If you think you need legal advice concerning a rent increase, contact Justin A. Goodman, with Zacks, Freedman & Patterson, P.C., at 415.956.8100 or Justin@zfplaw.com.
In San Francisco, rent increases exceeding the rent increase limitations of the Rent Ordinance take two forms: a landlord can increase the rent to market rate where Costa-Hawkins decontrols the tenancy or where the Rent Ordinance relinquishes it.
The Costa-Hawkins Rental Housing Act was enacted as a “moderate approach to overturn extreme vacancy control ordinances [that] unduly and unfairly interfere with the free market”. It achieves this by decontrolling (1) certain kinds of property and (2) certain kinds of tenancies. Generally, most single family homes and condominiums are exempt from local rent controls. (This is subject to tenancies that predate Costa-Hawkins or condominiums that have not been fully “subdivided”.) Certain tenancies are also decontrolled – generally, where the last original occupant that took possession of the unit at the commencement of the tenancy vacates, the landlord may impose a market-rate increase on any remaining subtenants.
This latter form of rent increase intersects with the Rent Board’s Rule 6.14, providing that a landlord must timely reserve their right to increase the rent upon notice of subsequent occupants. Unfortunately, A landlord can waive their right to a market-rate increase in several ways. The most obvious waiver is where the landlord acknowledges the subsequent occupant, indicating that they can remain at the existing base rent. But the landlord can also waive this right if they fail to serve a notice on the tenants/subtenants of their reservation of rights to increase rent to market rate within 90 days, following their receipt of written notice that the original occupant will leave (or actual notice that they already have). Finally, a landlord waives this right where an original occupant notifies a landlord of the subsequent occupancy, and the landlord subsequently accepts rent, unless the landlord reserves the right to increase the rent, when applicable, within 90 days of this notice.
Arguably, Rule 6.14 should not be an impediment to a market-rate increase under Costa-Hawkins, for imposing requirements not found in Costa-Hawkins. (In other words, the state law does not require the landlord to monitor subtenancies so carefully; it merely creates an opportunity for a rent increase when the last original occupant vacates and leaves those subtenants behind.) However, subtenants can always petition the Rent Board for a determination of lawful rent in response to a rent increase, and the Rent Board will presumably be more than happy to pay deference to its own procedures.
Meanwhile, the 2015 “Jane Kim Amendment” to the Rent Ordinance (i.e., “Eviction Protections 2.0”) created a disincentive to even attempting to enforce “no subletting” or “occupancy limit” provisions in a lease agreement. Where a landlord can no longer enforce these terms, it has become riskier to even engage the master tenant when they would want to bring in new roommates/subtenants. On the other hand, accurate information on who is living in your property is important in a number of circumstances (like when the landlord wishes to terminate a tenancy under a non-fault basis for eviction and needs to know who is entitled to relocation assistance), and it would would be better to have timely served a 6.14 notice, if subtenants end up insisting that the landlord was aware of their tenancy and argue waiver. Under current law, the best approach here is probably reactive, rather than proactive.
San Francisco Rent Board Rules and Regulations Increases:
The Rent Board Rules and Regulations also provide for rent increases, even when the last original occupant remains in possession, where they no longer permanently reside in their rental unit (e.g., they’re using it when they visit town, but their actual household is somewhere else).
This kind of rent increase, served pursuant to Rent Board Rule 1.21, requires that the landlord petition prior to serving the rent increase notice.
The content on this website is provided for general information and is not intended to constitute legal advice. If you think you need legal advice concerning a rent increase, contact Justin A. Goodman, with Zacks, Freedman & Patterson, P.C., at 415.956.8100 or Justin@zfplaw.com.