legal corner Q&A
The Unwritten Rules of Rent Control
by Various Authors
Q. If a service is added to an existing tenancy, can a rent increase be given? I am considering allowing a tenant to have a pet and she agreed to pay an extra $75 per month for this right, despite the fact that her lease prohibits pets.
A. This question addresses an unwritten rule in the San Francisco rent law regarding the ability to increase rent when a housing service is added after the tenancy has begun. Neither the San Francisco Rent Ordinance nor the San Francisco Rent Board’s rules and regulations specifically allow an increase in this circumstance. However, owners and tenants, along with their advisors, logically assume that when a tenant and landlord agree to add a service to the tenancy after the tenancy’s inception, a reasonable increase in rent is appropriate.
For example, sometimes a parking space or storage locker will become available years after the tenancy commenced, and the hopeful tenant may request that these facilities be included as part of the lease. While the rent law does not codify rules for increasing the base rent above allowable increments when such an amenity is added, no one would expect parking or storage to be rendered for free. As such, it is probably safe for an owner and tenant to agree upon a fair rental increase to reflect the tenant’s acquisition of the new benefit.
In the past, Rent Board judges have allowed modest increases in rent for the allowance of pets. However, the Board of Supervisors recently considered legislation that would officially allow owners to increase rent by a set amount as consideration for permitting pets, and tenant groups successfully opposed the measure. Given this current political backdrop, an owner may not always be able to adjust rent when acquiescing to pets.
The law expressly prohibits rent hikes for the addition of a roommate. In this instance, the landlord is simply waiving the ability to enforce a covenant in the rental agreement, such as a prohibition against subletting. The difference is that the letting of a garage or storage area is akin to physically expanding the rental unit, whereas the allowance of a roommate reflects a decision to relax enforcement of leasehold rules.
In the absence of legislative guidance, it is impossible to define every example where a rental adjustment would be allowed as opposed to instances when the tenant should not be subjected to an increase beyond the rent control guidelines. When seeking an increase for an added service, file a petition with the Rent Board. While there is no specific petition for increasing rent as a result of a new service after the inception of the tenancy, the standard request for rent increase forms can be modified. The Rent Board’s office also has information about new service rent increases. Failure to file a petition could conceivably enhance the tenant’s ability down the road to void the increase.
Consequently, be very careful about imposing new rent charges beyond the increases definitively allowed by law. Make sure that any fee for new rental space, like storage, parking or additional living quarters, is mutually agreed upon by the tenant, and that the monthly charges for this gain are fair and reasonable. Finally, note that this new rent becomes part of the base rent and subject to rent increase limitations even if a separate lease agreement or addendum is signed. Moreover, the additional feature probably becomes nonseverable, meaning the owner cannot, at a later time, unilaterally decide to take it back. In sum, be very cautious when expanding the tenancy and modifying the rent.
—David Wasserman
Q. I have a master tenant in a single-family home who has given 30-days notice. There are two subtenants (both of whom received 6.14 notices at the start of the tenancy), and after the master tenant leaves I want to empty the house for sale. What should I do?
A. You have a potential problem. Although single-family houses are exempt from “rent” control if the tenancy began on or after January 1, 1996 (since passage of the state Costa Hawkins Rental Housing Act), there is an unresolved issue as to whether or not they are exempt from “eviction” control under the San Francisco Rent Ordinance. The answer is not clear from the language of the ordinance itself, and there are no court cases published which would determine it. Tenants’ attorneys universally contend, as does the Rent Board, that the eviction controls continue to apply even though rent control does not. For the most part, landlord attorneys, while debating the issue, tend to resolve it as if it were true that eviction controls continue, so as not to run afoul of what may be the law.
This means that when the master tenant vacates, you cannot evict the subtenants unless you have just cause under the Rent Ordinance. Section 6.14 of the Rules and Regulations does not provide for eviction of a “subsequent occupant” who has been served with a 6.14 notice when the “original occupant” vacates, but the standard 6.14 notice used to serve subtenants contains language informing the recipient that, “In the absence of a written agreement to the contrary, Landlord disapproves of, and objects to, the occupancy and purported tenancy of all such individuals.” Section 37.9a(7) of the Rent Ordinance provides a just cause for eviction if “The tenant holding at the end of the term of the oral or written rental agreement is a subtenant not approved by the landlord.” In order to utilize this section, you would have to be able to show that, in addition to serving the 6.14 notice, you took no action to approve of or establish a relationship with the subtenant, such as accepting rent. Even if you had not, such evictions can be complicated, costly and lengthy.
Perhaps your best alternative would be to negotiate a buyout with the tenants, after initially asking them if they intend to stay. (Be aware of the recently passed measure on the November ballot, which may restrict your ability to do so.) If all that fails, you may have to sell the house occupied and let the buyer do an owner move-in eviction.
—Saul M. Ferster
Q. Does a custodian apartment in a church fall under rent control? The occupant is not a custodian and pays rent.
A. While housing accommodations in convents and monasteries are exempt from the San Francisco Rent Ordinance, for some reason such accommodations in churches are not exempt. Thus, the fact that the apartment is located in a church does not, in and of itself, make it exempt from rent control.
As for the unit being a “custodian” apartment, that does not necessarily make it exempt from the San Francisco Rent Ordinance. Under state law, if an employee is given the right to occupy a unit as part of the compensation package, and has no separate rental agreement with the owner, said employee is not considered a “tenant,” and arguably the Rent Ordinance does not apply. The idea is that if the occupant is not paying rent in exchange for the right to occupy the unit, there is no rent to control, and hence no need to impose the restrictions of rent control laws. Thus, a person hired as a custodian by a church, and provided an apartment within the church to reside in as part of the employment agreement, would not be deemed a “tenant.” There is, therefore, a strong argument that the Rent Ordinance would not apply to that occupancy.
It should be noted, however, that because the definition of “tenant” under the San Francisco Rent Ordinance is so broad, the custodian/occupant could argue that under the ordinance, as long as the occupant’s right to use the apartment is subject to a contract (employment contract), that is sufficient to make the custodian/occupant a “tenant” for the purposes of the Rent Ordinance.
In any event, the exemption is tied to the contractual relationship between the owner and the occupant, and not to the unit itself. Thus, a landlord may not circumvent the Rent Ordinance merely by labeling an apartment a “manager” or “custodian” unit. If that were the case, the majority of rental units in San Francisco would surely be “manager’s units.”
In this case, where the occupant is not in possession of the unit because of employment, but rather appears to be a normal tenant who pays rent, the San Francisco Rent Ordinance does apply and the occupant’s tenancy is subject to rent control.
—Fredrik Emilson
The opinions expressed in this article are those of the author, and do not necessarily reflect the viewpoint of the SFAA or the 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 contacted at 415-567-9600. Saul M. Ferster can be contacted at 415-863-2678. Fredrik Emilson is a principal with Cornerstone Law Group and can be contacted at 415-357-2099. Copyright © 2008 by Black Point Press. All rights reserved.