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Tenants Secure Passage of Law Limiting Owner's Ability to Take Away
Services and Amenities
Tenants Secure Passage of Law Limiting Owners’ Ability to Take Away
Services and Amenities
Effective July 27, 2006, the San Francisco rent law is amended to provide
that a landlord may not take away a tenant’s use of garage facilities, parking
facilities, driveways, storage areas, laundry rooms, decks, patios, or garden
access without “just cause.” This list is extended to kitchen facilities and
lobbies in single room occupancy (SRO) hotels. Where such a severance does
occur, the tenant is entitled to a reduction in base rent.
Why This Law Was Passed
Since the adoption of San Francisco’s rent and eviction control ordinance
more than 27 years ago, owners were severely restricted as to how much rents
could be raised and whether a tenant’s tenancy could be terminated. The
current law states that a tenancy can be terminated by the owner for only 14
“just cause” reasons. Some of these grounds call for a temporary suspension of
the tenancy, with the landlord having to re-offer the unit back to the
displaced occupants. Others, like the Ellis Act and the Owner/Relative Move-In
provisions, place onerous restrictions on the landlord’s subsequent use of the
property. Yet under all of the just cause reasons, the landlord must serve a
detailed eviction notice and, if the tenant does not vacate after the notice
period expires, file a court action; if the litigation is successful, the
tenant must surrender the entire unit.
Over the years, owners, many of whom were new purchasers, faced the dilemma
of having to change the terms of a tenancy by removing an occupant from a
garage space or storage area. In these instances, possession of the entire
rental unit was not sought, and the tenant was welcome to remain in occupancy
of the actual apartment with a reduced rent. For example, a purchaser of a
four-unit building might have to reclaim a parking stall for his personal use
from a tenant who was not displaced by an owner move-in but, nonetheless, had
control over a garage area that the new ownership wanted to use exclusively.
Under state law, the landlord would simply serve the tenant with a thirty day
notice changing the terms of the tenancy. Local regulation further required
that the landlord reduce the tenant’s rent in proportion to the value of the
service being withdrawn. The Rent Board provided a forum to adjudicate these
rent decreases in the event the parties could not reach an agreement.
Sometimes, a tenant would not consent to relinquish the parking/storage
space, thereby prompting the landlord to file an eviction action for the just
cause of breach of lease agreement that, if successful, would terminate the
tenant’s tenancy and award the landlord possession of the entire rental unit,
even though the landlord simply wanted to change the extent of housing
services being enjoyed by the tenant. As such, for most landlords, employing a
“just cause” for eviction was a method of last resort when the tenant refused
to cooperate.
Then, about ten years ago, certain superior court judges began a pattern of
denying landlords the ability to evict a tenant simply because the tenant
refused to relinquish a service. Oftentimes, the court’s rationale was that a
parking space or garage in San Francisco is tantamount to a kitchen or
bathroom, and therefore it could not be forcibly withdrawn unless the landlord
had just cause to terminate the entire tenancy under the rent law. These
decisions added to the uncertainty that consistently pervades property
ownership in San Francisco: While state and local law, and even the Rent
Board, seemingly permitted a landlord to withdraw these incidental services of
tenancy provided a fair reduction of rent was offered, an owner forced to take
the matter to superior court faced a judiciary that was less sympathetic.
Thus, in an attempt to stop owners from interfering with housing amenities,
tenant groups lobbied Supervisor Mirkarimi to pass legislation that would,
once and for all, eliminate the owner’s ability to withdraw services. The
public policy argument used to justify this proposal was the assertion that
many speculators and tenancy-in-common (TIC) developers were buying buildings
and then forcing tenants to vacate by taking away their parking, storage, and
use of gardens and patios. In these situations, it was argued, tenants would
not want to stay in an environment where they were once afforded the ability
to park and store their belongings, and instead opt to move elsewhere. In
addition, tenant advocates pointed to instances where elderly, disabled, or
otherwise vulnerable tenants were displaced when a new owner withdrew these
services and thereby made continued occupancy virtually impossible, as parking
for an elderly tenant or garden use for someone who is ill may be a crucial
component of the tenancy rather than just an incidental luxury. While there
are no known statistics or findings to verify these beliefs, the majority of
the Board of Supervisors felt compelled to take action.
