Legal Corner Q & A
by Various Authors
Q. What types of buildings or units are exempted from the San Francisco Rent Ordinance?
A. This is an excellent question that is oftentimes ignored, overlooked or mistakenly answered by landlords and landlord attorneys. The analysis begins with a breakdown of the ordinance itself. San Francisco’s rent law is comprised of two parts: (1) eviction controls that impose restrictions on how a landlord can terminate a tenancy (EC) and (2) rent limitations that control how much a landlord can raise the rent every year (RL).
Generally, all buildings with a certificate of occupancy issued before the Rent Ordinance's first effective date of June 13, 1979, are subject to both the EC and RL controls. As a result, most buildings constructed after June 13, 1979, will not be covered under rent control, and the landlord can evict or raise the rent without consideration of the Rent Ordinance (although state law applies). This also means that, unless one of the exceptions below applies, all buildings constructed before June 13, 1979, are controlled by the EC and RL rules. About 87 percent of San Francisco's rental housing stock is pre-1979.
Single-Family Homes and Condominiums
Single-family homes and condominiums built after June 13, 1979, are not subject to the EC and RL rules. However, pre-1979 construction with a tenancy that began after January 1, 1996, may be exempt from the RL guidelines pursuant to the Costa-Hawkins Rental Housing Act. This state law affirms that an owner may increase the rent without rent control limitations if the tenancy began after January 1, 1996, the structure is a condominium or single-family home that has not been subdivided, and there are no outstanding building code violations. Moreover, the subdivider (the owner who converted the building into condos) of condominiums must have sold the units to bona fide purchasers. Thus, if you own a pre-1979 condominium or a single-family home, you may be able to raise the rent without regard to the rent law if the tenancy began after January 1, 1996. However, you are still subject to the EC provisions of the Rent Ordinance. If the tenancy began before January 1, 1996, and the construction is pre-1979, both the EC and RL rules apply.
Substantial Rehabilitation
The owners of pre-1979 buildings — ones that have been either condemned or the building department has provided a written statement indicating that the building is uninhabitable — may be able to apply to the Rent Board for exemption from rent control (both EC and RL). These petitions are rarely granted, for the owner must show that he/she will spend at least 75 percent for rehabilitation or pay the price that it would cost to construct brand new units of the same size and construction type. About 12 exemptions have been granted in the past 15 years. These petitions are rarely granted because the landlord must show that the building has qualified to be torn down and was essentially re-constructed from the ground up. (Mere cosmetic improvements do not qualify.)
Last, even in terms of pre-1979 construction, the Rent Ordinance will not apply to hotels, motels, inns, tourist houses, and rooming and boarding houses unless the tenant has resided there for more than 32 continuous days. To move an occupant from these accommodations in order to avoid the attachment of rent control protections is illegal. Co-ops, hospital rooms, religious boarding homes, school dormitories and health care facilities are exempted outright and are not subject to the 32-continuous-day rule.
Before you buy property, and before you raise the rent, always ask the elementary question: is this building covered by rent control and to what extent? You should have a qualified professional assist you with this determination, for the wrong decision could result in dire consequences.
— David Wasserman
Q. My lease indicates that the tenant will be responsible and pay for all repairs, but I have always paid for these costs. Can I legally deduct the cost of these repairs from the tenant’s security deposit?
A. Generally speaking, the provision is enforceable to the extent that it does not attempt to waive a tenant’s Implied Warranty of Habitability. Civil Code Section 1941.1 requires landlords to maintain tenable conditions and provides that a premise is deemed untenable if: (a) effective waterproofing or weather protection is not available; (b) plumbing or gas facilities do not conform with applicable law at the time of installation or are not maintained; (c) hot and cold water and/or sewer connection are not provided; (d) heating does not conform to requirements of the law; (e) electrical wiring or lighting do not conform with applicable law at the time of installation or are not maintained; (f) common areas under the control of the landlord are not kept sanitary and clean; (g) there are insufficient garbage receptacles; or (h) floors, stairways, and railings are not maintained. Section 1942.1 provides that a tenant can’t waive his/her rights regarding the landlord’s obligation to put a premise in tenable condition.
