(415)552-9060
Should I Propose A Buyout to My Landlord?

Should I Propose A Buyout to My Landlord?

Should I Propose A Buyout to My Landlord?

Should I propose a buyout?

I live in an old 12 unit Victorian (1890s) in San Francisco’s Haight Ashbury district.

Tenants in our building suffered through the Lembi years where some of my neighbors were offered $25k to move (poor timing on my part).

The new owners are currently renting upgraded units for $3200. I would like to propose a buyout to the owner and see if they would be interested in my unit.

My rent is $1140 for a large 2 bedroom. We have a middle man management company that facilitates all correspondence. Should I send the request to them or is it a better tactic to try and locate the actual owner’s contact information to send the proposal letter to?

I have no idea if the owner would consider offering a buyout, but figured a good pitch may make them consider it considering after upgrades, they would yield a $2k profit monthly.

As you may know, I help tenants negotiate buyouts all the time. I’ve written four articles that illustrate the negotiation process, strategies to obtain the best price and the provision that should be contained in a settlement agreement:

Tenant Buyouts
Tenant Buyouts: Your Absolute Bottom Line
Tenant Buyouts: Strategy for Success
Tenant Buyouts: The Agreement

99.9% of buyout offers are initiated by landlords accompanied with a vague or overt threat of an Owner-Move-In (OMI) eviction or an Ellis Act eviction. Landlords rarely move into 12-unit buildings and almost never take them out of the rental market using an Ellis eviction because 12-unit buildings cannot be converted to condominiums.

The Lembis offered buyouts four or five years ago as a part of their scheme to inflate the projected income of their buildings to refinance them using collateralized debt obli­gations (CDOs), “a strategy that made their holdings more attractive to all that practically free short-term money—hundreds of millions of dollars—flowing in from around the globe.” Danelle Morton, “War of Values,” San Francisco Magazine.

In my experience, I haven’t  seen many successful buyout when tenants propose them. the landlord think the tenant will vacate voluntarily anyway.

The best way to deal with this is to show the landlord the value that he will gain if you move. And if you’re planning to move anyway look at a buyout as “found money.”

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

If Our Roommate Moves Out, Can Our Landlord Jack Up Our Rent?

If Our Roommate Moves Out, Can Our Landlord Jack Up Our Rent?

If Our Roommate Moves Out, Can Our Landlord Jack Up Our Rent?

My home is a duplex with my landlord living in the apartment above. It was built before 1979.

The original tenants moved in two and a half years ago. We will call them Dan, Josh and Ted. Ted moved out after the first year and my boyfriend moved in and signed a year lease with Dan and Josh.

After a year Dan moved out and I moved in but I did not sign a lease, my boyfriend and Josh signed a six month lease.

The six month lease is nearly up and my boyfriend and I would like to renew with a year lease without our third roommate Josh. My landlord wants to raise our rent claiming “the original tenant is moving out.”

My boyfriend has now been on two leases (one for a year and the other for 6 months) in this apartment, is he not considered an original tenant at this point? Is my landlord allowed to raise the rent any amount they wish? We have always paid on time and have never complained nor been complained about in this apartment and I am worried we will be taken advantage of if we don’t familiarize ourselves with the SF laws.

It’s not completely clear to me if the leases your boyfriend signed were subleases or leases also signed by the landlord. I’m going to assume that when your boyfriend originally moved in, he and Dan and Josh all signed a new lease with the landlord. I’m also assuming that your boyfriend and Josh signed the six-month lease with the landlord.

As you are probably aware, if your boyfriend only signed a sublease with the original tenants, your landlord may be able to increase the rent.

This is why a lawyer may ask questions to which the answers seem obvious. When you stated that your boyfriend “moved in and signed a year lease with Dan and Josh,” I thought he may have signed a sublease. The rest of the facts, however, indicate to me that the leases were negotiated with the landlord. Of course, the distinction is crucial to determining if your boyfriend is a co-occupant or a subsequent occupant.

Given my assumption, your boyfriend is clearly a “co-occupant” for purposes of the Rent Ordinance Rules & Regulations §6.14(a)(3): “‘Co-occupant’ for purposes of this Section 6.14 only, is a subsequent occupant who has a rental agreement directly with the owner.”

Rules & Regulations §6.14(c), the section applicable to your boyfriend, states: “When all original occupant(s) no longer permanently reside in a rental unit, and the last of the original occupants vacated on or after April 25, 2000, the landlord may establish a new base rent of any subsequent occupant(s) who is not a co-occupant and who commenced occupancy of the unit on or after January 1, 1996 without regard to the limitations set forth in Section 37.3(a) of the Rent Ordinance…”

Note that your boyfriend is not an original occupant within the meaning of §6.14 (a)(1): “Original occupant(s)” means one or more individuals who took possession of a unit with the express consent of the landlord at the time that the base rent for the unit was first established with respect to the vacant unit.

