While there are relatively few appellate decisions interpreting Costa-Hawkins and its application to local rent-control ordinances, this year has already seen a pair of cases that add a lot of specificity to rent increases on the children of rent-controlled original occupants who move away.
Recently, in Mosser Companies v. CCSF, Division Three of the First Appellate District held that the son of the original lessees on the lease was an “original occupant”, having moved in at the commencement of the tenancy with the consent of the landlord, even though he was not a party to the lease. Accordingly, when the parents moved out, and the son stayed behind, the court found that the decontrol provisions of Costa-Hawkins would not allow the establishment of a new rental rate while an “original occupant” was still in possession. In Drolapas v. CCSF, Division Four acknowledged and agreed with their colleagues’ Mosser opinion.
The Drolapas court reviewed a similar circumstance (rent increase on a son following the vacating of the apartment by his parents). Interestingly in this case, both parents and son moved into the apartment on September 3, 1995. That date is significant because Costa-Hawkins does not impose vacancy control on subtenants, if they took possession prior to January 1, 1996. The son was a minor at the time, and only began paying intermittent rent to his parents after they moved out, after he had become an adult. The court held that a single individual can be both an “original occupant” and a “subtenant”.
That said, this would have been an adequate and sufficient basis to rule in favor of the son. But the court also ruled that he would count as an “original occupant”, even aside from being a “subtenant”, citing to the rationale in Mosser. This may have taken Mosser too far. Material to that decision was the fact that the landlord knew about the minor child at the time the family took possession of the property. This had an element of express knowledge or intent to lease the property to the entire family, not just the parents. In Drolapas, however, the original lease was lost, with only a subsequent estoppel certificate indicating that there were children at the property.
If it is necessary for the landlord to have given express (or at least implied) consent about the individual, in considering whether someone is an “original occupant”, the Drolapas ruling does not follow from its facts. The court cited to the rule in Mosser: “The plain meaning of an ‘original occupant … who took possession of the dwelling or unit pursuant to the rental agreement’ (§ 1954.53, subd. (d)(2)) is an individual who has resided in the dwelling from the start of the tenancy with the landlord’s permission.” (Mosser Companies, supra, 233 Cal.App.4th at p. 512.)”
However, it noted that “There is no evidence that the occupancy by the entire family . . . was without the landlord’s permission.” Even if absence of proof of permission were proof of absence of disapproval, this is still missing a critical piece of the Mosser rule: a landlord must have knowledge of the individual taking possession at the time they take possession.
This rule does not lead to harsh results: Even if the son’s occupancy had been concealed for whatever reason – and even if the parents had no permission – the Rules and Regulations of the San Francisco Rent Board allow tenants to bring in certain specified family members (like children), even over the express objection of a landlord. So, it wouldn’t have been much of a stretch to find that the parents had no permission for the occupancy of their son, absent a lack of any evidence that they did have permission. His occupancy still would have been lawful.
This is a problem, because Mosser had interpreted “permission” after expounding a series of cases that discussed a landlord’s knowledge or permission. In this context, it takes on a feeling of imposing waiver/estoppel on a landlord, not imposing a burden of proof. Mosser and Drolapas were both sympathetic to the argument that this kind of ruling could lead to “intergenerational” rent-controlled tenancies, but in both cases, they deferred to the legislature to address that problem. In the meantime, as tenants can also bring in grandchildren without incident, and as Drolapas erodes the notion of landlord knowledge/permission, the court has now opened the door for this, as long as a landlord can’t prove when the subsequent occupant moved in.