Legal Corner Q & A

How to Handle the Legal Fallout from a Disaster

by Various Authors

Q. If a unit, slightly damaged in a disaster, remains occupied by a tenant, can a landlord continue to charge the full rent?

A. We would recommend that you follow the same general principles that apply for any damage to the unit that was not caused by the tenants or their guests: if you have notice of damage to the unit, and do not make repairs after you have been given reasonable time to do so, the tenant may legally be permitted to pay a reduced rental amount.

Clearly, what is considered a “reasonable time” really depends on the circumstances of your specific case. For instance, if you have a 30-unit building, and each unit has substantial damage due to a disaster, the tenants in these units understandably might have to wait much longer for repairs than tenants in a 3-unit building in which only one unit is in need of repair.

Another issue is whether the slight damage to the unit—as described in your question—constitutes a “reduction in housing services” or endangers the life, health, property, safety or welfare of an occupant or any person in the unit. In any of these situations, the tenant would be entitled to a rent reduction. If the damage is merely cosmetic, a tenant is not permitted to pay a reduced rent. However, if it affects her use and enjoyment of the premises (no hot water) or potentially her health and safety (shattered windows), the tenant may pay a reduced rent if repairs are not made as described above.

In any situation where a tenant advises you of needed repairs in her unit, you should try your best to make the necessary repairs promptly. In a disaster situation, you should certainly prioritize what repairs to do first to avoid rental losses and ensure the welfare of your tenants. If you expect a delay in conducting any of the repairs, you will want to provide the tenant details in writing that establish the “reasonableness” of the expected delay. Of course, if you have a tenant who pays or demands to pay less than the contract rent, you should consult a qualified landlord-tenant attorney before taking any action against the tenant.
�Sally Morin & James M. Millar

Q. Assuming there will be thousands of displaced residents seeking shelter after a devastating earthquake, can a San Francisco landlord lease or make available rental units on a short-term basis to victims of the quake and, therefore, not be bound by the restrictive elements in the Rent Ordinance?

A. Unfortunately, the answer to this question is no. The Rent Ordinance makes no exception for short-term rentals to victims of natural or man-made disasters. Section 37.2(r)(1) of the Rent Ordinance defines rent-controlled premises and, with a few exceptions, it covers all residential units in San Francisco. Even some of the exceptions—like hotel rooms and boarding houses—become rent-controlled units once occupied by the tenant for 32 continuous days, and a landlord may not seek possession to avoid that result.

The problem posed was evident after Hurricane Katrina. Landlords were asked to offer short-term, discounted units from their vacancies for displaced persons. Unfortunately in San Francisco, if a landlord attempts to do so, she risks the tenant becoming a long-term tenant at well below market rates. Agreements limiting rentals to short-term leases cannot be enforced because there is no right to evict; and increasing rent if the tenant stays beyond a designated date is illegal. The only real protection for a landlord under current law is simply not to make a unit available at below-market rents. I checked with the Rent Board, and there is no evidence of anything on the horizon to alter this situation.

Of course one possible option, if a tenant does not honor a moral commitment to vacate after short-term disaster relief, is a petition for a “comparables” rent increase. Rent Board Rules & Regulations Sec. 6.11 permits a rent increase where, because of extraordinary circumstances unrelated to market conditions, the initial rent was set very low. Such an increase, however, requires a Rent Board hearing where proof can be difficult or impossible and the process can easily become complicated, expensive and far from a “slam dunk.” Moreover, such an increase is available only once in the entire lifetime of that unit.

Just like when the master tenant is unable to evict an obnoxious roommate, or the retired mom and pop are stuck with subsidizing a wealthy tenant, or the elderly have trouble finding a new place because landlords fear renting to “protected” tenants, the Rent Ordinance stands to interfere with relief to the people that most need it—in this case, disaster victims. Hopefully, something will be done to create an exception for people in dire need of help before that next great quake hits.
�Saul M. Ferster