That brings up another issue. If the landlord increased the rent more than the Rent Ordinance annual allowable increase in one or both of the subsequent leases, you may be able to petition the Rent Board for an illegal rent increase.

Between you and me, when I read your question I thought, “WTF, the guy’s named on the lease. This landlord is out of his frickin’ mind!” But when I reread §6.14, which as usual, has the effect of a combination of Seconal and Wild Turkey, I understood your landlord’s confusion. Your boyfriend is not an original tenant/occupant, but the landlord still cannot increase the rent.

Rules & Regs §6.14 issues are always complex and one should always discuss them with someone trained in the nuance of the Rent Ordinance. Where can you find such a person? At the San Francisco Tenants Union! You can go over the facts with a counselor there and fashion a letter stating the applicable law, informing the landlord that he can’t increase the rent over the allowable limit.

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

Why Can’t My Wife Sign Our Rent Check?

Why Can’t My Wife Sign Our Rent Check?

Why Can’t My Wife Sign Our Rent Check?

The weirdest thing happened today. My landlady sent me a note saying that I should be signing the rent checks (I have been doing this till now but the last check was written by my wife). We have a joint account and when I signed the lease I put my wife’s name on the lease.

I feel my landlady is bordering on harassment (there are other incidents) with these nonsensical notes she keeps leaving for me.

What is the law on this? Am I the only one who can pay her? What difference does it make, if the money is from a joint account and she can very well cash the checks?

If you are the only signatory to the lease, one could argue that you should be the one signing the rent checks. If both you and your wife are named on the lease then your landlord is just being an idiot.

Your landlord probably read some half-baked legal argument somewhere that advised her to be cautious about inadvertently accepting subsequent occupants.

If you are the only named tenant on the lease and you want to take care of this once and for all, you should read San Francisco Rent Board Rules & Regulations §6.15D. Section 6.15D outlines the process by which you can add your wife to the lease as an approved subtenant.

If you and your wife moved into the unit together and the land lord was aware of that fact, you can simply tell the landlord that your wife is a “co-tenant” entitled to all of the same rights you have. You should be familiar with San Francisco Rent Board Rules & Regulations §6.14 before you make that claim.

I’m guessing that your landlord simply doesn’t know what she’s doing as evidenced by the notes (always wonderful damning evidence if a case comes to court.) Your landlord is also too cheap to hire an attorney to advise her about how to professionally manage her building.

What difference should it make? Not a bit. Especially when the Costa Hawkins Rental housing Act, which screwed rent-controlled tenants everywhere in California and should be repealed says:

Acceptance of rent by the owner shall not operate as a waiver or otherwise prevent enforcement of a covenant prohibiting sublease or assignment or as a waiver of an owner’s rights to establish the initial rental rate […] California Civil Code §1954.53(d)(4).

I’d be willing to bet that you have lived in your unit for about five years. That’s the time  some landlords begin to exhibit their “eccentricities.” Your landlord probably thinks it’s time for you and your wife to go so she can give herself a pay raise.

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

Can My Landlord “Bank” My Annual Rent Increases?

Can My Landlord “Bank” My Annual Rent Increases?

Can My Landlord “Bank” My Annual Rent Increases?

I live in a 15 unit building that was built in 1907. I’ve lived in my small one bedroom apartment for 19 years, and in that time, the building transferred ownership once, in 2001. At that time, the new owners tacked on a rent increase because of “capital improvements,” and this was an increase that actually ended in 2011, so my rent returned to its 2001 price last year.

The landlord hasn’t raised my rent in the past 4 years, not even the small yearly increase that is allowable by law. So my question is, why would a landlord choose NOT to raise rent if they are legally able to? I can’t imagine it’s just to be nice. Is it likely they are banking the increases so they can throw four years worth (or more) at me all at once? And is that even legal?

Is the landlord foregoing the annual allowable rent increases to be nice? I doubt it. Is this some scheme to dump a huge increase on you in the future to force you to move out? I doubt that too. Never ascribe to malice that which can adequately be explained by incompetence. I often substitute the word stupidity for incompetence. In your case it’s probably neither, unless you believe that business decisions are always inherently malicious–an apt conclusion these days.

The annual allowable rent increases under the San Francisco Rent Ordinance for the past four years are, cumulatively, 6.7%. If your landlord has multiple properties, he could be waiting to increase the rents when it is more profitable to do so. He may not think it’s justified to incur the expense to to recalculate the rent and send out notices for, in your case, a 6.7% increase in gross revenue.

