San Francisco Rent Control and Tenants' Rights - Know Them!
So you want to buy a multi-unit investment property in the City. You find the perfect property in a great neighborhood that needs some renovations, thinking to yourself, great I'll just kick out the tenants for a little while, remodel all the units and spike up the price of rent so I can cash flow on my investment. While that would all be great for a potential buyer you must know all the laws or you may be looking at a big lawsuit. In San Francisco an owner of a building must be up to date on all the rules of rent control along with tenants' rights, and trust me, there are a lot and you may be violating one without even knowing.
Not all buildings in San Francisco are protected under rent control. For these building it means you can raise the rent any amount at any time with proper 30 day notice. These exceptions are if you are living in:
- a building constructed after June 1979
- a dormitory, monastery, nunnery etc
- subsidized housing
- a residential hotel without continuous residency of over 28 days
Now if the building or living situation does not fall under any of those exceptions then you are classified under rent control. These are the basics, just to give you an understanding of the main components:
- A Landlord can only raise rent by a certain amount each year, determined by the Bay Area Consumer Price Index(inflation).
- Tenants can dispute their rental price with the rent board if the landlord has failed to supply agreed upon or legal services - ex: the building is not a safe and habitable place or the landlord takes away parking space, washer/dryer etc.
- Tenants can only be evicted for 15 legal reasons (just cause)
At any point if a tenant decides to move out on their own will or is evicted with just cause the landlord can adjust the rental price of that unit to any amount, as long as there was no ulterior motive of raising rent once evicting tenant.
There are still two other ways that a tenant can be evicted classified as "no fault" evictions. If you wanted to move into one unit after purchasing a building you can do an Owner Move in Eviction. You would have to compensate the tenants for relocation benefits of $5,101 per tenant and up to $15,304 per household, plus an additional $3,401 for senior or disabled people and for children under 18. Many landlords will abuse this and claim to be moving in when really they just want the tenant out, so be careful of sneaky landlords!
The last thing one could do to get any unwanted tenants out is one of the most difficult, time consuming and expensive evictions there is, known as the Ellis Act. An Ellis Act Eviction is a state law claiming that landlords have the unconditional right to evict tenants to "go out of business." To perform an Ellis Act Eviction you must evict all tenants in the building, not singling out any one unit, and you must pay similar relocation benefits as an OMI. Once the tenants are out you can do whatever you like to the building but if you bring any tenants back in then you must rent those units at the same price as before for the next 5 years. The reason most landlords Ellis Act a building are because they have the intent of turning the apartments into condominiums or TIC's.
The last thing an owner must be aware of before purchasing a building are knowing if there's any protected tenants living there. A protected tenant is a senior (60+) or disabled person who has been living in the building for over 10 years. The reason for this "protected tenant" status is to prevent new owners from coming in and evicting an elderly or disabled person out of the place they call home and out on the street. The problem with protected tenants is that many times they have been paying the same price for rent for the last 15 years and are now paying 1/3 of market value for their apartment. There is almost nothing you can do about them except Ellis the entire building which I mentioned before, is very complicated.
So know your laws, do your research and make sure to investigate everything before purchasing anything in San Francisco, because like most everything else, things are done differently in the City by the Bay.