CFAH

San Francisco’s Supervisors have unanimously approved legislation which will prohibit rent increases or evictions based on adding new roommates to an existing tenancy, will give tenants a chance to cure minor lease infractions, including violations of a no subletting clause, prior to allowing a landlord to initiate eviction proceedings, and will protect tenants in illegal units from being evicted.

As we first reported when the legislation was proposed, tenants will be required to make written requests to officially add a new occupant to an apartment. Landlords could formally petition the Rent Board for a rent increase based on increased costs associated with the addition but would otherwise not be allowed to unreasonably refuse the request or increase the rent.

A reasonable basis for refusing the request “includes, but is not limited to, the total number of occupants in the unit exceeding the lesser of: (1) two persons in a studio unit, three persons in a one-bedroom unit, four persons in a two-bedroom unit, six persons in a three-bedroom unit, or eight persons in a four bedroom-unit, or (2) the maximum number of persons allowed in the unit under state or local law.” A landlord’s failure to respond to a request within 14 days would be considered an approval.

The legislation also disallows increasing the base rent for a vacant apartment when the vacancy follows a change in the terms to a month-to-month lease or if the landlord had terminated an agreement with a governmental agency that provided for a rent limitation to a qualified tenant (i.e., Section 8 housing).

The intent of the legislation, which could be vetoed by the Mayor, is to reduce evictions which are based on technicalities in order to circumvent rent or eviction controls.

Comments from Plugged-In Readers

  1. Posted by JP

    This is insane! The Board has completely lost their minds. Do any of them rent properties? Landlords in this city are now just subsidizing other to live here. Most landlords will at some point soon just have to sell their properties, if they can, because they won’t be able to afford to keep up the properties in lieu of all the tenant laws. SF will become a city where all the buildings are run down. This city is a joke.

    • Posted by CHANDLER WHITE

      As a tenant, I have to side with the property owners who are against the Supervisors action.

      An unvetted employee is someone who will be living in the apartment next to me who did not have to pass any financial or criminal check.

      We’ve all known responsible tenants who have sleazoid boy friends or girl friends. The criminal types always have a companion who has a job and is credit to the community.

      The landlords and the other tenants get a scary creep in the building. To top it off, when the responsible tenant breaks up with the sleezeball, the rest of us have to witness the nasty fights and sullen looks at the mailbox.

      • Posted by Daniel Wayne

        As a heads up this would not grant tenants an unfettered right to have any old person move in, rather it would keep landlords from saying “there’s one person on the lease so even though it’s a four bedroom apartment you can’t have roommates.” Landlords still have the right and ability to insist on a written application from any perspective tenant, provided they don’t unreasonably withhold approval (which is the current law for replacement tenants). Hope that helps

    • Posted by [MockEAvelli]

      If any of them rented properties, they would be barred from voting on this legislation due to a conflict of interest. That’s what happened years ago to Supervisor Terence Hallinan, even though he wanted to vote against his personal interest as a landlord. And when Supervisor Willie Kennedy, who had been generally pro-tenant, bought a house for a relative, suddenly she could not vote on this type of legislation anymore, either. On at least one occasion, these conflicts prevented the Board from having the votes needed to pass pro-tenant legislation.

      Whether being a tenant would also create a conflict of interest, I don’t know. But it is interesting that in contrast to past years when several members of the Board were landlords, apparently there are no landlords on the current Board of Supervisors.

  2. Posted by observant neighbor

    What is the practical effect of the language about not increasing the base rent “for a vacant apartment when the vacancy follows a change in the terms of a month-to-month lease? Wouldn’t a “change in the terms of a month to month lease” itself be a violation of the lease? If so, does the legislation just mean that the landlord can’t raise the rent between tenancies if the former tenant vacated in response to the landlord’s breach?

    • Posted by sassyboyfrisco

      LUV it! Why…lawyers need to get richer in these high rent SF times. “roommates” will be legally tenants after 31 days, hence lawyers to rid roommates gone bad. “leases” will be questioned, hence lawyers to sort out contractual obligations–binding vs nonbinding. “owners and neighbors” will be left with a big flophouse mess, hence lawyers to sue for disturbances/nuisances. YAY! More $$$$$$ for me!

