My Erratic Landlord Is Asking For An Illegal Rent Increase

My Erratic Landlord Is Asking For An Illegal Rent Increase

My Erratic Landlord Is Asking For An Illegal Rent Increase

I have a question about rent increases. My girlfriend and I live in a rent controlled 12-unit building in Nob Hill (built in 1907). We recently received a 30-day notice to increase our rent from our landlord. He is trying to increase our rent by 3.8% (1.9% for 2012 and 1.9% for 2013). While I know it’s perfectly ok for them to bank increases, we haven’t lived in the unit for two years yet. We moved in on August 1st of 2011. He stated in his notice that the rent increase was to take place on 7/1/2013, which would only be 23 months of tenancy. This compounded by the fact that he said he wouldn’t raise our rent when we moved in as it just “pisses people off” leaves a bit of a bad taste in my mouth… I have tried to reason with him before on certain things and he has responded in a completely erratic way due to the fact I think he’s strung out on drugs most of the time to the point my girlfriend is afraid of him. He lives in our building so I don’t want to make it an unbearable living situation but given how crazy rents are getting these days we don’t really have too many options.

Thanks for any help in advance and thank you for your column it’s a great deal of help and a invaluable service to the rest of us non hedge fund/dot commie gazillionaires. 

Uh, oh, you broke one of the cardinal rules of renting an apartment in San Francisco. If the landlord lives in the building, take a pass, keep looking. I talk about this all the time. Landlords, especially those who live with their tenants, think they own their tenants. They think they’re helping when they illegally enter your unit to express your new puppy’s anal glands. Most of the time, however, they simply believe that your apartment is an extension of their house and they want to monitor and control your behavior.

Your rent increase is technically illegal. “Banking” rent increases is a well-established and legal practice, San Francisco Rent Ordinance §37.3(a) provides in part, “A landlord who refrains from imposing an annual rent increase or any portion thereof may accumulate said increase and impose that amount on the tenant’s subsequent rent increase anniversary dates…” As you stated, a rent increase of 1.9% could have been imposed in August 1, 2012, but the second increase cannot be imposed until August 1, 2013. I’m sure you understand that his prior “promise” to refrain from increasing the rent could never be a defense to refusing to pay the increase.

Politely inform the landlord, in writing, that you will begin to pay the increase on August 1, 2013. (You should establish a practice of written communication with your landlord despite his proximity in the building.)

Then wait for all hell to break loose.

You think your landlord is strung out on drugs. He may be, but sometimes the behavior one ascribes to drugs can simply be a syphilitic dementia-like, Caligula-style obsession for control commonly found in landlords.

I hope your landlord doesn’t have a problem waiting for his increase for one month, but your description reminds me that some landlords can turn into trolls at the first hint of “defiance” from their tenants.

If your landlord starts to get nasty, make sure you document the behavior and, if necessary, call the cops.

I truly understand your conundrum. Two years ago, rents in San Francisco were, what, a tenth of what they are now? 😉 But do you really want to live in fear? How much is that worth? I think you should consider moving. You should also consider volunteering to strengthen rent control, devoting the same amount of time you might spend worrying about your dickhead landlord. Call the San Francisco Tenants Uniion or Tenants Together.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

Can I Have My Living Situation “Both Ways”?

Can I Have My Living Situation “Both Ways”?

Can I Have My Living Situation “Both Ways”?

I am a subtenant in an apartment that is not rent-controlled.  I moved in on June 1, 2012.  I moved in with a roommate who had a one-year lease beginning May 3, 2012 and it is month to month after that.  I moved in on June 1, 2012.  The building is a large multi-unit bldg with 9 floors with an onsite property manager.  When I moved in, we got permission from the property manager for me to stay there and I was given my own keys and everything. I offered to be added to the lease, but they stated that wasn’t necessary.    Rent was $4200 a month. Most months my roommate paid the rent and I paid her 1/2, but on at least one occasion, I wrote a check directly to the property manager for the full rent (in case that matters). 

