When it comes to subtenants, local laws can be confusing. Read on for clarification on security deposits, rent increases and new lease agreements.
Q. The last master tenant moved out of my unit and is asking me to return the security deposit. I know I have 21 days to return it, but I just sent a market-rate rent increase notice to the subtenants residing in the apartment, to which they have 60 days to respond. I’m wary of returning the security deposit: what if the subtenants decide to move out, and I find I should have withheld the security deposit due to damages? How can I protect myself?
A. Owners need to understand that re-setting the rent under Costa-Hawkins is simply a continuation of the prior tenancy with a new monthly rent and, arguably, additional master tenants as subtenants become elevated to co-master tenancy status when the rent increase notice is served. The original master tenant does, however, remain a party to the lease agreement and, as such, must be named in any notices of rent increase or other communications from the landlord. In essence, the lease continues without interruption, no new lease is signed unless the remaining occupants wish to do so, and the initial security deposit remains entirely with the ownership.
Therefore, in this scenario, the security deposit is not returned in whole or in part. When everyone vacates, the security deposit disposition process begins, with amounts potentially deducted for unpaid rent, cleaning costs incurred to return the apartment to same level of cleanliness that existed at the inception of the tenancy, and repairs for damages that exceed normal wear and tear. Any remaining sums are then returned to the original master tenant.
The SFAA Residential Tenancy Agreement speaks to this issue: “The eventual return of the Security Deposit upon termination, and interest payments if any are required, will be directed solely to the [original] Tenant as named herein.” The lease also reminds original master tenants that legally they continue to be liable even when they depart: “Each person who signs this Agreement, whether or not said person is or remains in possession of the Premises, shall be jointly and severally responsible and liable for the full performance of each and every obligation of this Agreement, including, but not limited to, the payment of all rent due and the payment of costs to remedy damage to the Premises, regardless of whether such damage was caused by Tenant, Tenant’s guests, or Tenant’s invitees. This joint and several liability provision applies for as long as any one of the Tenants remains in possession or for as long as any of their subtenants remain in possession.”
So remember, departed master tenants are still parties to the lease agreement even though they no longer permanently reside in the apartment. Incidentally, the Rent Board now takes the position that a master tenant may return at any time, and that continuous occupancy is not mandated under law. Rent may be adjusted under Costa-Hawkins when the last original occupant no longer permanently resides in the dwelling, but that event neither requires disposition of the security deposit nor changes the other covenants in the lease agreement other than perhaps the amount of rent due each month. Once all persons move out, the security deposit is returned to the original lessees unless they have instructed you to do otherwise.
Q. How many occupants are too many occupants according to the “superficial floor area”? We rent out a 500-square-foot one-bedroom apartment, and at this point there are three adults and one child living there.
A. Landlords give up a lot of control of property when they lease to tenants (the biggest one being “possession”). There are some limits to a tenant’s free use of the property or their ability to assign/sublet, but most regulations look to a tenant’s unfair or unsafe activities. Your question suggests you’d like to have a safe number of occupants based on the size of the apartment, but the only tool in the San Francisco landlord’s kit to address this issue is (other than asking nicely) is an eviction lawsuit for breach of a lease or nuisance/violation of law, based on the increased number of occupants.
These are “fault based” evictions, and they’ve been getting harder over the years. In 1999, the city altered the Rent Ordinance’s definition of subletting breach to exclude one-for-one roommate replacements. (In other words, if one of your original tenants left, the other could replace them, despite a lease term prohibiting subletting or assignment.) A 2015 amendment now allows up to a specific number of occupants per “bedroom,” regardless of the occupancy limit in the lease (without actually defining what a “bedroom” is). By statute, tenants can have a total of three occupants in a one-bedroom.
If your lease started with fewer people and has an enforceable occupancy limit, “4” is obviously greater than “3,” so you may have a case here under a breach theory. (Although, the age of the child and the relationship to the master tenant will likely be of interest to the jury. “Sublease profiteering” would be a better fact than “grandma moved in to help with the newborn”.)
You would also consider “nuisance” as a basis to terminate the tenancy. Your tenants may be using the apartment in a manner that violates the law. Your phrase, “superficial floor area,” comes from section 503 of the SF Housing Code (titled “room dimensions”), which reads a bit like a math problem: every dwelling must have at least one room with 120 square feet or more, and any separate room used only for sleeping must be at least 70 square feet. But, if that sleeping room is also used for “living,” it needs to be at least 144 square feet. Occupants also need another 50 square feet for each person above two, but children under six don’t count.
So, if the bedroom is at least 194 square feet, and the minor is young enough, your tenants may all lawfully stay there. Although, if they aren’t all sleeping in the bedroom (or it lacks the square footage), your case would turn on whether the main/living room counts as a “bedroom.” To answer that question, you’d be considering whether other safety standards, like sufficient fire egress, disqualify its use as a sleeping area. (Our city’s Fire Department is much less flexible than our master tenants when it comes to what counts as a “bedroom.”)
Q. I was recently performing routine maintenance in my rental unit, and I saw that the tenant installed a countertop dishwasher without my approval. There is water damage on the wooden countertop around the dishwasher, and to the floor underneath. How can I remedy this during his tenancy, as opposed to waiting for the security deposit?
A. The first step is to review the lease you have with this tenant. Most leases, like the SFAA Residential Tenancy Agreement, have provisions that prohibit alternations, modification, or changes to the premises without permission of the property owner and provisions where a tenant agrees to maintain the premises in a clean and good condition.
If a tenant violates a term of the lease, it is considered a breach of the lease, and you may have grounds for an eviction. However, before serving a notice to perform or quit, you must first serve your tenant a warning notice to cease. This notifies the tenant of the violation and allows the tenant an opportunity to cure the violation in at least seven days. The notice should include as much detail as possible and include the language required by the San Francisco Rent Ordinance. If your tenant fails to comply with the notice to cease, you can take steps to start the legal eviction process.
If you do not have a written lease or your lease does not include the necessary provisions, you can still serve a demand notice on your tenant requesting that she remove the dishwasher at her own expense. At a minimum, your tenant is obligated to keep the premises in a clean and safe condition, abide by building and housing codes, and not damage the unit.
The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Dave Wasserman is with Wasserman-Stern Law Offices and can be reached at 415-567-9600. Justin A. Goodman is with Zacks, Freedman & Patterson, P.C. and can be reached at 415-956-8100. Angelica A. Sandoval is with Fried & Williams LLP and can be reached at 510-625-0100.