      • Posted by EcceMorons

        My lawyer refers to the SF Rent Ordinance as “The SF Landlord/Tenant Attorneys Full Employment Act of 1979”.

  3. Posted by Sfer

    Completely illegal. This will be vetoed by the Mayor, and will be rejected in court.
    Which renters or owners want non-vetted criminals living with you or next to you.
    SF politics are disgusting. Sane people (renters and owners) need to stand up to this intrusion of the peace by letting the Mayor know they do not support overcrowding and nuisances in the name of easy political votes.

    • Posted by Amewsed

      So shoot an email to the Mayor to voice your displeasure.

    • Posted by MockEAvelli

      11-0 is veto proof. The mayor could veto this, but it would not prevent the eventual passage of the law and would make him look terrible to a constituency that is already critical of his lack of concern for them.

      It is too bad this was not broken down into multiple pieces of legislation, so some of the more extreme parts could have been rejected.

      • Posted by Orland

        Given how reactionary this country is, I suspect some of the more controversial provisions will be striken by a court on “Freedom of contract” or some such other BS grounds.

        • Posted by San FronziScheme (formerly known as lol)

          Who needs contracts, right? Everything can be decided by the politburo.

  4. Posted by bay area native

    So if an existing tenant adds other tenants via this new legislation and I want to eventually move back into my own unit, I would be on the hook as a landlord for paying relocation fees under a just cause eviction of $5,500 per tenant. In a 2 person lease for a 2 bedroom unit that suddenly had 4 people living in it against my wishes, my costs for relocation would increase by $11,000. Is this correct? Shouldn’t this cost alone be a reasonable basis for denying increased tenants? Will I really be able to raise the rent, via my petition to the rent board, enough to cover the additional $11,000 in relocation expenses? If this is really the case, then I don’t see many short term (2-5 years), small landlords wanting to risk renting out their vacant units.

  5. Posted by wc1e

    We are thinking of relocating for school and are wondering what the best way to rent out our 3-bedroom flat (which we own and was built in 1907). We will want to return in 4 years.

    Does anyone know of a good resource that we could look at to figure out our options?

    Normal rental? Corporate rental? Airbnb type rental? etc…

    • Posted by Amewsed

      Corporate rental, depending on location and condition of flat.

    • Posted by Futurist

      My advice: corporate rental only, ironclad contract written by your lawyer; concise writing as to when you will return.

    • Posted by Dave

      Are not single units, such as flats and homes, exempt from rent control?

      In any case, check with a real estate attorney. Being a landlord in SF is insane IMO but your position is a bit different. its not like you are buying a flat as an investment to rent out.

      • Posted by Nameless Taggart Employee

        Yes to rent control exemption, however if you have to do an OMI eviction to move back then there are the 3 year restrictions.

        “For 3 years after the eviction, the landlord cannot re-rent the unit at a rent greater than what the evicted tenant was paying unless there were allowable rent increases such as annual rent increases. Also, for 3 years after the eviction, the evicted tenant has the first right of refusal to re-rent the unit if the evicted tenant informed the owner within 30 days of displacement of her or his desire to consider an offer to renew the tenancy and had given the owner a contact address.”

        • Posted by medalist

          With this legislation OMI re-rental prohibition is now extended to 5 years.

          • Posted by R

            Seriously?

          • Posted by Nameless Taggart Employee

            I read the doc “File No. 150646” dated Jul 27, 2014 and did not see the extension to 5 years. IIRC the original proposal was 5 years but reduced to 3 before passage. Is the Jul 27 the final version approved? Thank you.

          • Posted by Nameless Taggart Employee

            Doh, found it in version 7 of the file dated Sep 22, 2015.

            “(j) Costa-Hawkins Vacancy Control. Where a landlord has terminated the previous tenancy as stated in either subsection en {2) or (3) below. for the next five years from the termination. the initial base rent for the subsequent tenancy shall be a rent not greater than the lawful rent in effect at the time the previous tenancy was terminated plus any annual rent increases available under this chapter”

    • Posted by Greg

      Corporate rental. Although if someone wants to stay beyond the term, they can given rent control laws. You just have to find corporate renters who are very unlikely to stay and set the price so high that no one would want to stay. Other option would be to rent it and OMI when you come back. As insane as it sounds, there is no way to write a lease in SF that expires in 4 years (or one year). After 30 days, the renter is subject to rent control and eviction only for just cause. All leases are perpetual. All that said, lawyer up before you sign anything.