By law, a landlord may bank the annual allowable increases. There is no limit to the amount of rent increases that can be banked since April 1, 1982 and there is no time limit for imposition of these banked amounts. Indeed, I have seen banked increase notices that go back all the way to 1982, usually imposed by new owners seeking to immediately increase a building’s income. Is it fair? No. Is it legal? Yes.

As I said a couple of weeks ago. Courts have, time and again, decided that landlords must be able to get a fair return on their investments. Banked increases are a part of that scheme. Landlords will point out that a banked increase is not retroactive and that you should be grateful for all the money you saved over the years.

San Francisco Tenants: You need to understand that your landlord can, at any time, make up for years that he did not increase your rent by “banking” the annual allowable increases and charging them all at once. California Civil Code § 827 requires a landlord to give you a 60-day notice for such an increase if that cumulative increase is over 10% of your existing rent.

Banked increases will almost always be imposed by new owners. If your building has recently been sold and the old landlord has not increased the rent for awhile, plan on a banked increase. For that matter, all San Francisco tenants should always plan for a banked rent increase.

To paraphrase Anonymous, the internet hacktivist collective, “Landlords: They are legion, they do not forgive, they do not forget. Expect rent increases.”

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

A Rent Increase Question Puts The “Lord” In Landlord

A Rent Increase Question Puts The “Lord” In Landlord

A Rent Increase Question Puts The “Lord” In Landlord

I currently live in the Mission, in a loft (or condo) and was built around 1991, thus is not subject to Chapter 37 of the San Francisco Administrative Code. It is a 21 unit building.

I have lived in the building since 2004. I resided in a 1353 square foot loft from 7/16/04- 9/1/05 at a rate of $2500. I then moved into a smaller 851 square foot unit that I have resided in from 9/1/05 until present at a rate of $2000 per month (it is the smallest unit on this floor and is directly above the garage, which brings a lot of pollution and noise into my unit).

I recently received a rent increase. The increase was for $800 per month, or rather, a 40% increase. While I know that I can receive an increase at any given time, 40% seems unconscionable. While I was told that everyone received an increase, I do know that my next door neighbor’s increase was only 20% (he went from $2500 to $3000 for a 1209 sf loft). As well, I have spoken to neighbors upstairs who have a 1509 sf loft and only pay $2900. I have also spoken to neighbors who have received 10-20% increases, while others had none at all.

I have contacted the landlord and all they can say is that “it’s been raised to market value” and “we are not being discriminatory with the unequal increases.” This seems strange to me considering I did not bring up the word discriminatory and I know that they just leased a two bedroom (1044 sf) loft two doors down for $3100. How is my one bedroom worth only $300 less than the unit 2 doors down or $200 less than my next door neighbors 2 bedroom (1209 sf) unit?

I am a 39 year old professional woman who has never been disruptive, had a complaint or paid a bill late in my life. I also live alone and have no pets. Lastly, I helped to rent out my old unit while transitioning to the smaller unit, which I moved into on an “as is” basis (meaning they didn’t clean and only did minor touch of paint).

My question is, is it within their (landlords’) rights to raise rents in a disproportional manner?

The short answer to your question is yes.

The landlord’s answer to your question is, “It’s my property and I can do anything I want to including raising the rent or even taking it off the market. If you don’t want to pay the increase, I’m not forcing you to live here, you can move.” Unless you live in a rent controlled unit, the law will tell you the same thing.

Since the dawn of agriculture, when specific plots of land had to be protected from invaders, both human and animal, property rights–to protect, to make productive and to defend–have been a central theme in human history. Wars, contrary to the propaganda to justify them, are always fought over land and the natural resources that derive from land.

As societies became more complex, ruthless bands of sociopaths (call their leaders pharaohs, kings, popes, bankers or the 1%) took control, they usurped the commoners’ (call them the people or the 99%) rights to own the land. I’m sure the bargain went something like this: “Look peon, I’ll defend your land for you, but because I have taken on this burden you have to give me unfettered rights to your land.” Faced with an offer they could not refuse, most commoners gave in. Those who resisted lost their ability to pass down their genetic make-up to future generations. It seemed that evolution created the perfect marriage of cowards and kings.

Every once and awhile some throwback like Spartacus or Jesus or Robin Hood would try to set things straight, but who were they kidding?

As societies prospered and grew, kings relied increasingly on their lords to administer to their lands. In return for their service, lords were granted lands upon which they could rule like kings as long as they understood who was boss and paid their taxes. Being the sociopaths they were, lords quickly figured that they could force their subjects, now called tenants, to pay the lords’ taxes for them.

