Legal Q&A

Hold the Fort

written by Various Authors

Ever-changing local and state employment laws can be confusing, especially when it comes to resident managers.

Q. Am I required to have an on-site manager for my 16-unit building? There is a resident who takes care of the building’s maintenance for me in exchange for discounted rent. Is this good enough?

A. The short answer is “no.” There is common misunderstanding about this requirement in our industry. The law that speaks to this issue, 25 California Code of Regulations Section 42, states as follows:

“A manager, janitor, housekeeper, or other responsible person shall reside upon the premises and shall have charge of every apartment house in which there are 16 or more apartments, and every hotel in which there are 12 or more guest rooms, in the event that the owner of an apartment house or hotel does not reside upon said premises. Only one caretaker would be required for all structures under one ownership and on one contiguous parcel of land. If the owner does not reside upon the premises of any apartment house in which there are more than four but less than 16 apartments, a notice stating the owner’s name and address, or the name and address of the owner’s agent in charge of the apartment house, shall be posted in a conspicuous place on the premises.”

In essence, the 16 residential unit or more buildings do not need to have a resident manager living on-site, but in many instances the owner may want to have an on-site manager especially if the property is large and requires many daily functions. More commonly, however, a “responsible person” will suffice, which typically consists of an existing tenant that is charged with certain tasks such as (i) being the contact for all residents should an emergency arise; (ii) having access to the utility room and building systems to permit servicing or to perform emergency shut-offs; (iii) holding the master key to address accidental lock-outs; and (iv) administering building repairs with vendors. Indeed, a responsible person may simply act as the point-of-contact and not possess other significant management functions.

Whatever arrangement you elect to pursue or have otherwise inherited, please ensure that it is properly documented in a signed writing. For starters, you want a clear understanding of the nature and extent of the person’s responsibilities. Secondly, labor laws govern how managers and even in most circumstances janitors, housekeepers, and other responsible persons are to be compensated. While offsetting rent is oftentimes one manner of payment, both state and local law govern the amount and extent of rent offsets. State law limits the maximum monthly rent charged to an on-site manager, and the San Francisco rent law may deem a rent reduction to be permanent unless it is properly documented in a signed agreement.

Lastly, the Department of Building Inspection is actively enforcing this law. Violators will receive a “Notice of Violation” and given a short time period to appoint a responsible party. In addition, DBI takes the position that an owner owning neighboring buildings on separate lot and block parcels must likewise engage separate responsible parties in each 16 or more unit building.

–David Wasserman

Q. I’d like to raise the rent on the single family home I own in San Francisco to market rate. The increase would be 15%. Would this be considered rent gouging?

A. Regulation of a House (a Short Story): Your mid-century home was born in San Francisco in 1951. It was a foggy day in the Avenues, but your House had a bright future. It could be lived in by an owner or rented out at market rate. Suddenly, on June 13, 1979, the city diagnosed your house with “rent control.” Its prognosis was grim. Your house got second opinions from some of the best lawyers in town, but they all told you the same thing. A ray of hope: in 1995, your legislature found a miracle cure called Costa-Hawkins. It relieved any “separately alienable” dwelling unit from rent control with a single dose.

Once inoculated, your house stretched its arms and pulled in record rents. But it seemed like something new was going around every season. These new bills weren’t clean bills of health: AB 1506 (2017) and Proposition 10 (2018) would be fatal if not treated, each threatening to repeal Costa-Hawkins entirely. These threats still loom, but the local common cold is more insidious. Supervisor Ronen’s Ord. 5-19 adds to the statutory definition of “tenant harassment” a rent increase “imposed in bad faith with an intent to defraud, intimidate, or coerce the tenant into vacating the rental unit.”

In other words, San Francisco now punishes you for exercising your state law rights, if your tenant is intimidated by your rent increase. Would a 15% increase hurt your tenant’s feelings? I have no idea, and I think that’s the point. Any time San Francisco can make it scary for landlords to exercise their state law rights, they just might not do it. How could you know, for instance, whether 12% is “market rate” but three more percent makes your rent increase a tort? It might take an expensive jury trial to vindicate your earnest gesture.

