Feature

Owner Move-In Evictions – The Basics from A to Z

by Jeffery P. Woo

The ability of an owner to move into her own property is regarded as a basic American right. The San Francisco Rent Stabilization and Arbitration Ordinance even permits evictions when the owner seeks to move in to her own property. Although the right of a landlord to live in her own property seems simple enough, there are a number of conditions imposed by the Rent Ordinance that often makes this type of eviction expensive and time consuming.

The Basic Requirements

According to Section 37.9(a)(8) of the Rent Ordinance, an owner may evict a tenant provided the landlord:

Owns at least 25 percent of the property (married couples or domestic partners may combine their ownership interest to equal the 25 percent) if the property was purchased after February 1, 1991, or if purchased before that date, the landlord must own at least 10 percent;
Intends to occupy the premises as her principal place of residence for at least three years;
Seeks to evict with honest intent, in good faith, and without ulterior motive;
Provides at least a 60-day notice, effective January 1, 2003 (formerly a 30-day notice);
Must take another residential unit if it becomes vacant, prior to the actual eviction, if it is comparable to the original unit that she wanted. If the vacant unit is not comparable, the landlord must offer the vacant one to the tenant of the unit she wants at a commensurate rent to what the tenant is currently paying; and
Must pay the tenant who will be evicted a relocation fee of $1,000, provided he or she has lived in the premises for at least one year. Half of the fee must be paid at the time the notice is served. The balance is due when the tenant moves out. This requirement does not apply to single-family homes or condominium units. At first glance, these requirements appear relatively easy to meet. However, the landlord’s burden to prove she meets the requirements is not always easy in particular circumstances.

Landlord’s Intent to Occupy

As a landlord, your intent to occupy the premises for three years as your principal place of residence does not simply mean that you have to live there for three years. It means that you must prove to a jury that as of the date of the notice of eviction (known as the Owner Move-In [OMI] Notice), you have the requisite intent. Proving that intent will depend on your personal situation. For instance, if you own no other property and bought this property for the sole purpose of using it as your home, you will likely succeed in proving the “principal place of residence” component of the Rent Ordinance.

If, Likewise proving the three-year component of the Rent Ordinance will depend again on your circumstances. A common situation involves parents gifting or selling a 25 percent interest of a property to their adult children, which allows them to move in via an OMI eviction. Often these children will be in their mid to late 20s, recent college graduates, single, and starting their first professional, full-time jobs. For example, in determining sufficient proof for the requisite intent to stay for three years, we would look at the likelihood of whether this young person might change jobs and move to another city, decide to attend an out-of-town graduate school, or marry someone currently living in another city. The landlord clearly has the burden of proving her intent, and so this process may require fully considering the totality of her life.

Honest Intent, Good Faith, No Ulterior Motive

This element again requires the landlord to prove her state of mind. Two factors must be considered:

the relationship between the landlord and the tenant and
the landlord’s financial benefit in removing the tenant.

The relationship between a landlord and tenant is particularly relevant if there has been a history of conflict between them. This can range from tenant demands for repairs to tenant reports about illegal conditions to the building inspectors. If there is a history of conflict, a tenant will certainly claim that the OMI eviction is motivated by retaliation for the tenant’s assertion of his rights. Retaliation, however, is not a viable defense when the property has just been purchased, because the landlord has not had any pre-existing relations with the tenant.

In situations where the rent is substantially under market, a tenant being evicted will always claim that the OMI eviction is motivated by the landlord’s goal to clear the building of low-paying tenants. If your property is a multi-unit building in which there are a number of similarly sized units, you may avoid this defense by selecting a unit with a rent higher than your lowest priced one. Frequently, the laws of nature make this impossible for one reason or another. If this is the case, you must clearly justify the reasons you have chosen this specific unit. For instance, in spite of the fact that the unit you want may have the lowest rent, you may find it particularly desirable because it is on the top floor and has the best view, or it includes a garage. While the low rent paid by the tenant may be part of the reason you want a particular unit, you must demonstrate that it is not your dominant motive.

The other common claim of bad faith arises when the tenant is over the age of 60 or disabled and is approaching the tenth anniversary of his or her tenancy. A tenant will allege that the eviction is motivated primarily by the landlord’s wish to get rid of a tenant who will become a protected tenant shortly. (Further information follows under the section below entitled “Restrictions Against OMIs.”)

Thirty/Sixty Day Notice

Effective In certain circumstances, if you buy a property with the intent of occupying one of the units, you may even choose to meet with the tenant to inform him or her of your intentions once escrow closes.

