The NEWS

Turn a New Lease

Read on for up-to-date rental industry information,
including the new 2019 SFAA lease, upcoming deadlines, new legislation,
and SFAA’s annual tradeshow.

One of the most obvious changes is that the agreement refers to the landlord as “Owner” only, rather than the Owner/Agent. This change is a direct result of some extensive discussions at the state level with the California Apartment Association’s Compliance Committee and several prominent attorneys. The attention was over a concern about who has the actual right to transfer property, and the law is fairly clear that such authority belongs to the actual ownership of the property unless the owner clearly conveys that responsibility to an agent, and then properly discloses that grant of agency.  As such, the landlord reference is designated uniformly as “Owner” throughout the agreement, and the agreement clarifies any potential agency directive in a new Paragraph 56.

There has been an ongoing concern about a tenant’s ability to change how payments are applied by writing specific instructions on the body of a check. These concerns relate in particular to unpaid or late rent payments that, if left unremitted for more than a year, can no longer be collected through the eviction processes. SFAA has always recommended that rent payments be applied first to past due rents and with remaining amounts thereafter applied to the current rent period. Some tenants have tried to thwart that position by writing specific dates or directives on their checks.  In response, there is now new language contained within Paragraph 4 to resolve any ambiguity pertaining to the Owner’s right to apply current payments to past due amounts.

“Locks and keys” have their own specific paragraph as well. There have been enough concerns expressed about copying and allocating keys that the drafting committee believed this issue should be specifically and individually addressed. To that end, there is added language prohibiting lockboxes on a property, and more stringent language relating to a tenant’s liability to rekey an entire building if the Owner deems there is a threat to other residents resulting from lost or otherwise improperly disseminated keys.

Videography and video equipment have also become far more prevalent recently, so there are two new paragraphs relating to this issue. The first prohibits a tenant from installing any video or related equipment anywhere outside the rented premises. It also clarifies that an owner may install image capturing equipment in the common areas, but any captured images are the property of the owner; in addition, this lease provision clarifies that the installation of such equipment is not an invasion of privacy, that there is no obligation or promise regarding building security, and that images may not be provided to the tenant.

The second related paragraph relates to images that may be captured by the owner or an agent of the interior of an occupied unit. It is not uncommon for pictures to be taken to market a unit for rent or for sale, or for maintenance people to take pictures relating to a repair or other work. These images would likely show a resident’s personal property, and may be shown on the internet or other social media.  This paragraph spells out the owner’s right to take the pictures, and makes it clear that the owner does not accept liability if the images become available via online sites or other digital media.

Smoke and CO alarms have now been properly identified as alarms, not detectors, and there is updated fire safety language at the request of the San Francisco Fire Department. There is also added language about how local building owners are going to be required to upgrade building alarm systems, placing the tenant on notice that they will have to cooperate with that work when the time comes.

Proposition 65, the hazardous materials notice law, is being updated by the State of California and SFAA will have new brochures and a new clause that will need to be added to the agreement when the disclosure is finally drafted by state agencies. In the meantime, there is an optional check box for that addendum, which will be made available to all of you once drafted and obtained. Be aware that the language in the agreement will also have to change likely toward the middle of 2019, and a new version of the 2019 Residential Tenancy Agreement will be made available at that time.

Finally, probably the most obvious change is that the “house rules” have been moved into the body of the agreement rather than having this listed as a separate document. This was done to more definitively incorporate the rules into the Agreement, placing everything above the final signature lines and making them more “official.” Within that section, there is updated language regarding deliveries, exonerating the owner from any liability for acceptance or delivery of packages, mail, messages, et cetera.

The new agreement has quite a few improvements and additions, and is the most comprehensive document published to date. With a more than 25-year history, and updates made almost every year, it is amazing to see how the agreement has changed, but also important to point out how many new regulations and laws now have to be addressed within the document.

There are so many changes each year that  industry insiders are beginning to recommend that tenants receive a new agreement every year — something that many owners have not done for fear of losing track of what constitutes a material and unilateral change in the terms of a tenancy. SFAA attorneys are discussing this tactic while reviewing options and concerns, and there will be much discussion about this issue throughout the year. In the meantime, start using the new 2019 SFAA Residential Tenancy Agreement!

The above content was written by
San Francisco Apartment Association Board Members Eric R. Andresen and Dave Wasserman.

Gross Receipts Reminder

Don’t make the mistake of waiting for April to complete your tax work. Mark February 28, 2019 in your calendar as well.

The annual filing due February 28, 2019 for Gross Receipts and Payroll Expense taxes will ask businesses to report their gross receipts from the lease of warehouse and commercial space during tax year 2018. Estimated payments for tax year 2019 will be billed accordingly, subject to revision by taxpayers to reflect actual taxable gross receipts for each quarter. There will be no penalties for underpayment or late payment of the estimated taxes for the Commercial Rents Tax during tax year 2019.

