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Dave’s here to answer your questions every Wednesday, so send them to him at tenant@sfappeal.com

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!



We hear it all the time: The rents are falling! The rents are falling! Last week the Wall Street Journal reported that vacancies were at an all time high and rents had dropped 3% nationwide. As of October 2009 rents in San Francisco had supposedly declined 7.5%.

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.

Photo illustration: Tim Ehhalt

Dave Crow is an attorney who specializes in San Francisco landlord tenant law. However, the opinions expressed in these articles are those of the author, do not constitute legal advice, and the information is general in nature. Consult the advice of an attorney for any specific problem. You understand that no attorney-client relationship will exist with Dave Crow or his firm, Crow & Rose unless they have agreed to represent you. You should not respond to this site with any information that you believe is highly confidential.

the author

Dave Crow is an attorney who specializes in San Francisco landlord tenant law. However, the opinions expressed in these articles are those of the author, do not constitute legal advice, and the information is general in nature. Consult the advice of an attorney for any specific problem. You understand that no attorney-client relationship will exist with Dave Crow or his firm, Crow & Rose unless they have agreed to represent you. You should not respond to this site with any information that you believe is highly confidential.

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  • sfboogie

    About 4 or 5 years ago I “negotiated” lower rent for my apartment. I say “negotiated” because I simply asked and they said yes. I don’t recall how much it was reduced but enough to satisfy me at the time. I was happy in the apartment and where it was located so I told them I would sign another year lease. This way they were locked into the rate for a year and held to the allowable annual increase thereafter.

    (I even got my illegal cat put into the lease.)

  • sfboogie

    About 4 or 5 years ago I “negotiated” lower rent for my apartment. I say “negotiated” because I simply asked and they said yes. I don’t recall how much it was reduced but enough to satisfy me at the time. I was happy in the apartment and where it was located so I told them I would sign another year lease. This way they were locked into the rate for a year and held to the allowable annual increase thereafter.

    (I even got my illegal cat put into the lease.)

  • Dave Crow

    sfboogie, that’s also an excellent strategy. I neglected to mention that a threat to move-out does not carry as much weight if your lease has not expired. If you move out before the lease is up, you are in breach. While the landlord must try to mitigate his damages, i.e. rent the apartment for a lower price, they often don’t and the breaching tenant can be liable for the landlord’s loss. There is sparse, crappy case law on this issue. In this reader’s case, the threat to move is more credible because the lease is expiring soon.

  • Dave Crow

    sfboogie, that’s also an excellent strategy. I neglected to mention that a threat to move-out does not carry as much weight if your lease has not expired. If you move out before the lease is up, you are in breach. While the landlord must try to mitigate his damages, i.e. rent the apartment for a lower price, they often don’t and the breaching tenant can be liable for the landlord’s loss. There is sparse, crappy case law on this issue. In this reader’s case, the threat to move is more credible because the lease is expiring soon.

  • indoorcamping

    We lowered rents for a couple of our best tenants who moved in when the market was at its peak. They didn’t ask but I could see their rents were a little high. These tenants paid on time every month, communicate well and are just plain good people. I’d hate to lose them so I made the first move.

    But think about it – more than half the tenants here pay less than half the market rate, thanks to rent control. You may be on the high end now, but you know it’s not going to be that way forever.

  • indoorcamping

    We lowered rents for a couple of our best tenants who moved in when the market was at its peak. They didn’t ask but I could see their rents were a little high. These tenants paid on time every month, communicate well and are just plain good people. I’d hate to lose them so I made the first move.

    But think about it – more than half the tenants here pay less than half the market rate, thanks to rent control. You may be on the high end now, but you know it’s not going to be that way forever.