There is a corollary obligation on the part of a tenant under Civil Code Section 1941.2 that provides tenants must, among other things: (a) keep the premises in clean and sanitary condition; (b) dispose of all rubbish, garbage and waste; and (c) properly use and operate all electrical, gas and plumbing fixtures. If a tenant is in substantial violation of these requirements, there is no duty on the part of the landlord to repair the untenable condition, that was the result of the tenant's act or omission.
In summary, your provision can be enforced if it is for repairs that are either (a) items not relating to tenability (such as a broken towel bar) or (b) items that do relate to tenability but were caused by the tenant.
If you can enforce the provision, you may not want to deduct such charges from the security deposit. You would be better off seeking reimbursement for such costs in order to avoid diminishing your security deposit.
— Jeffery P. Woo
Q. Can a landlord take six months' rent up front?
A. California Civil Code §1950.5 defines a security for residential tenancies and sets limits on the amount of security that can be collected. Among the definitions of security is "any payment…that is imposed as an advance payment of rent…" Civil Code §1950.5(c) provides that, "A landlord may not demand or receive security, however denominated, in an amount or value in excess of an amount equal to two months' rent in the case of unfurnished residential property, and an amount equal to three months' rent in the case of furnished residential property, in addition to any rent for the first month paid on or before initial occupancy."
Thus, under normal circumstances, the maximum up-front payment that a landlord can require for an unfurnished apartment (the typical situation) is equal to three months' rent (including the first month). If the entire payment is designated as rent, the landlord is foregoing the ability to utilize the balance for purposes other than rent. Thus, in most cases, you would be wise to take one month's rent and two months’ security deposit (an amount that can be used for any purpose for which a security deposit can be used—for example, cleaning, damage to property, unpaid rent, unpaid garbage bills resulting in liens, failure to give a thirty-day notice, etc.) than to simply take two months' advance rent.
In addition to the above quoted language, Civil Code §1950.5(c) also states that, "This subdivision does not prohibit an advance payment of not less than six months' rent if the term of the lease is six months or longer" (emphasis original). Indeed, this is a truly odd sentence. The apparent meaning is that when dealing with a six-month or longer lease, the landlord could require up to six months' advance rent (again, if a security deposit for other purposes is waived). There is no reason why this would not apply for each renewal period of six months or longer. Therefore, if the tenancy rolled over in six months, as opposed to month-to-month increments, the landlord could appear to require up to six months' rent in advance of each renewal period.
I use the word "appear," however, because the code language itself on closer scrutiny does not seem to make any sense. It doesn't say that the landlord can require up to six months' advance rent payment—it says not less than six months' advance payment is not prohibited. Read another way, less than six months’ advance payment is prohibited, but more than six months' advance payment (six years perhaps?) is not. What could the legislature have been thinking, and how would the court regard it? Actually, it probably doesn't matter. Given the prevailing high vacancy rate, no landlord would dare demand more than two months' rent equivalent as an up-front rent deposit. I have only seen such an advance payment once, at the request of a tenant who planned to travel internationally and, thus, be out of touch. This tenant didn't want to lose his tenancy for nonpayment of rent in the meantime. Since that situation was initiated by the tenant, it fell into the "no harm, no foul" category and was not instructive on how the law would ultimately be determined.
— Saul M. Ferster
To submit a question for this column please send a brief (1-3 sentences) question to editor@sfaa.org. The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. The information contained in this article is general in nature. Consult the advice of an attorney for any specf ic problem. David Wasserman can be reached at 415-567-9600. Jeffery P. Woo can be reached at 415-705-6470.
Saul M. Ferster can be reached at 415-863-2678. Copyright © 2003 San Francisco Apartment Magazine