An Overview of San Francisco Bay Area Rent and Eviction Control Laws.
Rent & Eviction Control Laws
Although rent control laws and eviction control laws are two sides to the same coin, one should be careful to distinguish between the two. The ability to understand how each of these types of laws operate and interact with the other will make for better informed landlords and tenants.
Rent control laws are local by nature and are usually adopted by cities as a response to a shortage of housing and steadily rising rents. Local rent control laws regulate when and by what amount a landlord may increase a tenant’s rent. In areas that have adopted rent control laws, increases in rents are usually set by a local rent board which is charged with monitoring compliance with the local ordinance.
Bay Area cities with local rent control laws include:
However, one should be aware that just because a rental property is located in a rent controlled jurisdiction, does not necessary mean that the rental unit is automatically subject to rent control. In some circumstances the local rent control ordinance will automatically exempt rental units built after a particular date. For example in San Francisco residential units receiving their first certificate of occupancy after June 13, 1979 are exempt from the ordinance.
Furthermore, in 1995 The California State Legislature passed the Costa-Hawkins Act, which further exempted certain types of rental units from local rent control laws. In particular single-family homes and condominiums. The Costa-Hawkins Act also allowed landlord's to re-set a rental unit's rent to market rate at the beginning of each new tenancy. Although Costa-Hawkins significantly limits the reach of local rent control ordinances, it is very important to note that Costa-Hawkins does not exempt rental units from local eviction control ordinances.
Rent control laws cannot exist without a coinciding eviction control ordinance. The reason being is that if a landlord has a tenant in a rent controlled unit who is paying below market rent, he/she is financially motivated to simply evict this tenant and reset the rent to market rate under the terms of a new tenancy pursuant to the Costa-Hawkins Act. Therefore eviction control is necessary in order to preserve rent controlled tenancies.
Eviction control laws operate to permit “Good (or Just) Cause for Eviction". Good cause to evict for a landlord is enumerated in each local ordinance and typically includes the following:
- Tenant's non-payment of rent
-Tenant's material breach of the lease
-Tenant is conducting illegal activity on the premises
- Owner intends to move into the property
-Substantial repairs to the unit are necessary
-Tenant has willfully damaged the property
-Tenant has refused the landlord’s legal right of entry into the unit
Aside from good cause for eviction a landlord also has one other very powerful, but financially dangerous tool to compel the eviction of a tenant – The Ellis Act. The Ellis Act, allows a landlord to effectively “Go out of business" and thereby evict a tenant for the purpose of “Permanently" removing residential property from the rental market. Invoking the Ellis Act means that the property cannot be placed on the rental market for a period of ten years without legal consequence.
Evicting a tenant can be serious business in rent and eviction controlled jurisdictions. Tenants who win an unlawful detainer action, have standing to sue their landlords for Wrongful Eviction. These damages can be substantial, and in some cases have resulted in judgments in the hundreds of thousands of dollars. This result often means that property owners lose their buildings to their own tenants! Therefore it is highly advisable for any landlord operating in a rent and eviction controlled jurisdiction to add Wrongful Eviction Insurance to his/her policy, before proceeding with the eviction of a tenant.