Feature
by Dennis Hyde
Ordinance number 57-02, the so-called “Ellis Bluff” legislation, was signed by Mayor Brown on May 3, 2002, and goes into effect on June 3, 2002. A critique of the findings recited in the legislation is beyond the scope of this article. Instead, this article will focus on practical effects of the law on property owners and the professionals who represent them.
Sale Disclosures
“Prior to entering into a contract” for the sale of a
multi-unit building, an owner must now disclose in writing “to
the buyer” the grounds for the termination of the tenancy of
each residential unit to be delivered vacant “at the close
of escrow.” It is unclear how sellers will comply with this
new requirement.
Notice of Constraints
Within thirty days of filing an Owner-Move-In Notice with the Rent
Board, the Rent Board will now record a “Notice of Constraints”
that identifies any restrictions applicable to a particular unit.
At present these constraints would include the current 36-month
occupancy requirement, the right of re-rental by the former tenant
and rent increase limitations during that period, if the unit is
offered for rent. There is no provision to allow the owner to review
or comment upon the Notice of Constraints form.
Mandatory Tenant Lawyers
State and Federal law allows a person to appear before a court and
defend their interests whether they can afford a lawyer or not.
The new law requires a tenant to hire a lawyer before he or she
can enter into any agreement that would affect rights under the
San Francisco Residential Rent Stabilization and Arbitration Ordinance,
even in proceedings before a judge. This requirement will deprive
tenants of the right to represent themselves in negotiating any
settlement agreement, in or out of court, and require them to incur
the cost of an attorney even when not desired or necessary.
Mandatory Notices
A landlord is now compelled to serve a notice on a tenant stating
the particular grounds for recovery of possession under the Rent
Ordinance within five days of either making a request that the tenant
move or threatening an eviction, regardless of any other circumstances.
This requirement ignores the fact that most tenants would prefer
not to be served with an eviction notice and have cooperative relationships
with their landlords. It is unclear what constitutes a request or
threat. Landlords and their agents are cautioned not to make complaints
about tenant behavior such as breaking house rules or disturbing
other tenants in the building that could imply an intent to recover
possession of a unit unless the complaints are followed by a notice.
The failure to serve a notice within five days of such a communication
is “unlawful” and subjects the violator to criminal liability.
Additional Documents Filed with Notices
Any warning or threat that precedes a notice stating the particular
grounds for recovery of possession, must also be filed at the Rent
Board (along with the actual recovery notice). Presumably, “warning
or threat” is meant to describe the “request” or
threat discussed immediately above, although the use of different
terms must be noted and it remains unclear. The failure to file
the preceding warning or threat is unlawful and subjects the violator
to criminal liability.
Proof of Service of Notice Filed
A proof of service of all Owner-Move-InNotices must now be
filed at the Rent Board.
New Presumptions
If a tenant vacates a unit within 120 days of receiving a “written
or verbal statement” of intent to recover the unit for “grounds
stated,” it is rebuttably presumed that the tenant vacated
the unit under those grounds. The unit shall be subject to any restrictions
under the Ordinance for the grounds stated regardless of any agreement
to the contrary, even under a court-supervised settlement agreement.
If the landlord does not thereafter use the unit for the ground
stated, it shall be rebuttably presumed that the landlord did not
act in good faith. These presumptions apply in both civil and criminal
cases.
Prohibited Communications with Tenants
It is unlawful for either a landlord, or a landlord’s attorney
or other representative, to “seek” a waiver of a tenant’s
rights under the Ordinance. Violation of this restriction results
in criminal liability.
Restrictions on Settlement Agreements
No settlement agreement concerning rights under the San Francisco
Rent Ordinance is enforceable unless: it is overseen by a sitting
or retired Superior Court judge; the tenant is represented by independent
counsel; and the agreement states the names of the overseeing judge
and all counsel.
The settlement agreement itself can no longer be confidential, as it must be filed with the Rent Board by the landlord within ten days of “execution,” although any monetary amounts are not to be shown.
This new legislation is designed to prevent compromise resolution of disputes between landlords and tenants, and to create hyper-technical avenues of liability. Other than creating a trap for the unwary, this new law will only further accelerate the loss of existing rental housing in San Francisco, while creating acrimony between landlords and tenants.
This article is not intended as an exhaustive discussion of all provisions or ramifications of this new law. Property owners and their representatives are advised to consult with attorneys knowledgeable with practice under the San Francisco Rent Ordinance before undertaking any actions that fall within the topics discussed.
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. Dennis Hyde is with Wiegel & Fried, LLP. He is a civil trail attorney in San Francisco and has represented property owners under the San Francisco Rent Ordinance and other real property matters since 1980. © Copyright 2002.