Q & A: Is My San Francisco Condominium Subject to Rent Control?

“Is My San Francisco condominium subject to rent control?”

This is an interesting question, and the answer is surprisingly complicated. First, some general principles. Cities may constitutionally impose rent control ordinances, so long as they provide fair returns to property owners. San Francisco’s Rent Stabilization and Arbitration Ordinance applies to all “rental units” – a term that includes basically all dwelling units with certificates of occupancy issued before its effective date, June 13, 1979.

However, Costa-Hawkins, effective as of January 1, 1996, exempted certain kinds of dwelling units from local price controls, including those that were “alienable separate from the title to any other dwelling unit” (namely, single-family homes and condominiums). San Francisco eventually amended the Rent Ordinance in 2000 to respect the interplay between state and local law.

In the years after Costa-Hawkins’ enactment, some property owners were claiming the benefits of condominium conversion without actually selling any of them as separately alienable units. Essentially, the owner of an apartment would get final map approval to be able to sell the individual units in a (former) apartment building, using this as a pretext to increase rents on existing tenants. In 2001, the California Legislature identified this as a “loophole” in Costa-Hawkins and passed SB 985, amending Costa-Hawkins to exempt condos only under certain circumstances.
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SB 985 – Closing the “Loophole” in Costa-Hawkins

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Effective January 1, 2002, SB 985 amended the Costa-Hawkins Rental Housing Act to “close the loophole” allowing owners of apartment buildings to obtain a final public map for subdivision of an apartment building, never actually sell any units as condominiums. This would permit them to avoid local rent control ordinances that would otherwise apply to the apartment units, on the theory that the building now contained separately alienable units exempted under Costa-Hawkins. SB 985 amended Costa-Hawkins to require that condominiums be sold separately to bona fide purchasers for value. It is analyzed extensively in the case City of West Hollywood v. 1112 Investments Co..


Rent Board Publishes Annual Report on Eviction Notices

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The San Francisco Rent Board has prepared its Annual Report on Eviction Notices for the San Francisco Board of Supervisors, detailing the number of eviction notices filed with the Rent Board from March 1, 2016 to February 28, 2017, indexed by the “just cause” identified by the landlord.

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The report shows an overall decline in non-fault evictions, compared to the previous year, including an 18% drop in Ellis Act evictions and a 5% drop in Owner Move-In evictions.


Danger Panda v. Launiu – First District Court of Appeal Defines “Tenant” under the Rent Ordinance To Exclude Minors

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“Insisting that a ‘tenant’s child may be a tenant protected under the Rent Ordinance,’ defendants direct our attention to Mosser Companies v. San Francisco Rent Stabilization & Arbitration Bd. (2015) 233 Cal.App.4th 505 (Mosser Companies) and T & A Drolapas & Sons, LP v. San Francisco Residential Rent Stabilization & Arbitration Bd. (2015) 238 Cal.App.4th 646 (Drolapas) . . . Defendants mistakenly rely on Mosser Companies and Drolapas. The primary issue in both of these cases was how to interpret statutory language in the Costa-Hawkins Act, specifically, the words ‘occupant’ and ‘possession’ in Civil Code section 1954.53(d)(2). (Mosser Companies, supra, 233 Cal.App.4th at pp. 512-513; Drolapas, supra, 238 Cal.App.4th at pp. 652-653.) The present case does not involve a proposed rent increase under the Costa-Hawkins Act. Beyond that, the question we address is not whether David is an occupant or in possession of Unit 308A. The issue here is whether David’s status as a minor precludes him from being a ‘tenant’ for all purposes under section 37.2(t) of the Rent Ordinance.”

Danger Panda, LLC is the owner of a residential property in the Mission District. Over three years ago, it begin the process of invoking the Ellis Act to terminate all residential tenancies in the building. The Ellis Act is a state law that allows property owners to “go out of the rental business” and evict their tenants, so long as they comply with local eviction control ordinances. San Francisco’s ordinance requires property owners to pay “relocation assistance”, to help displaced tenants with moving expenses and deposits for their new home.
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Second District Challenges Supreme Court on Timing of Post-Foreclosure Eviction “Three Day Notice To Quit”

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“A trial court acquires jurisdiction over the parties when the plaintiff serves the defendant with the unlawful detainer summons and complaint. (Borsuk v. Appellate Division of Superior Court (2015) 242 Cal.App.4th 607, 612.) Service of the notice to quit is an element of the action that must be alleged in the complaint and proven at trial, but it does not give the court jurisdiction over the parties.”

In U.S. Financial, L.P. v. McLitus, a purchaser at a trustee’s sale following non-judicial foreclosure served a three-day notice to quit on the former owner, following the purchase but before perfecting title after the sale, and brought an unlawful detainer action to recover possession. The Superior Court for the County of San Diego awarded possession to the purchaser, but the previous owner appealed to the Appellate Division of the Superior Court, which reversed and remanded.
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Assembly Members Chiu, Bonta, Gonzalez Fletcher and Kalra Introduce AB 291 – A Bill Amending Landlord-Tenant Law for Heightened Protections Relating to Immigration Status

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Assembly Members Chiu, Bonta, Gonzalez Fletcher and Karla have introduced AB 291 – a bill aimed at creating heightened protections for tenants relating to their immigration status. Specifically, a landlord is prohibited from harassing, intimidating or retaliating against a tenant on this basis, including by reporting their status (or the status of someone associated with them) to an enforcement agency. Landlords are also prohibited from even performing certain investigations relating to immigration status after the commencement of a tenancy, where violations create rebuttable presumptions in favor of a substantive defense to an eviction lawsuit.

The text of AB 291 as it currently exists is available here.


Los Angeles Stiffens Rules for Replacing Units Following Ellis Act Evictions

LA Times

Los Angeles Times reports that Los Angeles is stiffening the affordable housing requirements for new rental units constructed after demolition following an Ellis Act withdrawal of the building from the residential rental market. While “new construction” is generally exempt from local rent control ordinances (and by Costa-Hawkins), the Ellis Act specifically exempts new units (built within five years) from these exemptions, subjecting the units to existing price controls. Cities may also allow certain density bonuses for new construction in exchange for a commitment by the developer to maintain price controls on a certain number of “affordable housing units”.

The new regulation would require developers to earmark the greater of the number of demolished units or 20% of the total number of new units to affordable housing.


Residential Rent and Eviction Control Resources