My roommate, who is the only person on the lease, is moving out this week.  She has paid rent through the end of the month.  She has received notice that rent will increase to $4,500.  I do not want to sign a one-year lease for $4,500 a month, which was the option presented to me when I told the landlord I wanted to stay.  I have asked if I can have a month to month lease and was told no. At least a week ago, my roommate and I have both asked if I can be added to the lease and pay $4,500 month to month and we have not gotten any response.  My question is, if I pay $4,500 when the rent is due, can the owner evict me? In other words, even that I am not on the lease, but the landlord is aware of my occupancy and my desire to stay, can he evict me if he finds a tenant in the next couple weeks who wants to sign a one-year lease for $4,500 a month, or is he required to give me at least 30 days notice? 

And on the flip side, if I find somewhere else to live in the next week or two, is he entitled to 30 days notice, or can I go ahead and move out without penalty? My roommate paid the deposit of at least a month’s rent, and if notice is required on my end, I don’t want me not providing the landlord with 30 days notice to result in her losing her deposit.  Yes, I am essentially asking if I can have it both ways.  I feel like thus far, the owner has been totally jacking me around, not giving me definitive answers, so he can remain uncommitted while looking for another tenant. So I want to know what my rights are, if any, given that I am not on the lease.

If the landlord accepts your payment of $4,500.00, he has renewed your tenancy for thirty days and he cannot evict you, simple as that. California Civil Code §1945 is clear on this issue:

If a lessee of real property remains in possession thereof after the expiration of the hiring, and the lessor accepts rent from him, the parties are presumed to have renewed the hiring on the same terms and for the same time, not exceeding one month when the rent is payable monthly, nor in any case one year.

Frankly, I don’t know why the landlord would not accept your rent. He wouldn’t have any interruption in the income stream and if he wants to insist that you sign a new lease he can present it to you again.  If you refuse to sign, he can give you a sixty-day notice to vacate (because you’ve been there for more than one year) and begin to search for tenants willing to sign a one-year lease. Conversely, if the landlord decide to let you stay as a month-to month tenant, you can give him a thirty-day notice of your intent to vacate if and when you decide to move.

Generally there is a clause in most residential leases that provides for the tenancy to revert to a month-to-month tenancy if the tenant holds over (stays in the apartment past the one-year period.) Check your lease to see if it has a different clause requiring some sort of notice on your part. Or take the lease to the San Francisco Tenants Union, join, and have a counselor take a look at your lease to understand your obligations. Assuming that the lease reverts to a month-to-month tenancy, the landlord will have to serve you a notice to vacate. Because the unit is not rent controlled he can serve a sixty-day notice without just cause. If the landlord doesn’t understand this, let him know. If you haven’t paid the rent he can serve a three-day notice to pay or quit. If he serves a three-day notice, simply pay the rent within the period and stay till next month.

The key here is to keep paying or offering to pay the rent in writing. If you do not pay the rent and move out the landlord can deduct from the security deposit any losses he incurs from your early departure without notice. If you think you can have it both ways you’re wrong.

Pay the rent. That’s the best single piece of advice I can give to tenants. You’d be surprised at how many landlord issues disappear when you pay the rent.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

Can I Refuse To Sign A Lease?

Can I Refuse To Sign A Lease?

Can I Refuse To Sign A Lease?

All the websites discuss the SF Rent Control stuff about when your building was built, condo or single family home, etc. But I can never find an answer to THIS situation:

Assume I live in a rent-controlled building.

Why does the landlord make me sign a lease? OK, maybe it’s because they don’t want to look for a new tenant, so I’d sign a 1-year lease. But given the rents rise in the city, after a year they’d probably love if I move out. But let’s say they don’t, and they want me to stay.

One-year anniversary of lease rolls around. Landlord asks me to sign another lease.

What rights do I have then? While I wouldn’t MIND signing a lease, if I don’t, I’m under rent-control anyways, so wouldn’t the term go month-to-month? In other words, if I signed a lease, I’m just giving up the flexibility to move away any month I want…without getting anything in return. I’m stuck in the same spot for another year and liable to pay that rent.

