The Property Management Shop
by Marc Wilson
Q. I have a long-term tenant whose rent is ridiculously below market. Her tenancy includes a private parking garage, which is articulated in the rental agreement as an extra charge of $25 per month. An owner down the street just rented his garage for $275 per month! Can I take back the garage, reduce the tenant’s rent by $25 and rent it to a third party for $275?A. The practical and legal realities of dealing with tenants and garage spaces has been a “moving target” over the last couple of months. Until recently, it was generally accepted that you could take back a parking space with a 30-day notice; the only area of debate centered around the size of the rent reduction you should give the tenant: should the rent be reduced by the amount paid for the garage by the tenant (if you are lucky enough to have that number articulated in your rental agreement) or do you have to reduce the tenant’s rent by the actual market value of the garage (in this case $275). It appears that owners and tenants will not be arguing about these types of things for much longer. Recent court rulings regarding parking spaces appear to have elevated a tenant’s parking space to that of an “inalienable right.” In effect, these rulings make the standard for separating a tenant from his parking space as onerous as separating a tenant from his apartment unit. What does this mean? It means that the probability of successfully separating your tenant from her parking space is slim. If you give a 30-day notice terminating her right to her parking space and, assuming that she does not comply, file an unlawful detainer and summons seeking possession of her garage or her apartment, you will probably be rewarded with a wrongful eviction lawsuit.
Does this mean you shouldn’t try to reclaim your parking space? It depends on your motive. In this case, your motive would appear to be purely financial and not what I would consider “high ground” if the case comes to litigation. As a practical matter, you can attempt to get your parking space without “going the distance” and suing your tenant. Most tenants are probably not aware of the current legal trends and would probably be cooperative—assuming they considered your rent reduction to be fair. Your negotiations with this tenant will probably break down if and when she consults competent legal counsel and/or the Rent Board. Assuming you have an honorable motive, however, there is no real harm in attempting to negotiate with her. Keep in mind that whatever deal you put together will probably not stand up to legal scrutiny or be enforceable.
You might consider never renting your garages to tenants who live in the building. What is the difference in value between an apartment with parking and an apartment without parking? Does the increase in value exceed the value of the parking space rented to an outside non-tenant? Maybe by only a few bucks! The price you pay by renting your garages to tenants is threefold: you lose control over the garage, you lose the ability to raise the rent on the garage, and in all likelihood you will end up with a tenant who will live in the apartment longer than a tenant who does not have on-site parking. You might even make a deal with your neighbors whereby you rent garages to their tenants and they rent garages to your tenants. It seems to me any alternative is better than renting your garages to tenants who live in your building.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. Marc Wilson has been managing and selling San Francisco apartment buildings for 15 years. Please send your questions concerning property management and/or apartment building sales to Marc Wilson at 1699 Van Ness Avenue, SF, CA 94109. He can also be reached at 415-229-1275. © Copyright 2001