      • Posted by OMN

        what about for new buildings? can’t you just increase the rent as much as you want after that first year? I don’t think rent control applies to buildings from the last 40 years or so

        • Posted by SFrentier

          There is no RC jurisdiction for buildings built after July 1979. None of this crapola should apply. Thank god 🙂

    • Posted by san FronziScheme

      For 1 or 2BR, the AIRBNB corporate rental, with durations from 1 to 3 months is the way to go. I have a 90% fill rate.

      The reason why this makes sense:

      1 – high demand – I have a 90%+ fill rate
      2 – non-permanent crowd – most of my tenants are in SF for the duration of their stays only
      3 – low risk of switching to rent-controlled tenancy – they pay a 25% premium compared with regular rentals and have no interest in perpetuating the high rent
      4 – high quality tenants – most of them have a very positive AIRBNB history and probably want to keep it that way. Also make sure they have a decent LinkedIn network consistent with their story (guy who says he works at Google is easy to verify)

      For 3BRs, I don’t know. It’s a different demographic, but if you want to test the waters, put your place online for a few days and see how many hits you get and at what price you’re getting them. Of course you have to reject the prospective guests, which is not really ethical…

  6. Posted by kulmoedee

    This is exactly why rents are so high in SF. No one wants to rent their unit here due to these stupid, renter friendly laws. Can you imagine the number of rental units hitting the market if rent control was revoked? Notwithstanding, the increase in in-law units being built. I purposely will never rent out my in-law unit.

  7. Posted by Elitist Pig

    Wait… so how the heck is someone going to correct a lease infraction like no subletting? Does that renter have no rights? I’m still wondering why the city wants to KEEP people in illegal units…

  8. Posted by Question

    Under this new legislation, if the original tenant on the lease wants to add new tenants, can you still issue the 6.14 notice to those new tenants so that when the original tenant leaves you can market adjust the rent?

  9. Posted by [kulmoedee]

    Wow! I can make good money off of this. I was going to leave my rental controlled apartment at end of the year. I’ll just add another person to my lease and effectively “sell” my lease to them for $25,000. I love SF! Landlord, thanks for paying for my Hawaii vacation with the money I saved for the past 12 years. By the way, I make $500,000 a year too 🙂

    • Posted by condoshopper

      nice one. but if you make 500k/year, it doesn’t take 12 years to save up for “hawaii money”.

    • Posted by SFrentier

      Don’t be a total douche and do that. Instead, just be a semi douche and negotiate a buy out with your LL. Funny how this city works.

  10. Posted by grrr

    This certainly won’t make anyone want to be a landlord and will only contribute to the lack of housing. Airbnd makes more sense.

  11. Posted by Dave

    Why anyone would want to be a landlord in SF is beyond me. Cash flow alone is a huge issues because of sky high real estate prices and other related costs.

    I purchased my first rental in Sacramento 14 years ago. More balanced between landlord and tenant. You can actually get a bad tenant out in 30 days. Try that in SF.

    Since then, I’ve discovered out-of-state rental property.

    Actually more landlord friendly than tenant friendly.

    Cheaper than Sacramento, and I’m talking nice areas in up and coming cities back east, but the rents are about the same as Sacto.

    Exchanged a single family home in Sacramento for 2 homes back East. new. Had to throw in 30K extra to cover the cost.

    The rent on each home is similar to Sacto so i’ve doubled my rental income. Don’t need a gardener (the men mow the lawn and drink beer on Saturday afternoons I learned) and ancillary costs are much less.

    Word to small landlords in SF. Consider selling and buying out of state. You can potentially up your monthly income 6/7/8 times and escape the landlord headaches you have here. Which look to get worse if this decision stands.

    I’ve worked with a great resource to help with my out-of-state purchases. it is not as hard as you might think.

    This decision is absurd. Not sure if the mayor will veto it but I think it might be thrown out in Court.

    • Posted by zig

      How is the vacancy rate outside in the area you own and are you cash flow positive when you have your units rented? I assume you need some sort of local manager right?