BUT, I can never find the definitive answer in this. I read one place that as that year approaches, the landlord can ask you to re-up on a lease at all the normal rent-control same terms (same rent plus the allowable increase, no material changes, etc). In THAT case, if I refused to sign the lease again – I could be kicked out. The reasoning was that I was offered the ability to continue to stay there at basically the same terms…and I refused (instead I asked for “more” via a month-to-month tenancy, which the landlord doesn’t have to accept).

So, which is it? Should a tenant in a rent-controlled apartment ever re-up with leases? Or can they say “No” and rest easy knowing the landlord can’t kick them out?

My business partner, Solvejg Rose, a German lawyer, taught me a very valuable lesson. When in doubt, read the statute. In the United States when we study law, we read a lot of cases interpreting the law but we tend to forget to rely on the wording of a given statute, the actual law. Often, a plain reading of the law is enough to make a legal argument.

For lay people it can be tough to find the applicable statute to interpret. That’s why I always try to cite the law and/or provide links to the law in these articles. I hope my readers can learn the basics and then ask, as you have, how the law can be applicable to an individual set of circumstances.

So let’s look at the law. Rent Ordinance §37.9(a)(5) provides that a tenant can be evicted if

The tenant, who had an oral or written agreement with the landlord which has terminated, has refused after written request or demand by the landlord to execute a written extension or renewal thereof for a further term of like duration and under such terms which are materially the same as in the previous agreement; provided, that such terms do not conflict with any of the provisions of this Chapter.

Before I get into the application of this just cause in the Rent Ordinance, here’s a method for tenants to find answers to their general questions. First ask yourself, “Can I be evicted if I (fill in the blank)?” If your unit was built before June 16, 1979, begin your search in §37.9 of the Rent Ordinance. The subparts of §37.9(a) list the just causes for eviction in San Francisco.

If you need to consult other resources, we provide a complete list of them on the Crow & Rose Tenant Resources page.

You can be evicted if you refuse to sign a new lease, but only if the lease contains “terms which are materially the same as in the previous agreement.”

Rent Board Rules and Regulations §12.20 provides further guidance:

Notwithstanding any change in the terms of a tenancy pursuant to Civil Code Section 827, a tenant may not be evicted for violation of a covenant or obligation that was not included in the tenant’s rental agreement at the inception of the tenancy unless: (1) the change in the terms of the tenancy is authorized by the Rent Ordinance or required by federal, state or local law; or (2) the change in the terms of the tenancy was accepted in writing by the tenant after receipt of written notice from the landlord that the tenant need not accept such new term as part of the rental agreement.

When the one-year anniversary rolls around, just compare the old lease with the new, side by side. Hint: If your old lease is a one-page stationery store form and your new one is a 34-page San Francisco Apartment Association lease, you can bet there will be a few more new terms–like about 60!

It does seem counter-intuitive for a landlord to request that a long term rent-controlled tenant continue to sign a new lease, but counter-intuitive for landlords can be beneficial for tenants. You are protected from nasty rent increases, OMI notices or Ellis notices that become effective before the end of your lease.

If you’ve lived in your apartment a couple of years, the market value of your rental will be markedly higher. If you decide to move and you give the landlord a 30-day notice to vacate before the end of the term of the lease, you will be in breach of your lease. The landlord, however, has a duty to mitigate (lessen or eliminate) his damages. He can do that by renting the apartment for the same amount of rent as you pay. As you said, the landlord will be happy to see you go because he can charge more rent.

Some landlords tell you that they can sue you for all of the rent that would be paid if you did not move out early. Not true. Others will attempt to keep your security deposit as damage for your breach. If you leave the apartment in the same condition (excepting normal wear and tear) and the landlord rents the place for the same amount you were paying, he has been unjustly enriched.

If you have a lease and you want to break it, I recommend that you make a deal with the landlord ahead of time. Before you give him a thirty-day notice, point out that you want to move and he will be making bank because you are vacating. Ask him to agree to release you of any claims he might have for your breach and to return you security deposit. Get the agreement in writing.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

My Landlord Died, Am I About To Lose My Apartment?

My Landlord Died, Am I About To Lose My Apartment?

My Landlord Died, Am I About To Lose My Apartment?

I live in a unicorn of an amazing SF apartment. We pay well below market rate for Pacific Heights for a flat that is part of a two-unit building built in 1913. I have lived in it for three years with two roommates all in our 30s. I am the master tenant on the lease. 

