Source: https://48hills.org/category/news-politics/tenant-troubles/
Timestamp: 2018-07-19 00:17:52
Document Index: 708411704

Matched Legal Cases: ['§37', '§ 37', '§ 37', '§ 12', '§ 37', '§ 37', '§ 12']

Tenant Troubles Archives - 48 hills
Tenant Troubles: Do landlords really have a secret ‘Rule of Seven?’
The secret landlord society?
Editor’s note: It’s hard to be a renter in San Francisco these days; some landlords are constantly looking for ways to squeeze out more rent money, to replace long-term tenants who are paying below-market rent, or to make your life more difficult so that you’ll leave. Tenant lawyer Dave Crow is here to answer your questions every Wednesday at 48hills. You can send him queries at [email protected]
Is there some type of seven-year rule that benefits landlords if they do not raise the rent for seven years and then increase it all at once?
I ask this because when I moved into my flat in 2011 the landlord said that generally he wouldn’t raise the rent unless someone stayed for seven years, at which point he would raise it by about 7%.
Then, about two weeks ago I was out with some friends who live my neighborhood and their landlord had just raised their rent by about 10% after they had been living in their flat for seven years.
Then just last night I ran into a neighbor across the street who told me that she has to move after having lived in her building for seven years because the landlord had raised the rent. We all live in buildings that are covered by rent control.
By 1978 the residential real estate market in San Francisco had changed forever. Gone were the days when an investor bought an apartment building based on a conservative projection of its future income and strictly evaluated the building based on its net operating income. A new breed of rapacious real estate brokers–many of them followers of Werner Erhard’s EST (a quintessential me-generation, greed-is-good pseudoreligion popular in the 70s)–realized that San Francisco real estate could be sold without regard to old, stuffy “market value” considerations, despite climbing interest rates of 11% and 12%.
A new breed of buyers agreed. Doctors and dentists began to invest in large downtown apartment buildings. They didn’t care about cash flow as long as they could write off the substantial debt service. They chanted the mantra “Location, location, location.”
Of course the big vipers, like Angelo Sangiacomo and Gunther Kaussen knew they could have their cake and eat it too. Sangiacomo is known as the Father of Rent Control because he steadfastly refused to cease doubling, tripling and even quadrupling rents for his 1,700 units. Kaussen, described by Der Spiegel as “the world’s biggest slumlord” with 2,000 units in the Tenderloin, crushed his tenants with similar practices.
Later that year, rumor grew of a shadow in the East, whispers of a nameless fear, and Rent Control now emerged. Its time had come–in Berkeley and Davis and Cotati kingdoms.
In 1979 the interest rates hit 13% and landlords’ lairs echoed with this refrain: “What news from the South, oh sighing wind, do you bring to me at eve? Where now is Santa Monica? Tenants vote and I grieve.” After Santa Monica voters passed a tough Rent Control Ordinance that included vacancy control – that is, rent controls that stay in place when an apartment is vacated — in April, 1979, the San Francisco Board of Supervisors rushed to enact the anemic Rent Ordinance we have now.
Landlords were frightened, scared witless. Many of them lacked the ability (or the literacy) to analyze and interpret the new Rent Ordinance. (While I sympathize to a degree, one can often rely on plain meaning to get by.) Some landlords were just too cheap to hire lawyers and their realtor advisors, hampered by the maximum IQ licensing requirement, were no help either.
After a long night of cocaine and disco binging at Henry Africa’s, a group of disgruntled landlords, lamenting the enactment of rent control, careened over to Anton LaVey’splace, where they and assorted Satanic worshipers conducted a voodoo ritual/seance designed to purge the city of all tenants. Upon absinthe blurred reflection the next day, the landlords, realizing that driving tenants from the City might disrupt their income streams, decided instead to use their newfound occult skills to understand the Rent Ordinance and thwart its supporters.
Thus, the Small Property Owners Occult Knowledge Society (SPOOKS) was born.