      I’d like to own rental property but it is too expensive in the Bay Area

      • Posted by Dave

        The first home I purchased in the exchange rented in 1 week to a military couple. I owned the Rocklin home free and clear so I put all cash into the new home (152K) and my return is 8.5%. Cash flow is positive as it is with those who puechase with 20% or 40% down.

        I have a local manager who has been doing this for 15 years. Most of her buyers are out of state and she comes to the Bay Area every 3 months or so as many are here. She is associated with a real estate “network” (hint hint) which has a great track record and has done well by me.

      • Posted by Dave

        Zig, I wish I could mention names and the real estate group I have been so successful with. They have monthly forums in the Bay Area and cover a host of topics – like PL.. Great for education if nothing else.

        Socketsite is, rightfully, not the place to post such stuff.

        I am reluctant to post my e-mail address but, if you are interested, and this group is dedicated to folks like you and me who want to own rental property but can’t afford it in California or specifically the Bay Area, I give the moderator permission to privately forward my e-mail address to you.

        • Posted by EcceMorons

          I’d also request the same thing – your email address forwarded to me, if that can be done. I’ve often considered exchanging out of here, but one big negative is not having someone trustworthy to manage the non-local properties correctly. Thanks in advance!

          • Posted by Dave

            Moderator has permission to forward you my e-mail address.

            Management is always an issue when it is far away. Before I did the exchange I realized that I was relying on a manger 90 miles away (I rarely went to Sacto) and that person was trustworthy and it worked out well.

            The person I am dealing with came with lots of local references and I am now on her reference list. This person I trust.

            But she is just one of a number the real estate network i refer to has. They come from a number of different cities and states.

            You don’t know me from Adam, but the nice thing is you can attend one of the events and meet lots of folks who have invested and learn their experiences. Plus interact with all the newbies who attend.

        • Posted by zig

          Thanks for the interest. At the moment I just bought a house in the near to SF suburbs a few years back and have two little ones so this is more a long term idea but would like to plan for when the company puts me out to pasture to cobble together other income sources.

      • Posted by Dave

        As to vacancy rates – quite low. My manager guarantees the rent for the first year. And her company is doing that because the places rent quickly. Oftentimes to military and health care employed tenants who tend to be looking for rentals in this area.

        Specifics. Checked the website and a home selling for 150K, (not new) with 4 bedrooms and 2 baths will return 4000K positive flow over a year with 20% down or 11K positive flow with full cash.

        Definitely positive flow is the only way to go and all these properties yield a positive flow. That is before depreciation kicks in which makes it even better.

        • Posted by zig

          First I need the real estate investing for dummies book as I have a lot of homework to do

          Have you considered ever mixed use and commercial properties or is that a whole different level of investing?

          • Posted by Dave

            Actually, the real estate “network” I workl with has commercial/mixed use opportunities. That is how I got started with them.

            At the peak of the downturn as a group we took over a half-built townhouse project on the Portland waterfront (Willamette side). As an investor I received 10% on my investment per year plus a share of the profits. It came to a 30% plus return after 2 and a half years when the project sold out.

            Right now a commercial project I invested in with the group in Dublin has sold and the return looks to be higher.

            So, yeah, mixed use/commercial is something I am doing (the group has a potential MV project near Google coming up) but I do it as part of a syndication. These are multi, multi-million dollar projects and, if it were not for the syndication, I could never participate.

            I am getting into PL too which is new for me so I am starting small.

            This group is a “live’ real estate for dummies book. The seminars are educational and there is no effort to sell anything. You network with folks investing in real estate or so interested and decide for yourself if it is right for you.

    • Posted by SFrentier

      I agree being a LL in Frisco is no picnic, but where else are you gonna make $500k in equity per building in 2-3 years? You just have to be very astute at picking your tenants and work things out with them directly, RC laws (many which get overturned in superior court) be damned. Most tenants I know don’t trust sfgov not the rent board, they’d rather work things out directly with a reasonable landlord. But becoming an SF LL is almost impossible now for new investors as it’s too expensive. And if you have a mil or two liquid and want to play in this arena, you better buckle up and plan to make it your primary investment focus. Dabblers are doomed to fail.

      • Posted by two beers

        It’s totally unfair to oppressed landlords: making $500k in equity per bldg SHOULD be a picnic! Everything the gummint does to interfere with mah god-given right to exploit rigged markets with my borrowed low-interest capital is outright communiss.