After an insane six months of a struggle over the estate of our former landlord who owned our flat and lived upstairs in the penthouse unit, (Two wills! Mentally unstable identical twins! A case of mistaken identity in which my roommate’s clothing got stolen as retaliation for the ensuing settlement on the estate!) it has finally gone on the market. 

The building is going to be purchased faster than someone could tweet the Redfin listing, so I want to know what my rights as an existing month to month tenant are. I know I will probably be kicked out for our new owner to charge twice what we pay for the place but I want to know what, if anything, I can do to make the inevitable eviction work in my favor. After having to deal with the last half year of insanity, I would like to know that there is some sort of silver lining on this incredibly dark cloud that is the SF rental market. Please don’t tell me to move to Oakland.

Like the unicorn, rent controlled apartments are mythical and fast becoming extinct, especially when they become objects of desire for Twitter-motherfuckers and bubble-headed investors. Yours is a typical San Francisco fable wrought with insatiable greed, two-headed, cross-dressing monsters and an age-old struggle to save the unicorn from the forces of evil–a tragic ballad.

While you should prepare for your eventual departure, your rights are completely intact until a new owner decides upon his course of action for the building. Remember that you must be evicted for one of the sixteen just causes stated in the San Francisco Rent Ordinance. For example, a new landlord cannot kick you out to charge twice the rent to another tenant. If that happens, you’ll have a unicorn of a wrongful eviction lawsuit!

Intuitively, it seems like a new owner who truly wants to live in the building would move into the penthouse and continue to rent to you. I’ve seen that once or twice in my career.

Here’s a more typical scenario for a two-unit building like yours. The owner threatens to serve a sixty-day owner move-in notice, hoping to begin a buyout negotiation. At that point you may be able to negotiate a buyout of your tenancy that involves waiving all of your Rent Ordinance rights. I’ve written several articles about tenant buyouts and won’t go into all the nuances here.

The upside for the new owner is that can move upstairs and charge the new tenants twice your rent for the downstairs unit.

The theoretical upside for you is that you and your roommates will receive more than the statutory relocation payment mandated by Rent Ordinance §37.9C.

If you’re thinking about negotiating a buyout you should also understand if you or one of your roommates is disabled within the meaning of California Government Code §12955.3 because you may be eligible to receive $3,472.00 for each disabled tenant who has lived in the unit for more than a year.

If you or your roommates are eligible for the additional relocation payment, your are also disabled within the meaning of the Americans With Disabilities Act (42 USC 12102.) This is important because an owner who evicts you, even with a just cause, will be barred from converting the building to condominiums per San Francisco Subdivision Code §1396.2. This is a valuable negotiation tool.

A developer/landlord may threaten to evict you using the Ellis Act, a process by which the owner “goes out of the landlord business” and sells the units to TIC buyers. The Ellis Act should be repealed.

You can evaluate a buyout using the same factors described above. Ellis relocation payments are slightly higher. Ellis evictions require a 120-day notice or, if you or one of your roommates is disabled, you could be entitled to a one-year extension of the notice.

Like Ted Gullicksen at the Tenants Union says, negotiating a buyout is a “game of chicken.” You don’t know what the landlord really wants to do and you don’t want to commit to a buyout unless it works for you, but there may be an instant when one of the parties drives off the cliff, caves, or the landlord simply serves a eviction notice.

If you receive a notice out of the blue, remember that the requirements for an OMI notice and an Elis notice are strict. Go to the San Francisco Tenants Union and become a member to get help to evaluate the legality of the notice.

Finally, I almost never recommend that a tenant defend an unlawful detainer (eviction action) based upon an OMI or Ellis notice. There are no defenses to an Ellis eviction. Unless you can prove that the landlord lives in a castle in Monaco and that he could never intend to live in your flat, as his primary residence for three years, you probably shouldn’t risk going to court to defend an OMI eviction either. For tenants, the court is the place where bad things happen.

What’s wrong with Oakland? I lived in Oakland for years. The weather is better. Just think of yourself as one of thousands of San Franciscans who are putting the there back there.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

How Much Do I Have To Help The Realtor Who Wants To Evict Me?