It shouldn’t take a jury to tell you if
you can increase your rent. Fortunately, SFAA sued San Francisco this February as part of its continued effort to advocate for the rental housing community. Keep reading for updates. In the meantime, while this is not required, think about opening a dialogue with your tenant, letting them know you’re getting ready for a rent increase of 15%, assure them you’ve enjoyed having them as a tenant, and ask whether this is something they’d be able to afford. If the dialogue gets you ten percent and peace of mind, that may be worth it for now. Either way, you have a paper trail showing that your good faith is a preexisting condition.

—Justin A. Goodman

Q. The tenants in my 4-unit building are not properly sorting their trash, and every week contents of trash bags are spilled around the bins on the floor. I’ve had to call an exterminator more than once as a result. How can I hold the residents accountable for properly sorting trash and keeping the area clean?

A. Beyond just being unsightly, if the mess is attracting vermin then it has become a health hazard and a nuisance. Many rental agreements will require tenants to keep their units and common areas clean, in addition to prohibiting nuisance activities or behavior. However, the language varies from contract to contract, and some rental agreements are stronger (more specific) than others.

If the mess is a breach of a term of the lease, then it can be enforced by eviction under Chapter 37.9(a)(2) of the San Francisco Administrative Code. However, the violation must be “substantial” and continue after receiving written notice to cease from the landlord. There is no specific definition of what a “substantial” breach is, so consult with an attorney about how to gather evidence of the breach and give proper warning to your tenants.

If your rental agreements fail to address cleanliness or nuisances, there is a general grounds to evict a nuisance tenant under Chapter 37.9(a)(3), provided that the nuisance is “severe”, “continuing or recurring”, and actually interferes with the comfort, safety, or enjoyment of the landlord or other tenants at the property. As with breach of lease, consult with an attorney to assist with evaluating the evidence that the mess is a “severe” nuisance.

Because this is a 4-unit building, it may also be possible that some units are sorting their trash and other units are not. While all tenants may be warned to sort their trash and keep the common areas clean, you may need to undertake further fact-finding to get to the bottom of who is actually causing the mess, or if all tenants are contributing to the problem. Obviously, you want to avoid inaccurate accusations against conscientious tenants.

If the mess is nuisance, without being severe, then as the landlord you will be obligated to continue cleaning the space and abating any vermin that are attracted by the mess. In that case, you should continue to communicate your expectations about trash sorting and cleanliness and establish a record of your concern about this issue, and the tenants’ response, if any. This can include reminder letters to your tenants, and notices posted in the garbage area. If all else fails, consider reorganizing the garbage system to better encourage proper sorting and cleanliness, or at least more clearly identify who among your tenants are the messy ones.

Of course, a responsible landlord would prefer to eliminate the source of a pest problem rather than just treating the symptoms. However, if the problem never becomes “substantial” or “severe” then there may not be any grounds for eviction. On the other hand, the tenants’ negligence and disregard for the lease may nonetheless make them liable for breach of contract, and the same evidence could be presented in small claims to recover the landlord’s cleaning costs. That can be another way to make a point to the tenants without raising the specter of eviction.

Tenants can be held accountable by enforcing the rental agreement by either terminating the tenancy or claiming damages after a breach. The landlord’s strongest case for eviction will be when the problem grows or spreads despite the landlord’s reasonable efforts to abate it. Otherwise, a judge or a jury may well conclude that these cleaning expenses are simply the landlord’s cost of doing business. And if cost is the primary problem, then the landlord should focus on that issue in small claims court and make the case.

—Matthew P. Quiring

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. Justin A. Goodman is with Zacks, Freedman & Patterson, P.C. and can be reached at 415-956-8100. Matthew P. Quiring is with Fried & Williams LLP and can be reached at 510-625-0100.