation.