Two Sides One Coin

A Campaign to Maintain

written by Daniel Wayne

Landlords should take care of tenant maintenance requests to avoid potential (and costly) decrease-in-services lawsuits down the road.T

Tenants protected under the San Francisco Rent Ordinance may petition the Rent Board for a reduction of their base rent in cases where they can demonstrate they’ve suffered a substantial decrease in housing services. In this edition, we discuss what constitutes a decrease in services, the remedies available to tenants, and the issues tenants and landlords alike need to be aware of to avoid risk.

The Implied Warranty of Habitability
Implied in every rental agreement is an obligation for a landlord to provide a tenant with a habitable premises. This is codified in Civil Code Sec. 1941, which provides that a “lessor of a building intended for the occupation of human beings must . . . put it into a condition fit for such occupation, and repair all subsequent dilapidation's thereof, which render it untenable.” In other words, landlords have to both ensure that any unit they rent out is in livable condition when it is leased out, and then maintain it.

State and local law limits the amount of rent a landlord can legally charge an original occupant in exchange for housing services. As a result, a landlord’s removal of one or more of those services can be construed as an unlawful rent increase and/or a breach of contract.

What is a “Housing Service?”
Pursuant to the San Francisco Rent Ordinance, a housing service is any service or amenity connected with use or occupancy of a rental unit that was provided at the commencement of the tenancy; reasonably expected by the tenant; promised by the landlord prior to the commencement of tenancy but never provided; OR added after the commencement of tenancy in exchange for an increase of base rent. This includes the right to quiet enjoyment, without harassment, repairs, maintenance, and basic amenities such as heat, water, and light. (See RO Sec. 37.2(g).

Get Ahead of Problems
We see landlords get in the most trouble when they ignore complaints from their tenants and allow defective conditions to get worse. Issues like water leaks, pest infestations, and mold do not get better by themselves. What may start as a minor, easy fix, can quickly snowball into a problem that can force a tenant to give up their tenancy. While there are those landlords who bank on tenants doing just that—and thus giving them the ability to replace that tenant with someone paying market rate—this is a great way to get sued, and to find yourself shelling out more money to repair your property.

If a landlord cannot resolve the problem with a simple fix, they should consider offering to reduce the affected tenant’s rent until the problem can be resolved. While this does not absolve a landlord of their duty to ultimately fix the problem, it will do wonders for the landlord-tenant relationship and potentially save everyone time and money down the road.

Tenant Remedy for a “Decrease in Services”
Assuming that no deal can be reached between a landlord and tenant on a decrease in rent or a quick repair,  San Francisco tenants can pursue a variety of different remedies. San Francisco Rent Ordinance Section 37.11(a) allows a tenant to seek reimbursement of all rent overcharges paid, in addition to attorney’s fees, in civil court. Again, charging full rent can be an overcharge if the tenant is not getting what they bargained for. For severe and/or pervasive habitability issues, a tenant may have grounds to sue for overpayment of rent, harassment, emotional distress, and, perhaps even move out and sue for constructive eviction. Damages in these cases can be substantial and even those landlords with the best insurance policies find themselves having to pay out of their own pockets to resolve these cases.

For less serious defects, tenants may go the route of filing a petition for a substantial decrease in housing services with the San Francisco Rent Board. This is often the best remedy for tenants dealing with less severe defects.

Rent Board Decrease in Services Petitions
If a tenant feels they’ve had a housing service removed or reduced, they can file a petition with the Rent Board. The petition must include a description of the service or services they claim were removed or reduced, when the problem began, whether it was ever restored, and when the tenant first notified the landlord of the issue. The tenant must also ascribe a dollar value to the service that they are seeking.

Once a tenant has filed a petition, the Rent Board will schedule a hearing and notify both sides.

Because the Rent Board is an administrative body, these proceedings operate a bit differently than court. The parties are not required to hire attorneys and the standard rules of court do not apply. The hearing itself is typically a half day and overseen by an Administrative Law Judge (ALJ).

On the day of the hearing, the parties have the option to try and mediate the issue, or proceed with an arbitration. During the hearing, an administrative law judge will listen to the parties’ testimony and weigh the facts in the case. The tenant must prove that there was a substantial decrease in housing services and that the landlord had notice of the condition but failed to restore the service within a reasonable time after receiving notice. Once both sides have presented their cases, the ALJ will take the matter under submission and issue their decision by mail after six to eight weeks.

