SF Apartment : July 2017

LEGAL Q&A

High Stakes Earthquakes

Q.  My property is undergoing seismic retrofit work. During the permitting process, the SFFD required that I add a new fire escape path, which will mean the removal of one parking space and a small storage space. The tenant pays separately for the unit and the parking/storage space. How should I notify the tenant? In addition to canceling the parking fee she pays, will I have to compensate her in another way?

A. Under the SF Rent Ordinance, rental units are defined to include “all housing services, privileges, furnishings and facilities supplied in connection with the use or occupancy thereof, including garage and parking facilities.” In other words, if a landlord rents a residential rental unit, then any parking and storage provided with the tenancy are part of the rental unit and protected under the Rent Ordinance.

To permanently remove a housing service, such as parking or storage, a landlord must have “just cause” under the Rent Ordinance. Accordingly, the landlord would need to serve a termination notice stating a just cause ground to terminate the parking or storage and complying with all state and local laws, similar to terminating a tenancy. And once the right to park or use storage is terminated by the landlord, the tenant is entitled to a corresponding rent reduction.

However, effective August 20, 2014, the Rent Ordinance was amended to allow a landlord to temporarily sever housing services from the tenancy, including parking and storage, without “just case” in order to perform the mandatory soft-story seismic retrofit work. In such circumstances, the tenant is entitled to compensation or to a substitute housing service and is entitled to restoration of the parking or storage when the work is completed.

When seeking to temporarily sever parking or storage, the landlord must first obtain all necessary permits to perform the mandatory seismic retrofit work. Thereafter, the landlord must provide the tenant with 30 days’ written notice temporarily severing the parking or storage and specifying the length of time the parking or storage will be severed. In addition, the tenant is entitled to the following compensation:

If the rental agreement states a rate for the parking or storage, then that rate shall be used to calculate the amount due to the tenant on a daily basis.

If there is no rate stated in the rental agreement, then the rate shall be equal to the current replacement value of the parking and storage.

If the landlord provides other comparable parking or storage, then no compensation is due.

Half of any compensation is due when the notice is served, and half is due when the parking or storage is severed.

In no event shall the compensation due to the tenant for each housing service exceed 15% of the monthly base rent for the rental unit. And if the parking or storage was provided to the tenant after the inception of the tenancy and the tenant does not pay any additional rent for the parking or storage, then no compensation is due.

—Steven Williams

Q.  We are doing retrofit work on our building. What is the procedure and cost for relocation? Can a tenant refuse or delay an order to vacate?

A. If you are voluntarily doing seismic retrofit work, the procedure is to terminate the tenancy with a right to return after the work is finished, pursuant to Rent Ordinance section 37.9(a)(11).  If the Department of Building Inspection is requiring you to retrofit your building as part of the Mandatory Soft Story Program, the Rent Ordinance was amended in 2014 to permit owners to temporarily sever housing services such as parking and storage and require them to compensate the tenants or provide a substitute housing service.

The rest of this article applies when you are voluntarily retrofitting your building and need one or more tenants to temporarily relocate.  The cost for relocation is the no-fault relocation fee set by the Rent Board. If a tenant refuses, it will cause a delay while you file an Unlawful Detainer.

Relocation payments for tenant displacement exceeding 19 days: Where the work will take more than 19 days to complete, all tenants, including minor children, who have occupied the unit for at least one year are entitled to the following relocation payments:

The current relocation fee is $6,281.00 per tenant with a maximum per unit of $18,843.00. Each tenant over 60 or with a disability, and each household with minor children, must be paid an additional $4,188.00. If the relocation is less than 20 days, the relocation fee is $341.00 per day plus actual moving expenses, with an option to provide a comparable unit instead of the relocation fee.

Rent Ordinance section 37.9(a)(11) and Rules & Regulations rules 12.15-12.16 govern recovering possession temporarily to perform work that would make the unit “hazardous, unhealthy, and/or uninhabitable.” Before serving the tenant with the required written notice, you must obtain all necessary permits. Copies of the permits must be given to the tenant along with a description of the work to be done and an approximate date when the tenant can reoccupy the unit before the date of service of a notice to vacate. You must also advise the tenant in writing that the retrofit plans are on file with the Central Permit Bureau of the Department of Building Inspection and that they can arrange to review the plans with the CPB.

The time permitted for the work is up to three months, unless the owner obtains an extension from the Rent Board. If you know (or “should know”) in advance that the work will take more than three months, you must petition the Rent Board for an extension before serving the notice to vacate.

The notice to vacate, which must be served in “good faith” and without “ulterior reasons and with honest intent,” must state the basis for the eviction and must include a form published by the Rent Board advising the tenant of their rights. The notice period is 30 days if the tenant has occupied the unit for less than 12 months, or 60 days if more than 12 months. A copy of the notice must be filed with the Rent Board within 10 days of service on the tenant.

Note that if you are not performing seismic work required by the Building Code, and any occupant of the unit is either a minor, anyone affiliated with a school, or has a custodial or family relationship with such a person, the law states the vacate date cannot be during the school year.  This school-based limitation, however, was recently deemed improper by the San Francisco Housing Court judge in a non-binding decision.

When the work is done, you must “immediately” advise the tenant and allow them to reoccupy the unit at the same rent rate, except for approved capital improvement passthroughs. The tenant has 30 days to notify you of acceptance and 45 days to reoccupy.

If you do not follow these procedures, you will almost certainly be sued for violation of the Rent Ordinance, so make sure you have the proper insurance before serving notice on your tenants.

—David Semel

The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Steven Williams and David Semel are with Fried & Williams, LLP and can be reached at 415-421-0100.