How Much Do I Have To Help The Realtor Who Wants To Evict Me?

How Much Do I Have To Help The Realtor Who Wants To Evict Me?

What are my rights in regard to Open Houses/viewings of my apartment when my building is for sale?

My situation:

I live in a 4-unit rent controlled building (built in 1906). The owners of our building recently died and the trustees of the estate came by with a realtor to assess the building.

I overheard the realtor telling the trustees that they should encourage a buyer to “Ellis us all.” Of course I did my homework and researched Ellis Act, and I know that it’s not as easy as she told them. However, it really upset me that she would say it like that, and encourage them to tell a buyer to do that.

Initially, I was helpful to them but now, without being hostile or breaking any laws, I have no desire to help them sell this building and I have no desire to accommodate this awful realtor. I don’t intend on being hostile but I do want to make things difficult for her because why shouldn’t I?

What are my rights in regard to her Open Houses that she will no doubt plan? Do I have any rights in limiting the viewings that she will schedule? I don’t want to let strangers into my home 24/7 and I also have a dog that will attack strangers/run out if I’m not home so I do need to plan in advance.

Do I have any rights in limiting views of Open Houses? Or do I have to just allow strangers to trample through my home with a disrespectful realtor?

Real estate agents–irrefutable proof that the United States is not a meritocracy. Between the lies, the drivel and the nonsensical notion that real estate agents are professionals, these guys make lawyers look good. On top of it all, despite the fact that it may benefit them, realtors don’t know jack shit about the law. When it comes to legal analytical skills, or the ability to read, it makes me wonder if there’s an IQ requirement to be licensed as a realtor–82 or lower.

Last year, after I had negotiated a postponement of an inspection with a seller’s agent to accommodate my disabled client, the buyer’s agent had the temerity to call me and say, “He (my client) is no more disabled than you or me.” I don’t think she expected my response: “What the fuck did you just say to me?” Needless to say, this moron’s advice to her client cost the buyer thousands of dollars in legal fees and tens of thousands of dollars more paid to my client.

As a tenant, you have no duty to help a landlord or his realtor sell a building. You don’t have to be nice to them. You cannot, however, obstruct the sales process.

All leases have an implied covenant of quiet enjoyment. You have the right to to enjoy possession of the premises without unreasonable interference or unjustified entry from the landlord or his agents. The tension between your right to enjoyment of your apartment and the landlord’s right to sell the building can create significant conflict with respect to marketing a building.

First, I recommend that you read and try to understand California Civil Code §1954(a) which states:

A landlord may enter the dwelling unit only in the following cases:
(1) In case of emergency.
(2) To make necessary or agreed repairs, decorations, alterations or improvements, supply necessary or agreed services, or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workers, or contractors or to make an inspection pursuant to subdivision (f) of Section 1950.5.
(3) When the tenant has abandoned or surrendered the premises.
(4) Pursuant to court order.

Also note that Civil Code §1954(d)(2) provides:

If the purpose of the entry is to exhibit the dwelling unit to prospective or actual purchasers, the notice may be given orally, in person or by telephone, if the landlord or his or her agent has notified the tenant in writing within 120 days of the oral notice that the property is for sale and that the landlord or agent may contact the tenant orally for the purpose described above. Twenty-four hours is presumed reasonable notice in the absence of evidence to the contrary. The notice shall include the date, approximate time, and purpose of the entry. At the time of entry, the landlord or agent shall leave written evidence of the entry inside the unit.

Second, inform the landlord and the landlord’s agent, in writing, that you have a dog in the unit that could bite a perceived intruder.

Third, within the context that you must be present at any showing because of the dog, try to arrange a schedule with the agent that will comport with yours. Tell her that you are willing to work with her.