Q. In terms of an owner’s responsibility, what typically happens with a rental unit when the tenant dies?

A. Tenants dying in their units are more common than many of us want to believe. With an aging population, owners will increasingly have to deal with this issue. State law allows a month-to-month tenancy to terminate by notice of a tenant’s death. However, local regulations also require the unit to be sealed after death when the Office of the Chief Medical Examiner (coroner) is called to complete an investigation into the cause of death or to allow the decedent’s family to inventory and distribute property. Do not disturb the unit until you have clearance from this office. According to the Office of the Chief Medical Examiner, the unit will be sealed for as long as it takes family members to inventory and pack items. For out-of-state or out-of-country survivors, this process could exceed one month; if the family is local, the unit may only be sealed for several weeks. If death is not due to natural causes, the Police Department may conduct its own investigation, and clearance from this agency will also be required before the apartment can be disturbed.

Another problem may arise when the landlord finds that other people are living in the unit. Sometimes, a friend or relative of the deceased tenant will seize the opportunity to move into a rent-controlled unit. Do not accept rent from them. The owner may want to serve a 30-Day Termination of Tenancy Notice for an unlawful holdover if strangers are found to be in occupancy. Yet, if original occupants remain, such as roommates of the deceased tenant, then the tenancy continues without interruption. If there are subsequent occupants who, prior to the tenant’s death, were either served with a 6.14 Notice or have moved into the unit after January 1, 1996, then the landlord should consider raising the rent to fair market value under the Costa-Hawkins Rental Housing Act.

Owners may also find that the departed tenant has no close family or friends to tend to the disposition of the body and estate property. Sometimes the tenant does not leave a will or trust to direct the administration of the estate. The landlord may then have to contact relatives or next of kin, and in some cases the landlord may have to store items for longer periods of time until the probate process is completed. In the worst case scenario, the tenant has no heirs, so the property would be transferred to the State of California. As such, it is never appropriate for the owner to take the tenant’s belongings unless the owner is named as an heir and the appropriate estate disposition proceeding has been completed. It is recommended that owners and managers have contact information for relatives and friends of tenants in the file, especially if the tenant is sick or elderly. Closely monitor the post-death activities to ensure that no one takes unlawful occupancy of the apartment, but do not be in a hurry to turn over the unit.
�David Wasserman

Q. If a building is heavily damaged by a disaster, such as an earthquake or fire, and the city “red tags” the structure because it is uninhabitable, how does the owner remove any remaining tenants?

A. A building inspector may “red tag” a building when it is uninhabitable due to structural damage. Red tagging a building is the equivalent of condemning the property for health and safety reasons. If it is red tagged, no one may use or occupy the property as a residence.

Most tenants are wise enough to voluntarily vacate when a building is severely damaged and uninhabitable. Others don’t leave simply because they have nowhere to go. After the 1906 earthquake, practically the entire city of San Francisco was homeless.

The building owner’s responsibility is to comply with city orders and vacate the damaged building. When a tenant refuses to vacate a red-tagged property, this may prove a nightmare for the building owner. If a tenant fails to vacate, the property owner could be fined by the city. And if the tenant is injured as a result of the condition of the property, the owner may be held liable.

Unless the city itself takes action to legally or physically remove a tenant, a landlord has few options available. Typically, the city will do little to remove a tenant. A notice to vacate might be posted, but there will be no official enforcement of the notice. I suppose that if a building were on fire, a firefighter might use force to remove a stubborn occupant.

A landlord in San Francisco may not endeavor to recover possession from a tenant unless the landlord has just cause to evict. Emergencies are no exception to the rule. When a tenant is permitting a nuisance to exist or is using the premises for an illegal purpose, there are grounds for eviction. It could be argued that ignoring a red tag or notice to vacate is a nuisance or illegal use.

Even if a landlord has just cause to serve a three-day notice based upon nuisance or illegal use, the eviction process will take some time. Using these grounds for eviction will still take 30 to 60 days before the tenant is removed by the Sheriff’s Department.
�Clifford E. Fried

The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of 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 specific problem. Sally Morin and James M. Millar can be reached at 415-981-8100. Saul M. Ferster can be reached at 415-863-2678. David Wasserman is with Wasserman & Stern, 415-567-8230. Clifford E. Fried is with Wiegel & Fried, LLP, 415-552-8230. Copyright � 2006 by the San Francisco Apartment Magazine. All rights reserved.