Lords owned their tenants like chattel and that did not change for thousands of years. “They Don’t Call ‘Em Landlords for Nothing.”

Flash forward to the Age of Enlightenment and the American revolution. Yes, the Founding Fathers created something new, but, as a tenant, you should remember that the new rights defined by Thomas Jefferson, John Adams and the rest were only bestowed upon white, male landowners.

The new constitution made property rights sacrosanct. While the founders did understand that the vast new country would expand and property owners (full-fledged citizens) would exponentially increase, they forgot (or did they) that land is, ultimately, a finite resource. The American cowboy humorist Will Rogers (1879-1935) is famously misquoted as advising, “Buy property, they ain’t making any more of that.”

In San Francisco the finiteness of land is demonstrated on a daily basis. Last year, average rents increased more than 13%. I am beginning to hear the same horror stories of bidding wars for apartments reminiscent of the previous dot bomb days of the late 90s.

You hear it all the time, San Francisco is becoming a city for the ultra rich, community is destroyed and those who have to serve us our mocha frappuccinos have to commute from Fremont to do so. We are becoming, as I pointed out in my post, “What’s Wrong With Working in a Bookstore,” San Francisco has become like Stratos, the city in the clouds in the 1969 episode of Star Trek. The “troglites” who create the city’s fungible wealth, are prohibited from living among or partaking in the intellectual pursuits of their masters.

As we all know, San Francisco is a city famous for its restaurants, the diversity and quality of which are world renowned. A couple of years ago I was sitting in the bar at Coco 500 with a dear friend of mine. We struck up a conversation with a guy from Wisconsin who was there with his wife and daughter. The daughter was a student in San Francisco who sighed and rolled her eyes as her old man proceeded to explain why Midwest family values were superior to our San Francisco, liberal, family hating, queer loving anarchy.

Of course, we took the bait and a rather animated discussion followed. At one point, for effect, my friend openly declared that she was a communist. That really got the guy going. He thought that all communists had to be marginal, frayed and broke. He asked, “How can you afford to be drinking in this restaurant.” I piped in, “Rent control, baby, rent control!”

So I am going to answer your question with some questions of my own:

In a market economy based upon products and services is it a good idea to divert larger and larger percentages of disposable income into the pockets of the few who simply cannot spread it around as efficiently as the many?

Should a landlord have the right to increase rents when higher rents destroy the very fabric of community?

Should land be treated as a “market” commodity subject to the laws of supply and demand when the supply is finite and the demand is almost infinite?

In my mind these are the central questions of our times and they need to be answered thoughtfully rather than with slogans and platitudes.

I’d like to hear your thoughts and comments. Start the discussion here. Next week I have a related question from another tenant. In that column I’ll continue to explore this issue.

In the meantime you should check out the OCCUPY related activities sponsored by the San Francisco Tenants Union. And don’t forget to join the worldwide general strike on Tuesday, May 1, 2012.

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

My Landlord Said I Didn’t Have To Pay Rent, But Now She Wants It

My Landlord Said I Didn’t Have To Pay Rent, But Now She Wants It

My Landlord Said I Didn’t Have To Pay Rent, But Now She Wants It

My landlord has filed for bankruptcy. At the time she filed, she also notified me in writing that she was releasing me from my obligation to pay rent to her since she wouldn’t be owning the house any longer.

Since then, we worked out payment arrangements to ensure that our utilities, which are in her name, were still paid by us. Per that agreement, also in writing, we are up to date in all payments owed to her. She sent us a letter saying our rent was in arrears for the last month and that we had to pay the full amount within 36 hours or be served with a 3 day pay rent or quit notice. After reminding her of our written agreement and giving her our 30 day notice, she still served us with a 3 day notice. Are we required to pay her the rent she claims we owe, even once other arrangements had been made? We will be moving out before the eviction process is complete so the threat of being removed from the premises is moot.

This is a great question. The scenario you describe is becoming more common and your question also demonstrates a reasonable, but fundamental misunderstanding of the law.

Are you technically required to pay rent to the landlord, despite her promises–yes. Wait a minute, as small children we are told that if we make a promise we must honor it. It’s fundamental morality, right? It may be, but one can only enforce a contract under the law, not a promise.

Well, you say, we had it writing, that’s a contract, right? Not necessarily. A valid contract must always contain an essential element–valuable consideration. In modern society consideration is almost always the payment of money or an exchange of promises–like I agree to pay you five bucks to scratch my back or you scratch my back and I’ll scratch yours.

