SF Apartment : May 2017
by Various Authors
Q. To maximize income, should we rent individual rooms in a single-family home that we own and where we don’t reside? What about renting individual rooms in a multi-bedroom apartment?
A. Both are bad ideas and this author implores the membership to stay away from such strategies, no matter how alluring the potential income numbers may be. There have been some recent press accounts of owners getting caught by the Planning Department for converting homes and apartments into what amounts to a boarding house. Besides fines from the government, there are other serious ramifications for going down this road.
First, in the case of a single-family home, making a decision to rent individual rooms effectively removes the property from the benefits of the Costa-Hawkins Rental Housing Act. Under Costa-Hawkins, when there is only one rental unit in a pre-June 13, 1979 constructed building (a single-family home or a condominium), and the tenancy began on or after January 1, 1996, then the tenancy is exempt from the rent increase limitations of the rent law, meaning rent may be adjusted to fair market at the landlord’s discretion. However, owners who subdivide these homes and condominiums, even if they do so illegally and without permits, make these properties subject to rent increase limitations and completely vitiate the benefits of Costa-Hawkins.
Second, should you create illegal dwelling spaces (for example, you build unwarranted units on your property like inside of the garage), to go back and remove these structures and to evict tenants that may be residing there on the just-cause ground of unit demolition is now exceedingly difficult under current city guidelines. Indeed, if you are even allowed to obtain such removal permits, you may be forced to legalize the unit as an alternative, regardless of the costs associated with that process. Moreover, a recent case from the Los Angeles Superior Court’s appellate panel, which may be followed by our local superior court Housing Department, states that landlords who rent out illegal dwellings may not evict a tenant for nonpayment of rent should the tenant decide to stop paying rent. As such, you may be faced with the nightmarish scenario of a tenant deciding to withhold rent with very little recourse to end the tenancy.
Third, the Planning Code, as referenced above, generally prohibits an owner from running a boarding or rooming house without a permit for such use. Converting a single-family home or apartment into group housing where individual rooms are rented and there is no permit for such a use will, if discovered by a building inspector, result in a Notice of Violation. Since quickly removing occupants will likely not be possible, you could be faced with fines and abatement actions by the city.
Lastly, don’t think that local tenant attorneys are not aware of the civil liability associated with these types of unpermitted uses, especially in instances where you as the landlord intentionally created the environment. Any time you offer housing that is in violation of the housing or planning codes, you risk a tenant lawsuit, which could be predicated upon fraud, breach of the warranty of habitability, unfair business practices, and the like. These claims are expensive to resolve, and conceivably you may not be insured for them if your insurance company discovers that you knowingly created the problem.
In sum, the current political and legal climate will not look kindly on these activities. Properties should be rented in a manner that is consistent with how they are constructed. This means that homes and apartments, unless legally converted for group or boarding house usage, ought to be leased as a single tenancy.
Q. How should I handle a tenant who is a hoarder? His studio unit is filled from floor to ceiling with books, boxes, and other clutter; there is barely room to move. I’m specifically concerned about the potential cleanliness of the building (rodents, smells, etc.) and the fire hazard.
A. Although landlords should respect their tenants’ privacy and lifestyle differences, issues of hoarding and cleanliness should be taken seriously as a matter of health and safety. Pest infestations can spread from unit to unit, and a fire hazard can be threatening to everyone in the neighborhood. Landlords must do their part with repair and extermination services, but tenants have their own legal obligations as well.
California Civil Code § 1941.2 requires tenants to keep their units “clean and sanitary,” including disposing of garbage properly, cleaning their plumbing and utility fixtures, and not otherwise damaging the property or using the premises in an unintended way. If you notice that a tenant is storing food or hazardous materials improperly, you should inform your tenant of this obligation. Many form leases also include similar language, and should also be referenced as a reminder, if applicable.
However, enforcing these statutory and contractual obligations to prevent tenant hoarding is often challenging. The San Francisco Rent Board has published links to Adult Protective Services, the Mental Health Association of San Francisco, and Legal Assistance to the Elderly at http://sfrb.org/information-hoarding-and-cluttering. We recommend that landlords exhaust all available services and remedies to the extent that they are applicable to the tenant. Each step should be documented as evidence of a good-faith effort to resolve the situation, short of eviction or other litigation. Undertaking this process may also take many months.
If the tenant continues to hoard despite all efforts at intervention, you should proceed with enforcement with the assistance of an attorney. The remedy for that situation is generally an eviction, which may be based on either a violation of a term of the lease (i.e. cleanliness), or nuisance (i.e. causing safety or health hazards). You should consult with your attorney to determine the best course of action, since more than one option may be available. In either case, San Francisco law requires that the tenant receive a formal warning before they are given a legal notice to quit (vacate).
Your chance of success at trial depends on the quality of your evidence. But even when it seems you have rock-solid proof, it is notoriously difficult to convince a San Francisco jury to rule against a tenant, especially if their illness makes them appear sympathetic. Litigation should be a last resort for a dangerous or intolerable situation that has no other possible resolution.
If the tenant’s unit is simply cluttered without being a hazard, there is likely nothing a landlord can do. Similarly, if a tenant’s carelessness or clumsiness occasionally (but not routinely) damages the property, the landlord should be dutiful in making repairs, with costs deducted from the security deposit. If the tenant has no security deposit, the landlord can sue the tenant in small claims court to recoup their costs, if they can prove the damage was the tenant’s fault, and not ordinary wear and tear to the unit.
Q. I have a garage in my 4-unit building that none of my tenants were interested in renting. I rented the garage to a neighbor in the next building. A tenant in my building is worried about safety because the person who rented the garage has access to the interior of the building. What are my options? How should I respond to my tenant?
A. If the garage lessee’s access to the building interior common areas is no different from the residential tenants’ then there appears to be no increase in security risk since the tenant’s concerns could just as easily apply to his or her neighbors in the building.
Assuming that you have done so, you can inform the tenant that you followed the same rental procedures for the garage as you did for the residential units in the building, including a tenant application form, a background and credit check, and a lease agreement, so the garage lessee poses no risk that you are aware of.
If you do not have a lease agreement with the garage lessee, I would recommend that you have one prepared and signed. The rental of a garage to a person who does not reside in the same building is considered a commercial tenancy and is exempt from the San Francisco rent ordinance. There are no vacancy or rent restrictions, so you can terminate the garage tenancy with timely written notice if an agreement cannot be reached. Some suggestions for the lease agreement would be restricting access to the building to certain named parties, specifying what can be stored in the garage, including the exclusion of flammable and hazardous items, as well as restrictions on the use of equipment and conducting automobile repairs inside the premises.
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 Law Offices and can be reached at 415-567-9600. Matthew P. Quiring is with Fried & Williams, LLP and can be reached at 415-421-0100. Frank Kim is with Eviction Assistance/Law Offices of Frank Kim and can be reached at 415-752-6070.