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

I live in a two-unit building where the owner lives in one unit. The building was built in 1900. They are both legal units and I pay $3,900.00 per month.

Is it true the rent can only go up .5%? I make over 400K per year but don’t want to pay any more than I have to.

When I read the laws of rent control my interpretation is that for a building like mine that only portions of the rent control apply to my situation covering evictions and such but don’t cover the actual rental fee. I know my landlord doesn’t cover his costs monthly on the rental and he will want to raise the rent if he can.

I love this question! It’s a great set-up (intended or not.) Rich tenant exploiting struggling landlord. Shouldn’t we all have their problems? I feel like I’m sitting behind a desk at ACORN; a prostitute and her pimp asking me for advice about buying a house and hiding their source of income… Okay, I’ll bite.

Unless the units were converted to condominiums, your tenancy is protected by both major provisions of the Rent Ordinance. Your rent can only be increased by the allowable annual increases established by the Rent Board and you can only be evicted for for one of the 15 just causes. If your unit is not a condominium you are correct. Beginning March 1, 2011, the annual allowable increase is .5%, half a percent. Last year’s increase was .1%.

If your unit is a condominium (a legal single-family dwelling) then your tenancy is only covered by the just cause provisions of the Ordinance. The landlord can raise the rent to “market rate.”

Really, the landlord could raise the rent as much as he wanted, but if he tried to raise your rent to, say $10,000.00 a month, that indicates that his “dominant motive” is to evict you–a violation of the Rent Ordinance.

Of course there are other allowable increases a landlord can levy: capital improvement passtroughs; operation and maintenance costs; utility cost passthroughs, etc. Generally, however, you won’t have to pay a penny more than $3,919.50 if your rent is increased after March 1, 2011.

A rent increase of 20 bucks for a tenant who makes $400,000.00 per year, is this fair?

The Rent Ordinance was enacted in 1979 because:

“Tenants displaced as a result of their inability to pay increased rents must relocate but as a result of such housing shortage are unable to find decent, safe and sanitary housing at affordable rent levels. Aware of the difficulty in finding decent housing, some tenants attempt to pay requested rent increases, but as a consequence must expend less on other necessities of life. This situation has had a detrimental effect on substantial numbers of renters in the City, especially creating hardships on senior citizens, persons on fixed incomes and low and moderate income households.” (San Francisco Rent Ordinance §37.1(b)(2).)

Every once and a while landlords squeeze into their green tights and with Robin Hood-like indignation point at tenants like our reader and demand “means testing” for rent control.

They claim that our reader and his ilk are always going to be able to afford increased rents and that he doesn’t deserve the protections of rent control. His unit, they cry, should be removed from the statutory protections. At first blush, this may seem fair…until you take a closer look.

Means testing, the application of an income threshold to remove a unit from control, would not create a single new affordable rental unit. Instead it would serve to remove vast numbers of units from rent control protections forever.

Think about it, a landlord with a wealthy tenant can raise the rent to whatever he wants, whenever he wants to. By virtue of those increases alone, only wealthy people will be able to afford his unit, insuring that the unit will stay at “market rate” forever. A landlord in that position has no incentive to rent to a tenant whose income may fall below the threshold.

If means testing is enacted, all tenants will have to prove eligibility for rent control. If you don’t like sending your tax returns to the IRS, how are you going to feel sending a second set to your landlord?

Finally, imagine the bureaucracy necessary to enact a means control scheme. The Rent Board would be flooded with petitions seeking to review renters’ tax returns.

Tenants, don’t get fooled about “fairness.” Means testing won’t create more affordable units nor will it provide revenue to do so. Means testing is simply a scheme to rob from the rich and give to the richer–another ploy to eviscerate the Rent Ordinance.

If we’re truly concerned about the rich paying their fair share, it’s time to revive the graduated income tax with upper level tax rates of 80-90%, just like in the days of that old socialist, Richard Nixon.

Let the IRS sort it out, not the Rent Board.

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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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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  • Greg Dewar

    If landlords want to bitch about rent control, then they need to aim their cannons at any Trinity Properties building in their area. It was their greed in the 1970s where they drove up rents like crazy that resulted in the 1979 ordinance being passed.

    I have to admit, personally, living in an 80+ year old building where I’m paying 2009 rents while the long term tenants are paying rent that was pegged at a say 1970s or 80s rate can chap my hide a little, because no matter what, my rent is still higher than a mortgage payment anywhere else, at the same time, I like my neighbors and I’m glad they didn’t get forced out of the City.

    If people would build more rental housing, instead of pricey condos for out of towners, maybe rents wouldn’t be so high all the time, or there’d be more choices. But this is SF where no one does anything that makes sense.