If the real estate agent refuses to accommodate you, remind her that her refusal will create liability for the landlord, her client, and point out in writing:

  • You have a right to quiet enjoyment of the premises;
  • She must comply with Civil Code California Civil Code §1954 (Be sure to provide her a copy.);
  • If she continues to enter unreasonably, even if the dog doesn’t bite, you will. That you can file a lawsuit against her and the landlord pursuant to Rent Ordinance §37.10B (landlord harassment) and Civil Code §1940.2 for significant intentional violations of C.C. §1954 that carries a penalty of up to $2,000 per violation; and that you will file a complaint with the San Francisco Association of Realtors and the California Department of Real Estate.

Frankly, I don’t know if complaints filed with the Association of Realtors or the DRE have much weight, but I’ve found that realtors don’t know that either (reading issues) and I have used the threat effectively.

Reread my blog post, Even Dracula Had to Have an Invite Before He Could Enter.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

Can I Refuse To Sign A Lease?

When Can My Landlord Ask For My Annual Rent Increase?

When Can My Landlord Ask For My Annual Rent Increase?

Annual rent increase?

I live in a pre-1979 apartment in a building that includes 6 units. We signed a 1 year lease on June 1st and our deposit included first month rent, last month rent and a security deposit.

Recently our landlord sent us a letter saying that our rent had increased by 1.9% starting May 1st. I’m aware that landlords are able to increase their rent by 1.9% in order to accommodate for inflation, however, I thought they were only able to do that at the start of a new year. Since my lease ends May 31st, I understand why I need to start paying the rent increase at the start of June, but can my landlord start charging me in May? I would like to not have to pay the extra $70 of rent for May if I don’t have to.

I would really appreciate any information you could give me!

Your one-year lease guarantees your rent for one year, not 11 months. This is even true in Bakersfield and Yuba City!

Your landlord is confused about how to apply the annual rent increase allowed by the San Francisco Rents Ordinance. Here’s an excerpt from the Rent Board’s information about imposing the allowable rent increase:

The first annual increase can be imposed 12 months after the date the tenancy began. The effective date of the annual increase is known as the tenant’s “anniversary date.”

This applies even if your tenancy is based on an oral month-to-month lease and, as I stated, no landlord anywhere can increase the rent during the term of a lease (unless terms allow it) without breaching said lease.

The Rent Board establishes the amount of the annual allowable increase in the December prior to the year the increase can be applied. This year’s 1.9% increase was “based on 60% of the percentage increase in the Consumer Price Index (CPI) for All Urban Consumers in the San Francisco-Oakland-San Jose region for the 12-month period ending October 31, which was 3.2% as posted in November 2012 by the Bureau of Labor Statistics.”

The increase became effective on March 1, 2013 and any rent increases imposed until February 28, 2014 must be 1.9% unless the landlord hasn’t increased the rent in years past.

I’m guessing that your landlord sent you a form letter that may have been effective for other tenants in the building, forgetting that your tenancy isn’t even a year old.

You should inform the landlord that the notice is ineffective. He will have to serve another notice. He can still serve a 30-day notice to increase the rent for June 1, but let him figure that out.

Now you can go out and stimulate the economy with your 70 bucks!

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060

Will The Board Of Supes’ Soft-Story Retrofit Requirement End Up Costing Me A Bundle?

Will The Board Of Supes’ Soft-Story Retrofit Requirement End Up Costing Me A Bundle?

Will The Board Of Supes’ Soft-Story Retrofit Requirement End Up Costing Me A Bundle?

Long time reader, first time caller (emailer?) here. I’m writing because I am curious about “pass-throughs” to tenants for improvements. Specifically, I am asking about a proposal at the Board of Supervisors to require seismic upgrades to buildings that need them. My building is on the list the City recently produced of buildings needing a retrofit because it’s what’s often called a “soft story” building (i.e. it’s an old early 1920s building with units that sit on top of an unreinforced garage).

My question is this – how is this pass through cost calculated and how can I figure it out so I don’t get overcharged by the property owner? There are 32 units in my building in total (including some units added in the late 1980s by the landlord in the back), and my rent is rent controlled (they banked 3 years of increases, and then raised it per the law from 1350 to 1413.25 per month). So my question is, given all this info, how do they calculate the pass through and how is it assigned to the tenants?

As you indicated, the law to require “soft-story” retrofits is still pending at the Board of Supervisors. The proposed law will require a seismic retrofit for all wood-frame soft-story buildings built before 1978 that are at least three stories high and contain five or more dwelling units.