To qualify for a 60-day extension to file your 2018 Annual Business Tax Return, you must complete and submit a request for extension as well as pay 100% of your 2018 Annual Business Tax liability on or before February 28, 2019. 

This is an excerpt from “Brass Tax,” which you can find on page 28 for detailed instructions and more information.

Reminder from Port of San Francisco
Fire Marshal Ken Cofflin

The deadline for R2 buildings (residential non-transient buildings) to upgrade their existing fire alarm systems to meet the 2013 National Fire Protection Association (NFPA) sound requirement is July 1, 2021. While this deadline is more than two years away, the San Francisco Fire Department suggests that building owners find a licensed contractor as soon as possible to perform the upgrade. As the deadline nears, it will be harder to find a contractor who can comply with the 2021 deadline and prices could rise as demand begins to increase.

Note: If a building permit is filed for construction of $50,000 or more, it will trigger the mandatory alarm system upgrade before the 2021 deadline (unless the work is for a mandatory seismic retrofit).

Building owners should fill out the Statement of Compliance form on sf-fire.org once they’ve met the requirements of the new code. 

EV Charging Stations Update

The January Legal Q&A column found that a landlord was not required to allow his tenant to install his own charging station for his electric car based on a state law exemption for cities with rent control laws. Since the print deadline, California has removed the exemption. Currently, Section 1947.6 of the Civil Code requires a landlord’s consent, but with some conditions:

The tenant must provide a written request, along with their consent to a written amendment to your lease. This amendment must include your requirements for the “installation, use, maintenance, and removal” of the charging station, as well as their obligation “to pay as part of rent for the costs associated with the electrical usage of the charging station”. The tenant must also maintain general liability insurance with the landlord as an additional insured.

For more on EV charging, see Trend Alert on page 32.

Richmond—San Francisco Ferry

A new ferry service from Richmond to San Francisco began in January (construction began in Spring 2017). The new dock is by the Craneway Pavilion and Rosie the Riveter Museum. Ferries will take 400 passengers on the 35-minute trip each day, eventually expanding to 1,700 – 1,800.

The hope is that the ferry service will lighten commuter traffic on Interstate 80 between Hercules and the Bay Bridge, and also bring weekend tourists to the Rosie the Riveter-WWII Home Front National Park and events at the Craneway Pavilion.

Jeff Samuels, long-time resident of Richmond Marina and broker-associate with Compass, says, “The Richmond Marina has always been our little hidden secret in the East Bay. Quiet, with well-kept parks, miles of bay trail and views for days. The re-arrival of the ferry is definitely exciting as it now gives residents here amazing access to the city.”

This is the first new ferry route in the Bay Area in seven years. In response to growing ferry popularity, the WETA is expanding the Ferry Building terminal, and new maintenance facilities opened recently on Mare Island and Alameda.

According to the San Francisco Chronicle, the number of passengers has doubled in San Francisco, Vallejo, Oakland, Alameda, South San Francisco and Mare Island—from 1.4 million in 2012 to an estimated 2.9 million this year. In a January article in Mercury News, Arielle Fleisher of SPUR said that there are plans to expand the ferry network landings from 5 to 25 by 2040. 

Oakland Vacancy Tax

Starting July 1, 2020, properties occupied for fewer than 50 days a year in Alameda County will be taxed. Vacant residential, non-residential, and undeveloped property will be taxed $6,000/year; vacant condos, townhomes, duplexes, and ground floor commercial space units will be taxed $3,000/year. Low-income households and seniors and owners with disabilities will be exempt from the tax, as will owners who would face financial hardship from the tax.

The tax money will fund homeless programs and services, affordable housing, code enforcement, illegal dumping, and cleaning up blighted properties.

While voters passed the measure in October (Proposition W), many oppose it. “It’s not fair for politicians to tax homeowners for being able to utilize their home in the way they want to utilize it,” says Jacqueline Jacobs, board member of the East Bay Rental Housing Association. “The city of Oakland has a lot of vacant lands also. So if they would set the stage and be the forerunner and develop these lands for affordable housing, that would send a greater message.”

SFAA Trade Show:
Monday, March 18

Mark Monday, March 18 on your calendar for the annual SFAA tradeshow. The event will take place at the Fort Mason Conference Building, Gallery 308, from 4:00 pm to 7:00 pm.

Attendees will learn all about the latest trends, products and services in the multifamily housing industry. Consult with legal and management professionals, get to know service providers, improve your overall effectiveness at the free educational classes, and meet peers in the San Francisco rental property market. The event is free and open to the general public, so bring your friends and enjoy!

Please note that the tradeshow will replace the March member meeting.

For more information or to become a sponsor, contact [email protected]. Turn to page 41 for more details.