The Legislative Process
The initial legislation that was proposed, and passed on first reading by
the Board of Supervisors, was extremely restrictive and potentially
devastating to the landlord community. The submitted draft suggested that an
owner could not under any circumstance interfere with parking, storage, or any
access to common areas, including lobbies and patios. This meant that owners
doing remodeling or extensive work on their buildings would be subject to a
wrongful eviction lawsuit, as taking away such amenities without a required
just cause would be unlawful without question. Indeed, any perceived
interference in the tenant’s service, whether it is an inconvenience caused by
scaffolding or a temporary withdrawal of a deck for improvement work, would
have been illegal. Moreover, since many of these owners would not be Ellis
Acting the building or withdrawing the offended tenant’s unit by way of an
owner or relative move-in action, there could be no just cause to justify the
withdrawal, thereby placing the landlord community in a quagmire.
Fortunately, your industry leaders at the San Francisco Apartment
Association, Coalition for Better Housing, and other related organizations
sprung into immediate action. The first stop was the Mayor’s Office, where Mr.
Newsom and his staff paved the way for a series of consultations with
Supervisor Mirkarimi. The second leg was meeting with Supervisor Mirkarimi and
his assistants. The Supervisor was receptive, and he understood the dilemma
created by his new law: Owners would effectively be prevented from improving
their property. Thus, during the second reading before the Board of
Supervisors, the language in the law was modified. More importantly, with the
assistance of Supervisor Sean Elsbernd, a legislative intent statement was
read into the record, thereby establishing that the law was not meant to deter
improvement projects and capital rehabilitations. Although the ordinance
amendment is still vague and potentially over-reaching, there is now a real
possibility that it can be implemented with legislative guidance that
addresses the ambiguities.
Unanswered Questions
However, there are certain aspects that require clarification. For
starters, the legislation still states that “just cause,” as defined by the
rent law, is required before garage facilities, parking facilities, driveways,
storage spaces, laundry rooms, decks, patios, or gardens can be severed from
the tenancy. The housing industry has maintained that the narrow definitions,
and onerous requirements, of the Rent Ordinance’s just causes are much too
restrictive to constitute the sole justification for withdrawing or altering
tenant housing services. Moreover, many owners do not want to terminate a
tenancy simply to gain partial or full control over a common area or tenant
amenity.
In response, the landlord commissioners on the Rent Board have expressed
their intent to adopt Rules and Regulations that expand the definition of
“just cause,” when applied to removing or altering tenant services, beyond the
current eviction parameters. The motivation to pursue this amendment will
hopefully be shared by the tenant side, for without amendment, owners who need
parking and storage, or simply want to remodel common areas, may be forced to
terminate the entire tenancy, as you cannot relegate an owner move-in to a
storage area or Ellis Act the parking garage only.
In addition, there will undoubtedly be legal challenges to this
legislation, as state law permits an owner to change the terms of a tenancy
after expiration of the initial lease term. If an owner is prevented from
altering the size of a laundry room, or cannot re-allocate storage space so as
to improve the fire safety of the basement, the integrity of this rent law
amendment may come before the California Court of Appeal, or perhaps even the
California Supreme Court. Incidentally, throughout the legislative debate, the
Supervisors were presented with a myriad of situations where a
well-intentioned owner would be lawfully prohibited from actually improving
the apartment house because of an inability to re-define and re-assign tenant
services. And to compound the inequity, is it fair to subject such owners to
wrongful eviction lawsuits simply because incidental and minor changes to a
building are implemented? Clearly, such a result would be patently unfair and
unproductive.
Conclusion
The housing industry cannot dwell on why this legislation was passed. To
the contrary, our advocates should be complimented for successfully
engineering crucial changes to the legislative text that, if not implemented,
would have resulted in a far more onerous creature than what is now in effect.
Instead, the focus must be on working with the Rent Board Commissioners to
adopt rules and regulations that respect the new policy prohibiting the
unilateral withdrawal of certain amenities, but at the same time allowing the
situations where an owner must change a service of an existing tenant for the
benefit of the building. The tenant community should also acknowledge that
forcing a landlord to invoke a just cause ground for termination of the entire
tenancy in order to modify a service will inevitably result in more tenant
displacements from housing. Therefore, there are compelling motivations on
both sides to ensure that implementation of this law is fair, just, and
sensible.
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