  • Greg Dewar

    If landlords want to bitch about rent control, then they need to aim their cannons at any Trinity Properties building in their area. It was their greed in the 1970s where they drove up rents like crazy that resulted in the 1979 ordinance being passed.

    I have to admit, personally, living in an 80+ year old building where I’m paying 2009 rents while the long term tenants are paying rent that was pegged at a say 1970s or 80s rate can chap my hide a little, because no matter what, my rent is still higher than a mortgage payment anywhere else, at the same time, I like my neighbors and I’m glad they didn’t get forced out of the City.

    If people would build more rental housing, instead of pricey condos for out of towners, maybe rents wouldn’t be so high all the time, or there’d be more choices. But this is SF where no one does anything that makes sense.

  • Josh

    Dave: A happy ending for you. Victorian, 4 bedroom, Master tenant moves on, one of the landlord’s sends a nasty letter. I’m a tenant organizer, I get the call from the concerned remaining tenants, a few guys in their early 20’s, who’ve lived there for a couple of years.
    By the time we get passed playing telephone tag, the issue has resolved. The landlord’s also own a store these guys go to. So they grab a table and talk to their landlords. Turns out, what they’re really concerned about is having to lose a lot in having to evict, but they hold no personal animosity towards the tenants who’ve been doing small handy man repairs on their own with things came up, letting the landlords’ know and review each time.

    There’s no reason to check their credit scores, which would be low ones, because they’ve been paying the rent on time for a couple years already. So, the landlords can evict them; but then they’d have to pay for the entire place to be renovated. They decide, being Persian Christians, to raise the rent a nominal amount, something each tenant can afford easily, they asked for the deposit to be restored, and they sign a lease with all tenants being equal on it. The landlord’s keep their good tenants, and their good store customers, all in one move.

    It’s not hard to do the right thing, but it struck me on how completely unusual I found their resolution to be.

  • Josh

    Dave: A happy ending for you. Victorian, 4 bedroom, Master tenant moves on, one of the landlord’s sends a nasty letter. I’m a tenant organizer, I get the call from the concerned remaining tenants, a few guys in their early 20’s, who’ve lived there for a couple of years.
    By the time we get passed playing telephone tag, the issue has resolved. The landlord’s also own a store these guys go to. So they grab a table and talk to their landlords. Turns out, what they’re really concerned about is having to lose a lot in having to evict, but they hold no personal animosity towards the tenants who’ve been doing small handy man repairs on their own with things came up, letting the landlords’ know and review each time.

    There’s no reason to check their credit scores, which would be low ones, because they’ve been paying the rent on time for a couple years already. So, the landlords can evict them; but then they’d have to pay for the entire place to be renovated. They decide, being Persian Christians, to raise the rent a nominal amount, something each tenant can afford easily, they asked for the deposit to be restored, and they sign a lease with all tenants being equal on it. The landlord’s keep their good tenants, and their good store customers, all in one move.

    It’s not hard to do the right thing, but it struck me on how completely unusual I found their resolution to be.

  • KWillets

    The rent ordinance has the most Zegnatronic explanation of economics ever.

  • KWillets

    The rent ordinance has the most Zegnatronic explanation of economics ever.

  • Al

    A landlord in that position has no incentive to rent to a tenant whose income may fall below the threshold.:

    Well, the landlord has no incentive to rent to a tenant below the threshold as it is, so it’s a moot point. I guess the danger is that landlords would compete to attract wealthy tenants (in order to have the option of raising the rent later) and might actually offer them lower rates or better terms than the poorer tenants.

    Hmm, maybe the solution is to have rent control ONLY for wealthy tenants. Landlords would then have an incentive to build/convert units to be more modest and affordable.

    Josh: I wonder if that arrangement isn’t illegal. I think it’s actually illegal for tenants to agree to forgo rent control (the reasoning being, I suppose, that it would turn into a standard requirement in new leases).

  • Al

    A landlord in that position has no incentive to rent to a tenant whose income may fall below the threshold.:

    Well, the landlord has no incentive to rent to a tenant below the threshold as it is, so it’s a moot point. I guess the danger is that landlords would compete to attract wealthy tenants (in order to have the option of raising the rent later) and might actually offer them lower rates or better terms than the poorer tenants.

    Hmm, maybe the solution is to have rent control ONLY for wealthy tenants. Landlords would then have an incentive to build/convert units to be more modest and affordable.

    Josh: I wonder if that arrangement isn’t illegal. I think it’s actually illegal for tenants to agree to forgo rent control (the reasoning being, I suppose, that it would turn into a standard requirement in new leases).