Considerations
The ALJ does not have a set formula for determining the amount of rent reduction awarded to the tenant, if any. Rather, the outcome is decided on the merits of the case. Considerations, as one might expect, include the credibility of testimony and the quality of the documentary evidence presented, such as Notices of Violation, repair reports and supporting letters from third parties (e.g., tenant’s doctors). Judges will not award a rent reduction that is greater than the rent reduction requested by the tenant or the total rent a tenant pays. If a rent reduction is awarded to the tenant, the rent reduction is retroactive to the date the landlord received notice of the reduced or removed  service.

For retroactive rent reductions, the Rent Board usually limits them to the one year period before the petition was filed, unless the tenant can prove that the landlord had long term notice of the problem or that extraordinary circumstances exist. Where a housing service has not been restored, the Rent Board may order a decrease in rent going forward until the service is restored. Note that the Rent Board does not have the authority to compel a landlord to restore the claimed housing service. The only remedy available from the Rent Board is the rent reduction for the loss of a housing service.

What Counts as Notice to the Landlord?
“Notice” of a decrease in services means actual knowledge (the landlord has been notified of the problem by the tenant [or others], or has inspected the unit and seen the issue) or constructive knowledge. The term constructive knowledge means that the landlord should have known of the issue with a reasonable inspection. Generally, constructive knowledge is proven by establishing: 1) that the landlord has not inspected the property within a reasonable time, and 2) that the problem is of such a nature that it would have been discovered by a landlord exercising reasonable care in an inspection.

Decrease in Services as Wrongful Eviction
In some cases, such as those described above, a landlord may be able to remove housing services in exchange for a reduction of the tenant’s base rent. However, some services cannot be severed from a tenancy without a just cause for eviction. For example, a landlord is required to provide a just cause and serve a proper eviction notice prior to taking away a tenant’s parking or storage facilities; garden, yard, patio, or deck; laundry facilities; or, in single room occupancy (SRO) hotels, the tenant’s kitchen facilities and lobbies.

If a landlord deprives a tenant of any of these services without just cause and proper notice, the tenant may file a wrongful eviction lawsuit, in addition to seeking retroactive rent abatement. In these circumstances, the damages could go well beyond the “actual” value of the service. For example, while a parking spot may be valued at $300 per month, the damages arising in a lawsuit where a landlord has wrongfully evicted a tenant from their parking spot without reducing their rent may be much higher and could include exposure to treble damages, attorney’s fees, cost, and emotional distress.

In other cases, a decrease in services may be so onerous to the tenant that they are forced to vacate the unit. For example, a tenant who uses a wheelchair and lives on an upper floor may not be able to cope with an elevator that’s broken for months at a time. In a case like this, a tenant may move out of the unit and later sue for wrongful eviction (and conceivably disability discrimination). Depending on the facts of the tenancy, damages in this type of case can exceed six figures.

Rent Board Trends
According to the Rent Board’s annual statistical report for 2017 - 2018, the total number of petitions filed by tenants with the Rent Board has increased overall. However, the number of petitions involving a decrease in services has actually gone down. For fiscal year 2017 - 2018, 452 decrease in services petitions were filed, compared to 500 the year before, and a high of 597 in 2014 - 2015.

Avoiding a Decrease in Services DisputeLandlords can do two simple things to avoid being served with decrease in services petitions: 1) properly maintain properties and 2) keep an open dialogue with tenants regarding conditions and issues pertaining to the property.  

For most tenants, the Rent Board is the last place they want to be. For most of the folks we talk to, what they want is to feel heard and respected. While your tenant may be getting a relative bargain if they have been living in their apartment for more than a few years, it can be extremely frustrating to live with defective conditions and feel like your landlord is not listening or doesn’t care about what you are going through. By responding to a tenant’s complaints in a timely and compassionate manner, offering a decrease in rent can go a long way to resolving an issue and avoiding a bigger fight.

The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Daniel W. Wayne is a tenant attorney with Wolford Wayne LLP. He can be reached at 415-649-6203.