This article was posted on Friday, Mar 01, 2019

On January 15, 2019, the Board of Supervisors unanimously passed an ordinance amending the wrongful eviction and tenant harassment sections of the Rent Ordinance. The amendment takes aim at the Costa-Hawkins rent increases allowed on condos and single-family residences (SFRs), and is meant to prohibit owners of SFRs and condos from circumventing eviction controls through excessive rent increases.

Previously, the law did not explicitly state that such tenants were protected from coercive rent increases, even though they have always been afforded such protection. The impetus for the amendment was anecdotal evidence that owners of SFRs and condos wrongfully evict tenants with drastic one-time rent increases that force them to move out because they can’t afford the new rent. The Board cites two examples of this occurring in the past few years, and “tenant advocates estimate that many similar cases arise in San Francisco every year.”

Costa-Hawkins and the Rent Ordinance allow owners of SFRs and condos to raise rent by any amount as long as the tenant is properly notified of the increase and the increase is not meant to force a tenant to vacate.

The Rent Ordinance now explicitly prohibits an owner of a condo or SFR from recovering possession of the property with a bad-faith rent increase imposed with the intent to defraud, intimidate, or coerce a tenant into vacating. It is now explicitly considered tenant harassment if an owner of a condo or SFR imposes a rent increase with such intent. The ordinance provides examples of what such an increase might look like:

  1. the rent increase was substantially in excess of market rates for comparable units;
  2. the rent increase was within six months after an eviction attempt; and
  3. any other factors a court or the Rent Board may deem relevant.

A tenant could challenge the rent increase at the Rent Board or with a lawsuit claiming tenant harassment and wrongful eviction. The Rent Board would likely require the owner to refund any rent paid pursuant to the illegal increase, but award no emotional distress damages.

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If damages were awarded after a lawsuit, the tenant could be awarded overpaid rent, emotional distress damages, or the owner could be fined $1,000. If the tenant moved out due to the rent increase, damage could be the difference between the old rent and new. The tenant would have to prove the owner acted in bad faith, as described in points (1) and (2) above. Practically, the amendment makes it easier for tenants in condos and SFRs to argue that any rent increase on a SFR or condo is coercive.

Law-abiding small property owners, many of whom are hesitant to increase rent given the army of tenant advocates who will threaten a lawsuit, will further be discouraged from raising rent within the bounds of the law.

The Board cited just two anecdotes of coercive rent increases, and tenant advocates imply that the problem is vast. The Board is clearly ignoring that the vast majority of small property owners do not raise rent to force tenants to move. This amendment will only make life harder for small property owners, many of whom have deep ties to the community. Perhaps this will be yet another reason for owners to get out of the rental business altogether and sell their property, the net effect being fewer units on the rental market.

Sean Makarin is an attorney with the Law Offices of Walter Parsley. He may be reached at (415) 777-1800 or [email protected]. Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News.  For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at or call (415) 647-2419.