As expressed on a February 5, 2013 broadcast of Forum with Michael Krasny, “SF Weighs Requiring Soft-Story Earthquake Retrofits,” the general consensus seems to be that the law will pass. After all, up to 60,000 rent-controlled units could be lost in the event of a major earthquake. Here’s a list of buildings that may be effected.

The contentious issue of cost to both landlords and tenants remains. Estimates from spokespersons on that broadcast ranged from $10,000 to $20,000 per building to $10,000 to $20,000 per unit. Noah Arroyo, a reporter covering the issue for the San Francisco Public Press, pointed out in his comments that $10-20K per unit “is accurate, though not the whole story. So, this legislation would affect buildings with 5+ units. That means that theoretically the cheapest projects will be between $50K-100K.” A San Francisco Chronicle article estimates the average cost to be $60,000 to $130,000.00 per building.

Of course, some landlords are clamoring for greater cost pass-throughs to tenants to pay for the retrofits. A commenter on Krasny’s broadcast proposes:

Allow rent increase to be a percentage increase with no maximum limit based on the time period of 10 to 20 years. Total cost: $200,000 including interest over 20 years is 10k per year, $883 more per month in total rent or $138 increase a month in a 6 unit building. For some this is expensive but what would it cost renters if the house is un-inhabitable or has to be torn down or you lose your life. (His math, not mine.)

Note, he’s not going to lose his life. Nor does he reveal the income from his building. Nor does he account for the tax write off. Nor does he acknowledge a basic capitalist tenet that investments come with risks and costs. Watch out for “you’re the one who’s gonna die, you pay for it” compromises proposed to pass the law.

Like the issue of soft-story retrofits, the San Francisco capital improvements Ordinance and Rules are complicated and dense. To demonstrate the complexity of the process, here’s a list of the topics on the “Landlord & Tenant Information” menu of the Rent Board’s website: Capital Improvement Petitions – General Information; Estimator Fees; How to Allocate Capital Improvement Costs; Interest on Capital Improvement Costs; Uncompensated Labor Rates; Special Rules for Properties with 1-5 Residential Units; Special Rules for Properties with Six or More Residential Units; Special Rules for Seismic Work and Other Improvements Required by Law; Special Rules for Energy Conservation Work; How to Notify Tenants of a Capital Improvement Increase; Tenant Objections to a Capital Improvement Petition.

Rent Board Rules & Regulations §7.12(c)(3) states the specific cost allocation and amortization requirements for Seismic Work and Improvements Required by Law.

As you probably noticed, nested in the list there’s a topic entitled: “Special Rules for Seismic Work and Other Improvements Required by Law.” Therein lies the answer to your second question:

For seismic work that is required by law (and other work required by laws enacted after November 14, 2002), 100% of the capital improvement cost may be passed through to the tenants, regardless of the number of units in the property. Such increases are subject to an annual limitation of $30.00 or 10% of the tenant’s petition base rent, whichever is greater. The amortization period for this work is 20 years.

Because the cost estimates for retrofitting are all over the map, it’s almost impossible to predict your potential rent increase. Let’s pretend that your landlord will get a good deal and the cost of the retrofit will be $10,000 per unit or $320,000.00 including financing. $320,000 divided by 20 equals $16,000 divided by 32 equals $500 per year per unit or an increase of $41.66 per month.

To be safe, expect to pay a 10% rent increase and anything less will be a happy outcome.

To answer your first question, the permissible tenant objections to a capital improvement petition (Rules & Regulations §7.15), are not going to be strictly applicable to a retrofit required by law, unless a landlord claims that he did the work but didn’t; or costs so high that they likely included a kickback for a bank deposit in the Cayman Islands.

For a petition based on seismic work there’s not much you can do except to make sure the work has been done and that the costs are reasonable. You should closely examine the cost of financing. A newer resident can object that she moved in within six months of the commencement of the work.

However, it is important for tenants (or a tenant representative from the building) to attend capital improvement passthrough hearings, if only to keep an eye on the process.

Call the Tenant Lawyers now for a free consultation.
(415) 552-9060