  12. Posted by simms3

    This decision is beyond absurd. Clearly there were good intentions. And the number of renters in this city clearly outnumbers the number of landlords and/or developers, so yea, politics (kind of reminds me of the way politics works in Chicago – check their property tax laws and other laws there – it’s all about the votes/numbers and look at how badly that city has suffered as a result, clinging on to non-bankrupt status by a hair and losing population).

    This city is long overdue for a shock as a result of human intrusion into the natural order of things. I really would rather have a little less human intrusion and for the city to ride the various breezes that flow through it rather than fighting 1 breeze, mitigating an unintended draft in a different direction as a result, then having to pander to some people that now fight a whole new breeze that is the direct result of steps 1 and 2, etc etc.

    Simply ridiculous how politically charged the city has become. Let’s stick to what SF knows best – social politics. We fought AIDS and basically won. We integrated the LGBT community into the greater community. We revolutionized sex and we were groundbreaking with respect to our laws towards immigrants and drugs.

    We DO NOT KNOW WHAT THE HELL WE ARE DOING WITH RESPECT TO REAL ESTATE. We are doing *everything* wrong and wreaking havoc for all. We need to stop. Just let SF be a free for all, frankly. Let everyone just do and build whatever they please. Our regulations are slowly killing ourself.

  13. Posted by JR "Bob" Dobbs

    I don’t see anything in the legislation that protects these “new roommates” from eviction once the original leaseholder moves out. It just restricts the right to deny a new roommate or evict because of one.

    While I’m against the whole concept of rent control, if you’re going to have it, then eliminating the exception for illegal units makes sense. If someone who followed the law in making a unit legal would be covered by rent control, but someone who broke the law with an illegal unit did not have to observe the rent control restrictions on evictions, that creates a perverse incentive to break the law. It is a general maxim that those who break the law should not benefit from their wrongful conduct. That particular change does not bother me. The rest of them are unwarranted (pardon the pun).

    Being an SF landlord is extremely lucrative, and there is much in the system that tilts the balance in their favor (prop 13, very restrictive limitations on new buildings). When the voters are overwhelmingly renters rather than owners, it should come as no surprise that they will exercise their power at the ballot to try to move the balance more in their favor. Doesn’t mean it is “right,” but the majority passes all sorts of laws in their favor that are not “right.”

    Landlords, you can always Ellis and sell if you think things have gone too far against you.

    • Posted by Miah

      Wow, a reasonable, thoughtful comment. Balanced, considerate of both sides. Thank you. I wish others on this list would go beyond self-interest more and consider the issues rather than be so reactionary.

      • Posted by medalist

        If you’ve been a landlord in SF and have had bad tenants then you would understand the reaction. The thought of these tenants that you have no choice but to keep rather than sell YOUR building that you put blood sweat and tears to acquire and maintain to be able to have even more carte blanche to move whomever they want in or create nuisances with impunity simply infuriating and downright frightening. The reaction is the sound of one party slowly being unilaterally STRIPPED OF THIER RIGHTS.

    • Posted by bay area native

      Being a landlord in SF is not necessarily “extremely lucrative” if you are a small single unit property owner. The rent barely covers costs and risks. That is why many of us keep our units off the market even though it’s financially detrimental to us in the short term. The long term risks of a bad tenant with no ability to remedy the situation is just too high. This legislation exacerbates this situation.

      • Posted by Dave

        Exactly! Its the small landlord in SF that is between the crosshairs. Corporate landlords can weather the storm.

        Yes, I understand many (some) small landlords leave their units vacant in SF. Especially if they have had them a long time. In that case the scenario of leaving them empty (with just property tax and small upkeep costs) can pencil out over renting them. Pencil out in the sense leaving them empty costs little while the potential for more by renting them out comes with a huge downside potential.

      • Posted by Nameless Taggart Employee

        It is lucrative like owning a sports franchise is lucrative. It is expensive up front, and you don’t really make any money until you sell. The monthly cashflow may require you to carry the property for a few years. So it can be a challenge for your neighborhood ma-and-pa landlord hoping to retire in place with monthly cashflow. They don’t actually want “their greedy millions” to be dumped in their lap, they just want to stay in their building and not be dependent on government programs for retirement.

