More details on new San Francisco and California renter-protection laws
Following my recent column on AB1482, readers had more questions about California’s new rent- and eviction-control law, especially about exemptions for accessory dwelling units and how the new state law interacts with local rent control laws, including San Francisco’s newly passed ordinance that extends eviction protection to virtually all rental units in the city starting Sunday.
I’ve summarized these questions and answer them below.
Q: Two readers wanted to know why my column said that the rent cap under AB1482 for the San Francisco metro area will be 5% plus the regional inflation rate of 4.01%, or 9.01%, when the allowable rent cap published by the San Francisco Rent Board for the year starting March 1 is 1.8% (down from 2.6% for the year ending Feb. 29).
A: AB1482, the Tenant Protection Act of 2019, has two provisions. The rent cap limits annual rent increases to 5% plus a regional inflation rate, or 10% — whichever is less. The eviction control prevents landlords from terminating a month-to-month lease or choosing not to renew a fixed-term lease once a tenant has been in the unit for at least 12 months for any reason other than specific “just causes.”
A property may be exempt from the rent cap, eviction control, neither or both. Properties exempt from both include any type of housing built within the past 15 years, single-family homes and condos of any age unless they are owned by specified business entities, and any duplex if the owner occupies one unit. “Affordable” housing where the rent is restricted by deed or government agreement is also exempt.
As noted in my previous column, the new state law generally does not apply to units that are subject to a local rent control ordinance. I said generally, because like everything associated with rent control, it’s complicated.
The rent cap and eviction controls under state law interact with local laws in two different ways, explained Jennifer Kwart, a spokeswoman for the bill’s author, Assemblyman David Chiu, D-San Francisco.
For annual rent increases, a local ordinance takes precedence over the state law “as long as the local cap is equal to or lower than” the state rent cap, she said.
When it comes to eviction protections, any local “just cause” ordinance passed before Sept. 1, 2019 — regardless of whether it’s stronger or weaker than state law — will apply, Kwart said. An ordinance passed on or after that date will take precedence only if it is more protective of tenants than state law.
Let’s see how those two apply in San Francisco.
Under the city’s 40-year-old rent stabilization law, multifamily buildings constructed before June 13, 1979, are subject to rent caps. Units in those buildings will be subject to San Francisco’s rent cap because it’s lower than the state’s.
Some units in San Francisco that are not subject to the city’s law could be subject to the new state rent cap of about 9% currently in the San Francisco metro area. These include units in multifamily buildings — and single-family homes owned by business entities — that were built after 1979 but not within the past 15 years. (The business entities are a real estate investment trust, corporation or limited liability company with at least one corporate member.)
Now let’s turn to eviction controls. Currently, San Francisco’s just-cause protections apply to multi- and single-family homes built before June 1979 (even though single-family homes are exempt from the city’s rent cap).
On Dec. 20, Mayor London Breed signed an ordinance that extends the city’s just-cause protections to virtually all rental units in San Francisco, including single- and multifamily homes built within the past 15 years. (There are very few exceptions.) The ordinance, which the Board of Supervisors passed unanimously, takes effect Sunday.
The San Francisco and state laws both limit evictions to a similar list of just causes. These include causes that are the tenant’s fault, such as nonpayment of rent or violating the lease. (Landlords can always evict for these reasons.) They also include causes where the tenant is not at fault, such as the owner moving in, moving a family member in or taking the unit off the rental market. If the reason is not the tenant’s fault, owners must pay the tenant relocation expenses, unless they’re exempt from the provision.
Under state law, the payment is equal to one month’s rent. Under San Francisco’s law, it can be much higher: The base rate is $6,980 per tenant, up to a maximum of $20,939 per unit. The maximum can go higher if any tenants are minors, older than 60 or disabled.
San Francisco’s just-cause provisions, which are more protective, would take precedence over the new state law.
Supervisor Matt Haney, who authored the ordinance, said it will extend eviction protection to about 35,000 tenants. Almost all live in multifamily buildings built since 1979; although it also applies to single-family homes, few have been built in the past 40 years.
These tenants could still face sizable rent increases — up to 9% (or whatever the state limit is that year) if their unit was built between 1979 and 15 years ago, and unlimited if it was built in the last 15 years.
Hypothetically, an owner who wanted to remove one of these tenants without just cause could keep raising the rent and hope they move out.
“Raising rent beyond what somebody would pay, as a pretense for getting that person out, is illegal and is called a constructive eviction. It’s not something that we advocate and not something housing providers should do,” said Charley Gross, a spokesman for the San Francisco Apartment Association, which represents landlords.
Also, many newer buildings are already charging market rents or close to it.
Landlords and tenants with questions about the new laws can contact the San Francisco Rent Board, which administers the city’s law. Groups such as the San Francisco Tenants Union and Housing Rights Committee advise renters. The San Francisco Apartment Association and Small Property Owners of San Francisco Institute represent landlords.
Q: Another reader wants to know whether an owner-occupied home with a detached cottage would be exempt under the new state law.
A: Any property built within the past 15 years is exempt. A single-family home or condo older than 15 years is exempt as long as it’s “separately alienable,” which means it can be sold separately from any other dwelling unit. In my previous column, I stated that a duplex is not separately alienable, but the law specifically exempts duplexes if the owner lives in one unit during the entire time of the tenancy.
The law does not define a duplex, so there is some debate as to whether a single-family home with an accessory dwelling unit, like a backyard cottage, would qualify as a duplex under this exemption.
I asked Kwart what Chiu’s intentions were. She said, “The legislative intent is that an ADU, attached or unattached, would be treated as a duplex” and qualify for the exemption if owner-occupied. However, if there was a duplex or larger apartment building, with an ADU on the same lot, it would not qualify.
Unless this question is clarified in subsequent legislation, “I think that’s going to end up in the courts,” said Shauna Matlin, a San Francisco attorney who represents landlords.
Q: My previous column said that single-family homes and condos owned by individuals (not business entities) older than 15 years are only exempt from the new state law if they provide a specific notice to tenants. One reader asked where to find the notice.
A: It’s in the law. It says: “This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12(d)(5) and 1946.2€(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”
Associations that represent landlords can provide forms that incorporate the language, although there may be a fee. “For now, owners can provide a stand-alone notice,” said Stephanie Shirkey of the California Apartment Association. Her association’s form includes the tenants’ name and address and the owner’s signature.
If the owner renews a lease or enters a new one on or after July 1, the notice must be in the rental agreement or an addendum to the agreement.
Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender