Friday, July 28, 2017

Owner move-in regulation expanded and tightened

On July 18, 2017, the new proposed regulations for the owner- and relative-move-in evictions passed in their final version, and yesterday the mayor has signed it into law. This legislation will significantly change the already heavily burdensome restrictions under the San Francisco Rent Ordinance, S.F. Admin. Code, Section 37.9(a)(8). It will become effective on January 1. Let us peek into what the legislators packed for landlords' Christmas sock.

For some ordinances it is easier to retrieve a final version than others, but under this link it appears to be the amended PDF version of the ordinance, as close to the final 7/18/17 vote as possible ( I was unable to find a link to a version marked "final").

So this will have to do for us today, until an actual final version gets implemented into the main Ordinance's language, or at least appears at the "what's new" section at the Rent Board's website.

So, let's go point by point and see how scary this new set of rules is.

1.  Landlord will be required to provide a declaration under penalty of perjury stating that the landlord intends to occupy the unit for use as the principal place of residence of the landlord or the landlord’s relative for at least 36 continuous months.   No change for landlords from the current situation, in my opinion. Landlords are already required to say so in the body of the notice, and that notice gets filed with the Rent Board and recorded in the City's Recorder's office.  In other words, the landlord already makes a written statement to the government of her/his intent to occupy the place for those 36 months.  Making it now in a form of a sworn declaration adds enforceability, but from my point of view, if you don't plan on occupying the place, it just as much makes no sense to issue a notice, as it would prevent you from declaring the same under the penalty of perjury.

2. Landlord will be required to provide a tenant with a form to use for informing the Rent Board about tenant's change of address.  My comment - no big deal at all. First, we already are including forms with the notice, which already reaches a width of a mid-size book with everything included, so another page or two won't hurt. Second, this practice benefits the landlords, to avoid ambiguity when you need to serve those tenants for whatever follow up reason you may have.  Third, this is no new practice -- Berkeley requires it, and it doesn't change anything in administration of an eviction.

3. Provisions for the "evidentiary standard" on what can be considered as evidence of landlord's bad faith. There are quite a few events written as the proposed standards, but it still remains a presumption and a question of fact. Therefore, in my opinion, a landlord endeavoring to proceed with an owner- or relative-move-in should be aware of what standard of conduct is expected of him/her, but not be intimidated by that list. Sure thing, there are more check-boxes to mark on the to-do list now, but nothing extraordinary. Here is the list: "Evidence that the landlord has not acted in good faith may include, but is not limited to, any of the following: (1) the landlord has failed to file the notice to vacate with the Rent Board as required by Section 37.9(c), (2) the landlord or relative for whom the tenant was evicted did not move into the rental unit within three months after the landlord recovered possession and then occupy said unit as that person's principal residence for a minimum of 36 consecutive months, (3) the landlord or relative for whom the tenant was evicted lacks a legitimate, bona fide reason for not moving into the unit within three months after the recovery of possession and/or then occupying said unit as that person's principal residence for a minimum of 36 consecutive months, (4) the landlord did not file a statement of occupancy with the Rent Board as required by Section 37.9(a)(8)(vii), (5) the landlord violated Section 37.9B by renting the unit to a new tenant at a rent greater than that which would have been the rent had the tenant who had been required to vacate remained in continuous occupancy and the rental unit remained subject to this Chapter 37, and (6) such other factors as a court or the Rent Board may deem relevant."  From this list, I don't know how tenant-advocates will argue No. 3, which is pretty much a finding to be made under circumstances of each case, a hard thing to prove in my opinion, considering that each piece of real property is unique. Similarly, No. 6 leaves the door open for both sides to argue facts one way or another, just as it is argued presently. The rest are bureaucracy points, which we ought to comply.