Restrictions Against OMIs

Even if you meet the requirements for an OMI, you may not evict the tenant if he is:

Over the age of 60 and has resided in the premises for at least 10 years;
Disabled within the meaning of federal Supplemental Security Income (SSI) and is determined by SSI to qualify for the SSI program or satisfies such requirements through any other method of determination as approved by the Rent Board, and who has resided in the premises for more than 10 years; or
Catastrophically ill (defined as disabled and having a life threatening illness and who has resided in the premises for more than five years.

These restrictions do no apply to OMI evictions of single-family homes or condominium units.

New Requirements Under the Daly Amendment

Effective June 2, 2002, Supervisor Chris Daly’s legislation adds new requirements when an OMI eviction is initiated. Following are some of the major requirements:

The OMI Notice, which must be served upon the Rent Board, must be recorded on the title of the property by the Rent Board;
In order to be valid for a tenant’s waiver of any rights under the Rent Ordinance in a settlement, the tenant must be represented by independent counsel and the settlement agreement must be approved by a sitting Superior Court Judge or retired judge;
Regardless of the agreement made by the landlord and the tenant in a settlement—even if approved by a Superior Court Judge—if the tenant moves out after an OMI Notice has been served, the landlord must move in and live in the premises for three years or, if she does not, then she must re-offer the unit to the evicted tenant.

The effect of these changes now makes it extremely cumbersome to negotiate with a tenant to move out in order to avoid the expense of a trial.

Requirements After You Evict the Tenant

Once you have served the OMI Notice and the tenant has moved, either by agreement or as a result of a trial and judgment, there are yet more requirements that deserve your attention. First, you must occupy the premises within three months of the tenant’s departure from the unit. If you fail to do so, it will be rebuttably presumed that you have not acted in good faith.

Second, you must use the premises as your principal place of residence. Under the Rent Ordinance, you can have only one principal place of residence. In order to determine your principal place of residence the following factors are examined:

Subject premises are listed as the owner’s place of residence on any motor vehicle registration, driver’s license, or with any other public agency, including state and local taxing authorities;
Utilities are installed under the owner’s name at the subject premises;
All the owner’s personal possessions have been moved into the subject premises;
Documentation of a homeowner’s tax exemption, voter registration, and U.S. Postal Change of Address form;
Subject premises are the place the owner normally returns to as his/her home, exclusive of military service, hospitalization, vacation, or travel necessitated by employment;
Notice to move from another dwelling unit was given in order to move into the subject premises; and
Owner sold or placed on the market the home she occupied prior to occupying the subject premises.

Third, you must reside in the premises for three years. If you fail to do so, it is rebuttably presumed that you have acted in bad faith. If you vacate the premises before the three years have passed, you are required to offer the unit back to the evicted tenant at the same rent that was charged at the time of his or her eviction, plus any lawful rent increases that could have been taken. In the event that the original tenant does not wish to reoccupy the unit, and you offer the unit for rent to anther party, you must charge the same rent that was charged at the time of eviction, plus any lawful rent increases that could have been taken. After three years, the landlord may vacate without offering the unit back to the tenant or restricting the initial rent she charges to new tenants. Last, by doing an OMI eviction, you have designated that unit as the owner’s unit. In the future, this is the only unit in which any other owner of the property may ever seek to evict tenants for OMI.

Risk of Wrongful Eviction Claims

The subject of wrongful eviction is beyond the scope of this article, but it does bear a few words. Probably more wrongful eviction claims arise out of OMI evictions than any other type. This is because the cause of action can arise if bad faith can be proven during the initial eviction or after the eviction is complete. Don’t be fooled by the Rent Board’s rules regarding your obligation to offer back the unit if you don’t live there for three years. Those rights are in addition to any rights the tenant may have to sue for wrongful eviction. Because the Rent Ordinance creates rebuttable presumptions, the landlord who must bear the burden of proof that she acted in good faith.

Before any action is taken to commence an OMI eviction, including the service of an OMI Notice, confirm that your liability insurance policy covers you for wrongful eviction.

Conclusion

Your fundamental right to live in your own property is greatly affected by the requirements of the Rent Ordinance. Whether you currently own property with a unit you want to occupy, or you are buying property with the intent to move into a unit, the presence of a tenant there will force you to carefully evaluate the time and expense that recovery of the unit will require. The advice of an experienced attorney is critical to this evaluation.

The opinions expressed in this article are those of the author and do not necessarily reect the viewpoint of the SFAA or the SF Apartment Magazine. Jeffery P. Woo is the principalof the law firm of Woo& Associates. He can be reached at 415.705.6470 .