If you think about your arrangement with your landlord, ask yourselves: What did we have to do or pay to extinguish our duty to pay rent? Reading your description of your agreement, I don’t see that you had to provide any consideration. All you did was to arrange to pay the utilities. If the landlord was responsible to pay the utilities before your agreement, her three-day notice may be invalid because it may be stating the wrong amount you owed, but the landlord did not bargain away her right to collect the rent.

When are mere promises enforceable? Only when one has detrimentally relied on the promise and the reliance was justified. In your case detrimental reliance would mean that you spent the rent money and now don’t have the dough to pay the rent. Let’s say you relied on the landlord’s promise and spent the rent money for that nose job you always wanted. Is your reliance justified? Probably not.

Frankly, I don’t think you could ever show that your reliance on the landlord’s promise was justifiable. Why? Because the duty to pay rent in this culture is practically sacrosanct. Courts, even San Francisco courts, are loathe to excuse tenants from their duty to pay the rent. That’s why I almost always advise tenants to pay the rent if they receive a three-day notice.

So, if the notice period has not expired, the conservative advice is to pay the rent.

Functionally, given your thirty-day notice to vacate, it would be foolish for the landlord to serve you with an unlawful detainer (eviction) lawsuit: 1) She probably doesn’t have the money to successfully prosecute the case and 2) You will likely vacate before the trial.

The problem for you, if she does file a lawsuit, is that your credit record will be tainted if the case is not dismissed within 60 days of the filing. The unlawful detainer action can be also converted to a breach of contract lawsuit that could last for years.

Do not fail to respond to an unlawful detainer just because you are moving. Your default will speed up the process by which the landlord can recover possession and your credit record will certainly suffer.

Take your documents down to the San Francisco Tenants Union. Discuss your options with a counselor and to develop a strategy which will include communication to the landlord informing her that evicting you now will simply be throwing good money after bad. If you have a security deposit, also remind her that the deposit can be applied to any arrearage in the rent.

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

Rents Are Dropping, Can I Renegotiate?

Rents Are Dropping, Can I Renegotiate?

Rents Are Dropping, Can I Renegotiate?

Rents are dropping.

I signed a lease on 3-1-09 for $1425/month, but rents have dropped in my building and area. Same unit on the top floor rented for $1300, I am on the 2nd of 3 floors. How should I negotiate? Write a letter now or wait until lease renewal on 3-1-10, when it goes month to month? I love the building and I am a great tenant. Help!

Rents are dropping. Should tenants rejoice? Hardly. I think that would be akin to celebrating when Capital One lowers your interest rate from 29.9% to 27.9%. Whoopeee! I talk to many tenants who are searching for apartments. Anecdotally, I just don’t perceive that rents are going down that much, more vacancies for sure, but the rents still seem to be sky high.

I do, however, know that some landlords are willing to lower their rents, especially for good tenants.

Technically you are bound by the contracted rate until the lease expires, however you and the landlord can agree to modify the lease at any time. If you live in a rent controlled apartment in San Francisco, I don’t see why there is any reason to wait. The rent will be fixed anyway, with increases according to the allowable annual rate. Beginning March 1, 2010, the allowable increase is 0.1%.

When you begin to negotiate with your landlord you should understand that there may be a time in the future when he will want to increase your rent back up to the contracted rate, i.e. $1,425.00 per month. The Rent Board’s policy, when considering tenant petitions alleging illegal rent increases in these cases, is to inquire if the decrease was based on the tenant’s hardship or a change in the market.

If the Board decides that the landlord decreased the rent because you were having a hard time, in the future they will allow the landlord to increase the rate based on the original contract. If the Board decides that the landlord decreased the rent solely based on the softer market, they will find that he can only increase the rent based on the rate you negotiated.

Landlords who are aware of this policy, even if they want to negotiate a decrease, may want to depict the decrease as one based on hardship. They are usually very reluctant to attribute the decrease to market conditions.

It sounds like you are in a good position to negotiate. The top floor just rented for $1,300.00 per month, so you can justify your request using the pure logic of mathematics. The market has been established at $1,300.00. If you move and the landlord tries to rent your unit for $1,425.00 and it stays vacant for just one month until he gets a tenant, it will take him more than 10 months to amortize the cost of the vacancy. You already know that he can’t rent it for $1,425.00 anyway. The math is powerful.

Assuming you agree on a new price, it will be tougher to get the landlord to acknowledge that the decrease is based on the market. The best way to do this is to write it in the lease modification document. The next best way is to make sure that all of your negotiations are in writing. You can prove at a later date that you never asked for a favor, and that you based your request on the market rate. Everything should be in writing anyway.

Good luck and let us know how it goes.

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