Feature
by Barbara Herzig
When the Costa-Hawkins Rental Housing Act was passed in 1995, it exempted virtually all condominiums from the portions of the San Francisco Rent Ordinance that limited rent increases. Beginning January 1, 2002, this exemption for condominiums was scaled back significantly. Now the exemption from rent increase limits for condominiums applies to only two classes of condominiums.
The first class of exempt units is condominiums built after the effective date of the San Francisco Rent Ordinance (June 13, 1979). These units are exempt because of the general exemption contained in the ordinance itself for units built after the effective date of the ordinance.
A condominium built before the effective date of the Rent Ordinance is exempt from the rent increase limitations of the ordinance only if the condominium unit has been sold separately to a bona fide purchaser for value. If you are the buyer of a single unit in a condominium project, then you are exempt from the rent increase limitations of the Rent Ordinance. However, if you convert a building to condominiums and continue to hold and rent the units, or if you buy an apartment building that has a condominium map on it, they remain subject to rent control. There is one exception to this rule. If the original subdivider has sold all but one of the units in the building and has resided in that unit for at least one year as his or her principal place of residence and then rents out the unit, the unit is thereafter exempt from rent increase limitations.
The exemption from the rent increase limits for condominiums that have been sold separately does not apply to the following tenancies: (1) a tenancy in any condominium that became vacant because the previous tenant moved after getting a 30- Day Notice to Quit or a 30-Day Notice Changing the Terms of the Tenancy (this would include a rent increase); (2) a tenancy in a condominium unit with serious building code violations that have remained uncorrected for six months or longer, and (3) a tenancy that began before January 1, 1996.
If you gave a rent increase under Costa-Hawkins before January 1, 2002, then under this law, the correct “base rent” will be whatever rent was in effect on May 7, 2001 (the day mandated by the amended Costa-Hawkins law).
You must remember that the exclusion applies only to rent increase limitations of a rent control ordinance. All owners of condominiums built before the effective date of the Rent Ordinance need a just cause to terminate a tenancy.
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. Barbara Herzig is a partner in the firm of Herzig & Berlese. She specializes in transactional work involving residential real estate in San Francisco, including condominium conversions and tenancy-in-common agreements. Copyright © 2002.