San Francisco Apartment Association

legal corner q&a

Master Tenant Dilemmas

by Various Authors

Q. The master tenant in one of my units has decided to evict the subtenant. The subtenant has said she would prefer to stay. Should I get involved, and is the subtenant protected by rent control laws?

A. If the building was built before June 13, 1979, the subtenant may be protected by the rent law. In 2001, the city’s rent law was changed to clarify when a master tenant could evict a subtenant without one of the 14 “just cause” reasons. The regulation states that, for tenancies commencing on or after May 25, 1998, a master tenant who is not an owner of record of the property may only evict a subtenant without just cause if, prior to the commencement of the tenancy, the master tenant informed the subtenant in writing that the subtenant can be evicted without just cause. Absent this written disclosure, a master tenant cannot simply decide to terminate a subtenancy; rather, the master tenant is subject to the same stringent just-cause rules that the owner must contend with in order to evict a tenant. This same law also requires the master tenant to disclose in writing to the subtenant the amount of rent the master tenant pays to the landlord, and further requires the master tenant to charge the subtenant no more rent than what is attributed to the subtenant’s proportional use of the rental unit. Thus, if the subtenant leases half of the apartment, the master tenant can only charge the subtenant 50% of the total rent that is paid to the owner.

Most master tenants and subtenants are unaware of this regulation. Consequently, it is commonplace to see situations where subtenants are being charged more than their proportional share of the rent and master tenants evict their subtenants without just cause, even in instances where the required disclosures were not made. Owners should refrain from assisting a master tenant in this endeavor for several reasons. First, the eviction attempt could likely be illegal. As such, the owner would invite personal liability for wrongful eviction by assisting the master tenant in this instance. Second, owners should not involve themselves in any tenant-versus-tenant dispute. An owner who sides with one occupant against another is risking a lawsuit should the offended tenant contend, and perhaps prove, that the accusations used to justify the eviction were false. The one exception would be if any tenant, master or sub, was committing a verifiable “nuisance” by engaging in highly offensive conduct that caused serious annoyance or harm to the other residents of the building; however, if someone were causing a nuisance, the owner would seek to terminate the entire tenancy.

In sum, a master tenant who decides to terminate a subtenancy may not have grounds to do so unless the appropriate written disclosures were made at the inception of the tenancy. Even if this writing was provided, the landlord still should not get involved. Instead, master tenants, who are legally considered landlords, may have to employ their own counsel to assist them with this effort.

–David Wasserman

Q. I am considering renting to a graduate student who does not meet my usual financial standards, but whose parents have said they will send a letter of responsibility for the rent. Is this all I need or should I only agree if the parents sign the lease as well? How would that work if they live out of state?

A. I would suggest that you check the parents’ credit history and balance sheet. If they are financially qualified, and if you decide to rent to the grad student, then you should do so only if the parents will sign a separate contract called a guaranty. If the grad student eventually defaults, then he/she could be evicted and the parents would become equally responsible for the rent and other charges as the guarantors. If the parents do not fulfill their obligations under the guaranty, then they could be sued in California Superior Court for breach of the guaranty contract.

Do not ask the parents to sign the rental agreement. Since the parents will not reside in the unit, it would not be prudent to create any tenancy rights in their favor by having them sign the rental agreement. Among other reasons, they might claim to be entitled to monetary relocation assistance as tenants if such rights arise under the San Francisco Rent Ordinance.

Guaranty agreements are commonly used–and enforced–in commercial lease transactions. A guaranty would be just as useful in the residential context. Even though the parents agree to become financially responsible, the grad student is not relieved of responsibility for meeting the obligations under the rental agreement. So you really gain additional security by having the parents sign the guaranty. You would have every right to contact the parents to demand timely payment if the grad student falls behind with the rent or other charges.
The guaranty contract should provide that your right to enforce it will not be affected by any changes to the terms of the rental agreement between you and the grad student, and that you do not have to notify the guarantors or obtain their prior consent to institute any such changes

–Michael C. Hall

Q. I recently had an applicant whose roommate is still out of state. The tenant I have met has an excellent job and I am leaning toward renting him the apartment. Should I rent to him and then serve the roommate a 6.14 Notice when he arrives? Or should I not rent unless all the occupants are present to sign the lease?

A. There is, of course, another alternative: sign a lease with the excellent prospective tenant that’s here, with both names on the lease, and have the other person sign when he arrives. It’s unlikely that the out-of-stater would refuse to sign. You might even write a condition into the lease that, should he refuse, it will be deemed a breach of the lease by the tenant who has already signed, or you can just serve him with a 6.14 Notice on his refusal. If you would prefer to wait until they are both present, you may, but that assumes you will not lose the good tenant in the interim.

Your suggestion of signing the one tenant and serving a 6.14 Notice on the other is attractive, but probably not practical, if he wants to be an original tenant on the lease. San Francisco Rent Board Rules & Regulations Sec. 6.14 defines an original occupant as an individual “who took possession of a unit with the express consent of the landlord at the time that the base rent for the unit was first established with respect to the vacant unit.” A subsequent occupant is someone “who became an occupant of a rental unit while the rental unit was occupied by at least one original occupant.” Since the out-of-stater is already contemplated as a part of the tenancy from its inception, even if he arrives slightly later, it’s unlikely that the Rent Board would regard him as a subsequent occupant. It can be argued, in fact, that when the signer went into possession, he took possession on behalf of both tenants with prior landlord agreement. Of course, the longer the time span between when the original tenant occupies and the out-of-stater arrives, the easier it might be to deem the latter a subsequent occupant, and serve him with a 6.14 notice. If possible, it’s not a bad way to go, because he is still responsible to observe almost all requirements of the lease, other than payment of rent, or be subject to eviction along with the original occupant. And, if the original occupant were to vacate several years down the line, leaving the subsequent occupant in possession, you would have the opportunity to raise the rent to market.

So, it’s a little bit of a judgment call: would you rather have the added comfort of another tenant signed to the lease, binding him explicitly to its obligations, including rent, or take a chance on being able to treat him as a Rules & Regulations Sec. 6.14 subsequent occupant if and when the original occupant vacates? If you choose the latter, your lease should not include him. It’s also a good idea for your tenant to be his landlord, i.e. you accept rent only from your named tenant and not from the subsequent occupant.

–Saul M. Ferster

The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. David Wasserman is with Wasserman-Stern and can be reached at 415-567-9600. Michael C. Hall can be reached at 415-512-9865. Saul M. Ferster can be reached at 415-863-2678. Copyright © 2007 by SF Apartment Magazine. All rights reserved.