In its heyday in 1980-83, SPOOKS attracted a membership of between 50 and 200 landlords and their supporters. In some circles SPOOKS was more popular than EST. Their monthly meetings at Trader Vic’s were notorious because members never removed their masks and the only nourishment one could take was through a straw. Evidently the meetings were conducted in hushed whispers punctuated by slurping and demented cackling–truly occult.
Not much is known about the SPOOKS philosophy or the Society’s impact on the landlord community at large. There aren’t many records left and, like EST, no one will admit to former membership in the organization.
But you have stumbled upon a persistent SPOOKS holdover from the past–The Rule of Seven.
We will never know whether The Rule of Seven was devised as a tenant intimidation technique or it was an occult interpretation (misunderstanding) of the method of banking rent increases. Landlords were not allowed to bank, that is save up increases to impose them all at once, until 1982. From 1982 to 1984, the annual allowable increase that could be imposed was 7% (Hear the thereminin the background?) per year. Rent Ordinance §37.3(a)(2) now provides:
Banking. A landlord who refrains from imposing an annual rent increase or any portion thereof may accumulate said increase and impose that amount on the tenant’s subsequent rent increase anniversary dates. A landlord who, between April 1, 1982 and February 29, 1984, has banked an annual 7% rent increase (or rent increases) or any portion thereof may impose the accumulated increase on the tenant’s subsequent rent increase anniversary dates.
After 1984 a “seven-year wait and bank” strategy may have been effective because a landlord could increase the rent by 28%. But think about it, the strategy would assume a tenant would live in a unit for seven years, an assumption that is not corroborated by statistics. If the initial rent was $1,000.00 in 1984, the landlord would also lose $10,779.40 in accumulated income over seven years.
These days, the rent increases are formulated based on 60% of the annual local Consumer Price Index. If you moved into your unit in 2011 and the landlord never increased the rent, now, he could only bank an increase total of 12.1%. Again, the landlord loses the accumulated income along the way.
Therefore, waiting seven years to increase the rent is a strategy of “Cut your nose off to spite your face.” It’s a stupid, vindictive and financially unsound practice that could only be justified by ignorant superstition, evidence that some landlords have SPOOKS in their brains.
Try to identify your landlord in the photos. Then read more about the history of San Francisco rent control in 1980-1991: Rent Control Wars, by Randy Shaw, and from the landlords’ perspective, The Birth of Rent Control in San Francisco, by Jim Forbes & Matthew C. Sheridan.
Editors note: It’s hard to be a renter in San Francisco these days. Tenant lawyer Dave Crow is hear every week to answer your questions. Email him at [email protected]
Tenant troubles: My building is for sale — what should I do?
I live in 24-unit building in the Western Addition, built long before 1979. It is three stories and all of the units are either studios or one-bedrooms. I’ve been there seven years and pay about $2,000 a month for a one-bedroom unit.
A few years ago, I would have been cautiously optimistic in my answer to your question.
But that was yesterday and yesterday’s gone. No tenant is immune from the huckster-carpetbaggers who epitomize today’s new real-estate tycoons.
How do the units become vacant? There may be a few vacant units in the building as a result of inevitable tenant turnover—the seed units, if you will.
You know…heads we win, tails you get to live in a noisy, dusty, filthy construction zone—unregulated by a battered EPA, barely regulated by a local building department with bigger fish to fry, and ignored by a build, build, build planning department. And from a legal perspective, not quite uninhabitable enough to justify moving and suing. You’ve just entered the Tenant Twilight Zone.
Get a copy of the sales listing or a prospectus for the building. Because this type of project will attract more sophisticated investors, a more detailed proposal may be available, one that includes renovation cost estimates per unit, along with projected income for a renovated unit. If the listing includes these details, then you can begin to plan for the inevitable.
You can gain valuable insight into a bare-bones listing by analyzing the income and expenses. If the price of the building is comparatively low based on net income, it may not be a candidate for renovation.