4. Landlord will be required to file documentation with the Rent Board. This is an additional, and absolutely unnecessary burden imposed on the landlord. It is unnecessary because the landlord already stated in writing about the intent to occupy (and under the new rules, even declared so under penalty of perjury). Now in addition to all of that, same landlord had to "file the statement of occupancy with the Rent Board within 90 days after the date of service, and shall file an updated statement of occupancy every 90 days thereafter" and then "file updated statements of occupancy once a year for five years, no later than 12 months, 24 months, 36 months, 48 months, and 60 months after the recovery of possession of the unit." What is the reason to make a landlord do these additional bureaucracy steps, or how it helps anyone with anything, is not disclosed. What's not forgotten is, of course, a set of new penalties for skipped filings, a scale of $250-$500-$1,000 penalties, depending on how many times a landlord forgot to file. It is omitted in the version I read to differentiate between the entire failure to file, to file late or incomplete, and between doing so intentionally or due to mere negligence.

5. The time will now be extended from three to five years for when after an OMI during which a landlord must first offer the unit to the displaced tenant. Technically, there is an extension of time, but the outcome effect of this prohibition is slight -- we are already under the 5-year rule for not being able to re-rent at market level rates, the only difference now is not to re-rent to anyone except the original tenants. Yes, technically there is a difference, but not in practice.

6. The ordinance will now provide that a landlord who charges above the maximum allowable rent during the five-year period after an OMI is guilty of a misdemeanor -- just don't do it, Ok? Jokes aside, a criminal liability will require a finding of intent, and we will have to see how the courts will deal with this enforcement when the first poor landlord's soul will be dragged-in under this provision. Currently on the civil side of things, a miscalculation for a de minimis amount often throws the entire calculation out (say, a rent increase). I saw Board's decisions annulling rent increases differing by 5 cents. How much of an error has to be found to get the landlord criminally liable? Something remains to be seen. Also to note that the misdemeanor liability has been in the ordinance already, and not only in the rent ordinance.

7. The ordinance will require the Rent Board to annually notify the unit occupant of the maximum rent for the unit for five years after an OMI , and authorize the occupant to sue for three times any excess rent charged. Nothing for us to do, phew.

8. The ordinance will extend the statute of limitations for wrongful eviction claims based on an unlawful OMI from one year to five years. Keep your insurance policy current, don't skip on all steps required, reside at the unit where and when you promised to reside, and otherwise relax on this one. As I mentioned under No. 5, the OMI/RMI project has been already a five-year proposition, and having now the statute to be extended is not outrageous. Besides, tenants can argue tolling of the timing anyway, so again, not a big deal.

9. The ordinance will authorize interested non-profit organizations to sue for wrongful eviction and collection of excess rent following OMIs. At least on this one it is clear who benefits from this new law. They should have put this as the first point, not the last one. If you were wondering, who needs all of these new steps and rules, here is your answer, it's all about money. No wonder, the Tenants' Union claims to lead this legislation.  Landlords are routinely perceived as some walking money trees, and why not to pinch them for more. Too bad the Tenants' Union changed their logo, but I was able to find their original art on SF Weekly webpage. I think it summarizes this new "body of law" very precisely:

Not surprisingly, with so much hard work on hammering this new law out, all these new rules and prohibitions, many questions remain unresolved. Here is an example of what still remains unaddressed -- how to treat a situation when an owner or relative, who moved-in under the OMI/RMI just cause, provides a portion of that residence for short-term rentals? I have a feeling this one little issue would have more reflection on how those evictions are regulated, than all nine points above combined. And yet it is not on the books. Something to think about.

All in all, nothing to lose your sleep over yet, as in "nothing new" for those who observe the general trend. Things get more minutiae-sized, bringing in more administration, more government control, more enforcement, more opportunities to step into a trap for unwary, more money to tenants and the so-called "not for profit" organizations, and more work for insurance carriers. Keep your ends tight, and, oh, move in before January 1, if you are considering such move in recent future. In the case you have to address the seasonal prohibition for notices to tenancies with children, perhaps consider issuing a long-term notice, so that its expiration would fall within the 2018 summer school break, while the issuance and service of notice are done still in 2017. Just a thought.


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