According to San Francisco Rent Board Rules and Regulations 1.21, in order to qualify for rent control, a tenant must occupy the rental unit as his principal place of residence. The tenant need not be physically present in the unit at all times or continuously in order for the Rent Board to consider him to be “in occupancy.” But the unit must be his “usual place of return.”
Provided that there is no other tenant occupying the unit, if you file a 1.21 Petition and the Rent Board agrees that the tenant in question is not in occupancy, you may impose an “unlimited rent increase” (i.e. increase the rent to market value). There is no specific date by which you must file the 1.21 Petition, however, because the Rent Board makes its determination as of your petition’s filing date, it’s important to have all evidence in place when you file. If some part of your occupancy compliance investigation might alert the tenant, be ready to file quickly.
Factors the Rent Board Considers in
Determining a Tenant’s Occupancy Status
In order to build your case against the tenant you need to collect as much evidence as possible. When determining if a tenant is occupying a rental unit as his principal place of residence, the Rent Board considers “the totality f the circumstances, including:
- Whether the unit is listed as the tenant’s residence on any vehicle registration, driver’s license, voter registration or with any other public agency
- Whether utilities are billed to and paid by the tenant at the unit
- Whether all of the tenant’s personal possessions are kept in the unit
- Whether the tenant has filed a homeowner’s tax exemption for a different property
- Whether the unit is the place the tenant normally returns to as his home
- Whether there is credible testimony or evidence that the tenant actually occupies the rental unit as his “principal place of residence.”
Inspecting the Rental Unit
In addition to the evidence described above, you may collect further evidence as part of your routine periodic health and safety inspection, which you may do with the tenant’s agreement or 24 hours after proper service of notice to enter the property.
In addition to testing smoke and CO detectors and checking for other health and safety issues, survey the premises for signs of habitation. In combination with other evidence, a big stack of unopened mail, an empty refrigerator, or the absence of the tenant’s personal possessions may lend more credence to your claim that the tenant is not living in the unit.
We have seen tenants misuse their rent-controlled dwellings for a variety of convenient and profitable reasons:
- To meet the occupancy requirement for enrolling their children in a particular school
- To use as a second home (pied-a-terre) or
- As a sublet at a higher price than their rent-controlled rent.
Some tenants even have the temerity to advertise on short-term rental sites like Airbnb or VRBO.
Getting Professional Help
Rental property owners who suspect that they are being defrauded in this way may find it expeditious and ultimately more cost-effective to consult with a landlord-tenant attorney and hire a private investigator rather than navigate the legal waters on their own. The investigator should do a preliminary investigation and issue a report – typically four to six hours of work. Then you and your attorney can decide if the matter is worth pursuing further. Attorneys specialize in arguing cases before the Rent Board or in court. Investigators specialize in collecting evidence. You’ll need both if you hope to win your case.
Although a single piece of evidence such as homeowner’s tax exemption filed for a different property might be sufficient to prove your case, inSan Francisco, where 70% of registered voters (potential jurors) are tenants, you’re more likely to prevail if you have an overabundance of evidence to tip the scales in your favor.
Even if you have to spend thousands of dollars on attorney and investigative fees to ensure the success of your 1.21 Petition, the potential increase in rental income and the value of your property is enormous. When the Rent Board or the Court ahs found that the tenant is not occupying the unit as his principal place of residence, our clients have realized rent increases of $1,000 to $2,500 per month.
Andrew Solow is president of Gladding & Michel investigations. (415) 722-3047, www.gladding-michel.com. Brenda Cruz Keith, a San Francisco landlord attorney at (415) 626-6494 also contributed to this article.