If the building sells, get as much information as you can about the new owner(s). Find other properties they own or have owned. You can search for recorded documents online here and check the San Francisco Property Information Map for more detailed information.
Speak to other tenants in the building. Your combined knowledge will be much more complete…and powerful. Create a listserv. Begin to work as a group, a team. Go to the San Francisco Tenants Union to learn how to organize.
Try to get information from the real estate agents handling the sale or the current owners. Occasionally, somebody associated with the building may blab. The first rule of speaking to those in the know: Keep your ears open and your mouth shut.
If the new owners offer you a chance to discuss a buyout, I recommend that you or a representative tenant from your group sign the Pre Buyout Disclosure form. Signing the form does not obligate you, in any way, to accept a buyout; but it may, in some circumstances, represent another method to gain information from the new owners or their representative. Get the owner to explain why your buyout offer is so low. He may want to rationalize his offer by explaining why his costs are so high. Ask lots of questions and listen carefully.
If the new owners begin their construction, don’t wait to complain about the noise and the dust and the trip hazards in the hallways. Always document your complaints in writing. Coordinate your complaints with the rest of the tenants. Give the owners one chance to remedy and if they don’t, call a housing inspector at the Department of Building Inspection.
Finally, call your San Francisco supervisor. He or she needs to hear your complaints loud and clear and often. He or she may begin to think twice about accepting that “contribution” from the SFAA or some other shill for the so-called real estate industry.
I don’t mean to alarm you by suggesting your building will be absolutely targeted in this manner, but the impending sale of a building these days, even 24-unit building like yours, should concern tenants. An impending sale also provides them an opportunity to connect, organize and take power.
TENANT TROUBLES Hi, Dave. Glad to see you back! First the essentials:
* My building was built before 1979
* Six units in my S.F. building, three are rent controlled including mine, the last 2-bedroom
* I am 52 and have an asthma disability. LL has agreed to pay the $4,188 disability payout
* I’ve lived here almost 14 years, and the rent is $1,130
* The building sold last May, and the new LL has not even given me a new lease! Clearly a predatory LL, as he could have moved into either of the two 2-bedroom units when he bought the building. He is gunning for my unit.
Apart from making the claim I have “protected status” with my asthma condition (including a letter from a leading asthma doctor in SF), and that he appears to be a predatory landlord, is there any other way to fight an owner move-in?
I’m glad to be back! Thanks for providing most of the information I need to dissect this.
I see you have a rent controlled two-bedroom unit in San Francisco that rents for $1,130 per month. The predatory landlord (they’re all predatory BTW) wants to evict you, even if he has to live in your apartment for three years, because he can make a shitload more money when he eventually sells the building.
According to several online real estate sites, the average rent for a two-bedroom apartment in San Francisco is approximately $4,500.00 per month, more or less, depending upon location. The rent differential when the landlord sells the building will be approximately $3,370 per month in today’s dollars or $40,440.00 per year. Using a 4% capitalization rate (a standard method to determine the value of a residential income building, explained in detail here) getting rid of you will increase the value of the building by approximately a million bucks, barring a 9.0 earthquake or nuclear blast.
I’m willing to bet that you pay the least amount of rent in the building for a two-bedroom. No wonder the landlord is gunning for you, given the profit he will pocket. Even if you live on the bottom floor with a view of a dirty alley and top floor has an unobstructed view of the Golden Gate Bridge, the tenant upstairs will be safe from an OMI eviction if he or she pays more rent. In my opinion, most of these new landlords, these MBA-bean-counting-investors, don’t want to “live” here; they want to get rich here.
Making a disability claim does not necessarily confer complete protection from an OMI.
Read Rent Ordinance § 37.9(i)(1)(i), which states in part:
“A disabled tenant is defined for purposes of this Section 37.9(i)(1)(B) as a person who is disabled or blind within the meaning of the federal Supplemental Security Income/California State Supplemental Program (SSI/SSP), and who is determined by SSI/SSP to qualify for that program or who satisfies such requirements through any other method of determination as approved by the Rent Board.”
