Dave’s here to answer your questions every Wednesday, so send them to him at tenant@sfappeal.com, here’s what to make sure to include in your letter.

rental-agreement.jpgI 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.”

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.

Want more news, sent to your inbox every day? Then how about subscribing to our email newsletter? Here’s why we think you should. Come on, give it a try.

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.

Please make sure your comment adheres to our comment policy. If it doesn't, it may be deleted. Repeat violations may cause us to revoke your commenting privileges. No one wants that!
  • gg

    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.

    Ummm…..why isn’t it fair?

    I can understand seeking to apply banked rent increases retroactively as being unfair, you snooze you lose, but why would applying banked rent increases going forward be unfair in general?

  • gg

    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.

    Ummm…..why isn’t it fair?

    I can understand seeking to apply banked rent increases retroactively as being unfair, you snooze you lose, but why would applying banked rent increases going forward be unfair in general?

  • Greg

    Doesn’t this only apply to rentals that fall within the Rent Ordinance? So only buildings constructed before 1979?

    Considering how many new condos there are in SF, that’s a pretty big failure to mention.

    http://www.sfrb.org/index.aspx?page=1036

  • Greg

    Doesn’t this only apply to rentals that fall within the Rent Ordinance? So only buildings constructed before 1979?

    Considering how many new condos there are in SF, that’s a pretty big failure to mention.

    http://www.sfrb.org/index.aspx?page=1036

  • Daviator

    I second what gg said. There is nothing unfair about imposing a banked rent increase. In fact, it seems like it’s more “fair” than imposing a small increase every year, because the tenant has saved money for a bunch of years in the interim.

    The tenant is almost undoubtedly still paying far less than market rent, even after the increase. And the increase itself is less than it would have been if made annually, because if made annually, each subsequent increase would be made against a slightly higher rent. In other words, annual increases get the benefit of compounding, while banked increases do not.

    Your rants against landlords border on the nonsensical. There are plenty of things in life that are unfair, but banking SF’s tiny allowed rent increases is not one of them.

  • Daviator

    I second what gg said. There is nothing unfair about imposing a banked rent increase. In fact, it seems like it’s more “fair” than imposing a small increase every year, because the tenant has saved money for a bunch of years in the interim.

    The tenant is almost undoubtedly still paying far less than market rent, even after the increase. And the increase itself is less than it would have been if made annually, because if made annually, each subsequent increase would be made against a slightly higher rent. In other words, annual increases get the benefit of compounding, while banked increases do not.

    Your rants against landlords border on the nonsensical. There are plenty of things in life that are unfair, but banking SF’s tiny allowed rent increases is not one of them.

  • AtariBaby

    I just wanted to say thank you for this valuable information.