Legal corner Q&A
by Various Authors
Q. I have a long-term tenant who always pays rent on time, but seems to be using his unit for storage rather than as a residence. How can I prove that he is not really living in the unit?
A. The rent law was amended five years ago to allow owners to increase rent beyond the rent control limitations if a tenant is found not to be using the unit as a principal place of residence. This provision is known as “Section 1.21,” termed after its designation in the Rent Board Rules and Regulations. Owners suspecting that one of their tenants really lives elsewhere can file a 1.21 petition with the San Francisco Rent Board. A hearing will be set, and if the judge finds in the landlord’s favor, a rent increase beyond what is normally allowed will be permitted. In other words, the rent can be reset at fair market value.
Absent an admission from the tenant, proving that someone does not reside in the unit is difficult. Since the law allows temporary absences for reasons such as education, military service or hospitalization, the owner must establish that the tenant permanently moved his principal residence to another location. Thus, hiring a competent private investigator, or PI, is the necessary first step.
At a minimum, the PI should be properly licensed. In addition, the PI is bound to abide by state and federal privacy laws. The Rent Board will not tolerate illegal snooping, so make sure that you retain someone who operates within the rules. Next, determine exactly how you will prove that the tenant is principally residing at another location. The PI should search property tax records to see if the tenant owns a home and takes a homeowner’s tax exemption for his residence. Most Rent Board judges lend great weight to a homeowner’s exemption, filed with the government, where the tenants swear under penalty of perjury that their primary residence is at the home they own.
The PI should also run a credit header. This data consists of the addresses reported by the tenants as their residences. In other words, the credit header shows all past and present mailing places used by the tenant in chronological order. Another helpful tool is the DMV database. For example, the PI can sometimes ascertain what address the tenant lists on a driver’s license, or where the tenant has been cited with a traffic violation.
Finally, the PI can also perform a “knock and talk.” This procedure involves the PI visiting the tenant at his address away from the unit. When the tenant answers the door, the PI poses as an investigator looking for a John Smith who worked at ABC Company and was recently involved in an accident. The tenant, also named John Smith, replies that he is not the John Smith who worked at ABC Company. The PI asks that the tenant confirm, in a declaration, that he lives at this address and is not the employee that is being sought; all too often, the unsuspecting tenant eagerly agrees to cooperate and signs the affidavit attesting to his true place of residence.
In sum, hire a good PI, and gather all of your evidence before you file the petition. Once you apply to the Rent Board for a 1.21 determination, the tenant will receive notification and may alter the evidence you need to prove your case. If you do win, you can turn the rent-controlled storage locker into a market rate rental.
–David Wasserman
Q. I received a 30-day notice from my tenant and subsequently found a new tenant and executed a rental agreement. Now, my outgoing tenant has retracted the notice. What should I do?
A. Unfortunately, you have a definite problem. One of the more insane characteristics of the San Francisco Rent Ordinance is that the current tenant’s failure to honor the 30-day notice terminating tenancy is not just cause for eviction; without one of the enumerated 14 just-cause reasons, you’re dead in the water. As a practical matter, however, even if the eviction process were available, it would likely not solve your problem. By the time an eviction could be achieved, the new tenant would most likely have flown to another coop.
First, tell the tenant that you are already in contract for his unit with someone else, in reliance on his notice, and that if you suffer any damage as a result, he will be sued for recovery of any losses you suffer. That might just stimulate the tenant to be moving on his way.
Presumably, he has a desire to leave or he wouldn’t have given the notice to begin with. If you are using one of the forms of rental agreement used by the SFAA within the last few years, you will find a provision that makes the current tenant liable for the landlord’s damage if he gives a notice terminating tenancy and then reneges. I would point out that provision to the current tenant and emphasize his exposure to liability based upon his failure to comply with the notice he served.
Unless you could be assured, however, that the current tenant will reconsider and vacate, you should also bite the bullet and contact the would-be new tenant, indicating the problem and offering the prospective tenant the opportunity to back out before he terminates his existing tenancy or foregoes alternative new residences, all of which may lead to his damage.
One would hope that either of the above courses of action would result in eradication of your problem. The fact is that having made the rental agreement with the new person, you are contractually bound to honor it, unless he releases you. Frankly, I think it’s dangerous to enter into a binding rental agreement with a new tenant until the unit is actually physically available. At the very least, your rental agreement with the new person should be made conditional on the current tenant vacating. That way you will have no contractual liability if he doesn’t.
–Saul M. Ferster
Q. I have a tenant who admitted, in writing, that she was the cause of water damage in the unit below hers. She offered to reimburse me for the $900 painting contractor’s invoice, but so far I haven’t received anything. Can I send her a notice to reimburse us within 72 hours or suffer a $900 deduction from her security deposit? Can I further demand that she reinstate the full security deposit within 30 days and, if she doesn’t, would I be on solid legal ground to evict her?
A. Civil Code section 1950.5 allows you to deduct for damages to the premises, other than ordinary wear and tear, caused by the tenant or the tenant’s guest or licensee. Since the damage was to another unit, and not to the tenant’s dwelling, the tenant would have an argument that your proposed deduction from her security deposit is not permitted under this code section. Therefore, you could be on shaky ground to try and evict the tenant. In any case, the high cost of unlawful detainer litigation is probably unwarranted given the comparatively minor $900 repair expense.
I suggest that you send her the invoice along with a demand that she reimburse you by a certain date, and that you will take her to small claims court if she fails to pay. The written admission by the tenant that she caused the damage would be admissible in court and good evidence supporting a judgment in your favor. It should be easy to collect the judgment by levying against the bank account the tenant uses to pay her rent. Of course, you could then avoid any attorney fees and would incur only small filing and levy fees.
You should keep in mind that any water intrusion could be the source of a future mold infestation. Painting over the wet surface may not prevent this. In fact, it could allow a hidden mold infestation to worsen, resulting in a costly remediation problem. Talk to your contractor in order to assure that the repair is sufficient, and charge the tenant for the entire cost.
–Michael C. Hall
The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. David Wasserman is with Wasserman-Stern and can be reached at 415-567-9600. Saul M. Ferster can be reached at 415-863-2678. Michael C. Hall can be reached at 415-512-9865. Copyright © 2007 by SF Apartment Magazine. All rights reserved.