        Those are the landlords that are being pushed to exit the business. Neighborhood small business people that don’t want to “lawyer up” just to rent the inlaw unit.

        What type of person or entity will take their place in the Komrade Kim world? Lembi-types. Trump-types. People that are willing to, and possibly enjoy, unleashing their lawyers. It might be fun to type things like “poor landlords, call the waaaahmbulance”, but think about the logical outcome.

    • Posted by EcceMorons

      to Mr. Dobbs – your posts are always informative. Are you a real estate attorney? If so, any opinion on whether or not this law will hold up in the courts?

      • Posted by JR "Bob" Dobbs

        Well, thank you. Not a real estate lawyer at all (but a lawyer – I advise on mergers and acquisitions (and of course I have my own church ;))). One aspect of this that looks vulnerable to a legal challenge are the provisions prohibiting rent increases upon a vacancy. But, frankly, I can’t figure out what that all means (and I’m not inclined to pore over the language to parse it)! The provisions restricting termination of the leasehold in the event of some breaches also would appear to be iffy as they, if effect, deem a breach to not “really” be a breach. Laws like this are good for the lawyers.

    • Posted by Hitman

      Since when are you against rent control? Seems to me that every other post defends the concept with the usual admonishment that if you are a landlord you should know the legislative risk.

      • Posted by JR "Bob" Dobbs

        I’ve never defended rent control.

        However, I have repeatedly made the point that rent control has been the law for several decades. And any landlord who enters into a lease governed by rent control and then cries about the deal he/she freely entered into is simply looking to be saved from that bad decision. There are lots of dumb laws out there. But they are still the law, and you can’t cry about a choice you made with full knowledge of that law.

        • Posted by SFrentier

          Sorry, but totally disagree with you on ‘respecting dumb laws.’ Screw dumb laws! It is completely unethical for a legislative body to knowingly and persistently pass illegal law after law, which is the case for many RC laws that have been enacted, then overturned in court. The ordinance in discussion here is a prime example. It’s sickening how lawyers game the system to guarantee litigation for themselves. Half the Supervisors have law degrees. It figures.

          The whole approach is absurd. While morally I think sfgov is a sham when it comes to property rental management, on a personal level I benefit from most of its ill conceived moves. I’ve learned not to get too worked up about ordinances like these. 1- my relationship with my tenants is the primary driver of any terms and negotiations. 2- these laws just push more LL’s to keep units off market, sell as tics, go corp/short term rental, etc., which help keep rental rates sky high. 3- half this sh!t ends up getting over turned in superior court anyways. Gotta think unconventionally as an SF rental property owner 🙂

  14. Posted by san FronziScheme

    Your apartments are belong to us

    For great justice!

  15. Posted by EcceMorons

    “Paging Dr. Ellis. Dr. Ellis, please pick up the nearest white phone.”

  16. Posted by EcceMorons

    This could turn out interesting. So, a Master Tenant adds new roommates – more than originally took occupancy. SF rental laws allow it. The courts overturn this – fast. Master Tenant then must comply with old laws which only allowed one-for-one replacement, and must now…. EVICT ALL THE EXTRA PEOPLE HE ADDED!!! THROUGH THE COURTS!!! WHILE PAYING ALL THE LEGAL COSTS!!!!! HAHAHAHAHAHA.

    Welcome to our world, buddy….. NOW do you see what we complain about?

    • Posted by [Sfer]

      Yes, and we’ll be adding cameras now to all units so we can monitor the nuisances & extra roommates.
      A WARNING TO TENANTS: if you add unauthorized occupants you will find yourself with an eviction, not a pretty thing when looking for a new place.

    • Posted by SFrentier

      Yep I was just thinking about that too…kinda made me smile inside. I smell greedy schmucky master tenants getting burned by this. This should provide for some good theater in the annals of SF landlord/tenant drama.

  17. Posted by Ellis Act

    Just checking in to have a laugh at the expense of Socketsite’s crew of amateur real estate moguls and wannabe developers. Love all the gnashing of teeth and tearing of hair. Such sweet schadenfreude, sippin’ on landlord tears!