While asthma can be a disability within the meaning of the California Government Code or the Americans with Disabilities Act (ADA), unless you are receiving SSI or SSDI or qualify for either program, you will not be absolutely immune from an OMI eviction.
You also mention that the landlord is willing to recognize your disability and pay you the mandatory relocation payment for a disability in an (OMI) eviction—for 2017! You don’t mention if the landlord has already served you a 60-day notice to evict you for OMI, but if he served it before March 1, 2018, the disability relocation amount would be correct.
Which begs the question, did the landlord serve you with the correct form of an OMI 60-day notice?
Last year the San Francisco Board of Supervisors made significant changes to the requirements for an OMI eviction and also increased protections for tenants who receive an OMI eviction notice. (Rent Ordinance § 37.9(a)(8)(v).) The Rent Board provided the specific details for the notice requirements in Rent Board Rules & Regulations § 12.14(b):
“(b) Information to Accompany Notice to Vacate. In addition to general eviction notice requirements, a landlord who endeavors to recover possession under Ordinance Section 37.9(a)(8) shall provide the tenant with the following documents and information in writing on or before service of the notice to vacate and file a copy of same with the Rent Board within 10 days after service of the notice to vacate on the tenant, together with a copy of the notice to vacate and proof of service upon the tenant:
(4) a description of all residential properties owned, in whole or in part, by the landlord and, if applicable, a description of all residential properties owned, in whole or in part, by the landlord’s relative for whom possession is being sought;
I am providing the relevant part of the statute here, not to enliven my writing, but to demonstrate some of the comprehensive changes to the OMI statute which became effective this year.
If you have been served an OMI notice to vacate and it does not include each and every one of these items, the landlord cannot evict you based on the notice.
How Can You Fight an OMI Eviction?
When you ask how to fight an OMI, I assume that you want to stay in the apartment and fight (defend) the eviction. Even with the new notice requirements, defending an eviction is still an uphill process.
You (your lawyer) must be able convince at least four members of a jury that the landlord does not intend to live in the unit for three years. Disproving intent is extremely difficult. How do you disprove the landlord’s internal rationale?
When I speak to tenants about this, I tell them that they need a smoking gun. In other words, you need evidence that will convince a reasonable person that the landlord is flat-out lying about his intent to move in.
For example, if you can show that the landlord currently lives in a 35-room mansion in Beverley Hills and works in the film industry, it’s unlikely that he wants to live in your two-bedroom apartment and make it his primary place of residence.
I must warn you that you need to provide evidence almost this convincing to successfully defend an unlawful detainer (eviction) lawsuit for OMI.
Gather as much information about the landlord as you can. The Supes created the new notice requirements to give you a head start. Evaluate and verify the information provided in the notice. Search for more information on the landlord and his relatives as you can. If landlord’s 18-year-old is moving in and the landlord doesn’t live there, make sure she owns 25% of the building—not that likely in your six-unit building.
Bring all of your documentation to the San Francisco Tenants Union and evaluate your evidence with a tenant counselor.
Your case may have some specific details that may make it worth your while to fight. But generally, when I speak to tenants, I often find that defending an OMI eviction will be an expensive, losing proposition. Think about it — a sophisticated landlord will cover all of his tracks if he has to provide the extensive information now required in an OMI notice to vacate.
So, if you have been served a valid OMI notice, you should also be looking for a new place to live.
Readers: You can find all of the new regulations pertaining to OMI evictions on the San Francisco Rent Board website. Specifically read Rent Ordinance § 37.9(a)(8), Rent Ordinance § 37.9B, Rent Board Rules & Regulations § 12.14 and the information sheets (actually written in English) provided on the site.
I did not address the new 90-day and annual landlord reporting requirements, because they will be more instructive and useful for a tenant who moves out and later wants to sue for wrongful eviction—a topic for another article.