  18. Posted by Hitman

    …And people wonder why SF has the highest rents

    This legislation and all the other attacks on landlords are expenses that LL’s have to deal with. The logical response is to continue to raise rents to compensate us for all the additional trouble or to simply not participate. The Jane Kim’s of this world can keep attacking but we still own the property so they can go suck it!

  19. Posted by san FronziScheme

    OK, the fake post of [kulmoedee] made me think of a way rent controlled lease transfers could be monetized.

    Let’s take a hypothetical case:

    – Mr. Original Tenant has a new job in New Zealand. But he has been renting his 3 Bedroom for 20 years and currently pays $1300/month

    – He would hate to let this good deal go to waste but yet doesn’t really want to cheat the landlord for ethical reasons (!). He doesn’t plan to go back to SF.

    – He puts an ad on CL and finds a roomie, Mrs. Lucky Roommate, and puts her on the lease. The landlord doesn’t know about the relocation of the original tenant and accepts the new roommate.

    – Mr Original Tenant waits for a few months and announces his landlord he’s leaving San Francisco. This means Mrs Lucky Roommate becomes the official tenant.

    This is bound to become a business!

    Say the unit rents for 5500/month and the tacit agreement between the tenants is to compensate for 50% of 5 years of rent differential, the potential “gift” could be around $100K. The key is how will people trust each other? How do you make sure Mr. Original Tenant will go as planned? Maybe by making a first payment of $25K and giving $75K on official departure.

    In short, if you look for a place, find a roommate who will put you on his lease for $100K and enjoy the cheap rent.

    • Posted by SocketSite

      While the legislation requires a landlord to allow new roommates, it doesn’t require said landlord to add any new tenants to the master lease.

      • Posted by san FronziScheme

        This is an unacceptable loophole that could make the landlord rich! We need the roomies officially on the lease!

        Quick, someone suggest this new equity grab to Jane Kim.

      • Posted by EcceMorons

        It hardly matters. The Rent Board often disallows rent increases to subsequent occupants who have been given 6.14 notices, because the regulations around those are so ambiguous. Even when the original tenants moves away, there are debatable issues, and the Rent Board tends to side with the “tenants”.

      • Posted by Medalist

        True but if that person remains when the original occupant vacates in order to regains possession or market rate rent you must go through the unlawful detainer court which is extremely costly or and administrative court (rent board) which has a track record of unfairness towards landlords in these matters.

        • Posted by san FronziScheme

          I think I am going to start a business “AirRC” where people with rent controlled units are connected with potential tenants. The original tenant can collect 10s of 1000s and the new tenant will have a ticket to cheap rent. I’ll collect 10% in fees and earmark some of that for lawyer fees to counter EVERY legal move from landlords and make resistance a losing proposition.

          Then Kim and Co will see the absurdity of all the rules they have created. And maybe they’ll atone? /s

  20. Posted by EcceMorons

    I think the biggest issue is the newly allowed increase in occupancy.

    Say an owner rents a 2 bedroom apartment to 2 new tenants. Those tenants can now move in 2 MORE people, and the owner can’t object, or even do any background checks into the new occupants, since doing so, even under 6.15, puts the ability to increase rent when the last “original occupant” vacates at risk, as doing any background check and then issuing a 6.14 notice can later be construed as a form of “approval” of the new occupant, giving them full tenant’s rights.

    It just puts all other tenants in the building at risk.

    This seems to be SF’s new “solution” to the “housing crisis”. Let tenants move in as many people as the housing codes allow.

    It’s just stunning how the Supes say “Oh, you know that contract that you and your tenants all mutually agreed to? We’re radically changing the terms of it now.”

    Just one more reason to NEVER rent out a vacant unit to “regular tenants”, but to instead rent them to corporate short term tenants, or AirBnb visitors.

    And one more reason, if you own units that are rented below market, to Ellis them (or sell to someone who will Ellis them) and 1031 exchange into property in friendlier cities.

    • Posted by Nameless Taggart Employee

      Maybe Sheriff Mirkarimi could do the background checks, based on his astute judgement of human character.

  21. Posted by BayviewSF

    We can require the rich tenants to pay $100 tax per month to subsidize low income tenants. If that’s not enough, require rich homeowners to pay $100 per month. If that’s not enough, require all the employers to pay $100 tax per employee per month.

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