Fact Sheet 5 - Landlord Petitions and Passthroughs
Overview of Landlord Petitions
For certain types of rent increases,
landlords must file a petition at the Rent Board before serving the tenants with a notice
of the increase. The tenants are not required to pay the increase until the
Rent Board approves it, but if approved, the rent increase will be retroactive
to the effective date specified in a valid notice of increase.
There are six types of rent increases that require
the filing of a landlord petition. These are:
and Maintenance Expense Increase;
Circumstances Increase Based on Rents for Comparable Units;
Increase Based on the Past Rent History of a Proposition I Affected Unit;
Passthrough (requires the filing of either a petition or a worksheet); and
Rules and Regulations
Section 1.21 Increase where there is no Tenant in Occupancy.
A landlord is also required to file a petition for a
Rent Board determination of:
Rehabilitation Exemption; and
Extension of Time to
Complete Capital Improvement Work.
A landlord may elect to file a petition requesting
the Rent Board to determine:
a rent increase under Ordinance Section 37.3(d) (the Costa-Hawkins Rental
Housing Act) and/or Rules and Regulations Section 6.14 is justified;
a property or rental unit is exempt from the Rent Ordinance;
a tenant is entitled to protected status from an owner/relative move-in
eviction under Ordinance Section 37.9(i)(4) or 37.9(j)(3); or
to approve a supplemental hotel visitor policy for an SRO.
In addition, a landlord may elect to file a petition
for a Rent Board determination of the tenant’s current lawful rent, provided
that the landlord has evidence of the complete rent history for the tenancy. A
landlord may also file a petition for a Rent Board determination of the amount
of the rent reduction to which the tenant is entitled when the landlord severs,
reduces or removes certain housing services supplied in connection with the use
or occupancy of a unit, such as parking, storage or specified common areas.
Landlords are not required to file petitions
for Rent Board approval of rent increases based on general obligation bond
measure passthroughs or water revenue bond passthroughs or certain utility
passthroughs. However, the landlord must use the worksheet forms provided by
the Rent Board to calculate these rent increases and must file completed
Utility Passthrough Calculation Worksheets with the Rent Board before serving the tenants with a notice of rent increase
for the utility passthrough.
There is no charge for filing a
petition or worksheet. Landlord petition and worksheet forms are available at
the Rent Board’s office or on our website at www.sfrb.org or through our Fax
Back service by calling 252.4660.
Capital Improvement Petitions
A landlord may petition the Rent Board to pass
through to tenants the cost of capital improvement work performed at the
property. A capital improvement is one that materially adds to the value of the
property, appreciably prolongs its useful life, or adapts it to new uses, and
which may be amortized over the useful life of the improvement of the building.
Examples of capital improvements include new windows, a roof replacement and
exterior painting. Repair and maintenance work, such as replacing a broken
windowpane, patching a roof or clearing a clogged pipe, are not capital
Capital Improvement Petitions must be filed within
five years of the completion of the capital improvement work. A petition cannot
be filed until the work is entirely completed and paid for. Proof of cost and
proof of payment must be submitted for each capital improvement listed in the
petition. Proof of cost can be
documented by a bill, invoice, contract, receipt, statement, etc. Proof of
payment is best documented with a copy of a cancelled check.
For each petition totaling more than
$25,000.00 (exclusive of interest),
the landlord must provide for each capital improvement item included in the
petition either copies of
competitive bids received for work or materials OR copies of time and materials
billing for work performed by all contractors and subcontractors OR payment for
the cost of an estimator to be hired by the Rent Board. It is permissible to have
competitive bids and/or time and materials billings for only some of the items
in a petition and to pay an estimator fee for the remaining items. The amount
of the estimator fee is based on the cost of the items needing an estimate,
which may be less than the total amount claimed in the petition.
There are different rules for properties with 1-5
residential units than for properties with 6 or more residential units. To
determine the number of units, all residential units on the same property must
be counted, even if they are in different buildings. Commercial units do not
count for purposes of this rule, although a portion of the cost must be
allocated to commercial units that benefit from the capital improvement work.
Properties with 1-5 Residential Units: 100% of
the certified capital improvement costs may be passed through to the tenants of
properties with one to five residential units. The amount of the passthrough
may not exceed the greater of $30.00 or 5% of a tenant’s petition base rent in
any 12-month period. Where certified costs exceed this limit, the landlord must
impose the passthrough in phases. For large passthroughs, it may take the
landlord several years before the passthrough is fully imposed.
Properties with 6 or More Residential
Units: In general, only 50% of the certified capital improvement
costs may be passed through to the tenants of properties with six of more
residential units. The amount of the passthrough may not exceed the greater of
$30.00 or 10% of a tenant’s petition base rent in any 12-month period. However,
the landlord should be aware that a majority of the tenants in any unit may
elect an alternative passthrough method based on 100% of the certified capital
improvements costs, to be imposed at the rate of 5% of the tenant’s base rent
per year, with the total passthrough limited to 15% of the tenant’s base rent.
For properties with six or more
residential units, if the cost of a
project is reasonably expected to exceed $25,000.00 multiplied by the number of
units on the parcel or in the building, the landlord must inform each tenant
and the Rent Board in writing of the anticipated costs of the work. The
landlord’s notice must occur within 30 days after such determination is made by
100% of the cost of the following types of capital
improvement work may be passed through to the tenants without regard to the
number of residential units on the property:
Seismic Work Required by Law and Other
Work Required by Laws Enacted After 11/14/02: 100% of the cost of seismic work that is required by law may be passed
through to the tenants, regardless of the number of units in the property. The
same is true for other non-seismic work required by laws enacted after
11/14/02. The amount of the passthrough may not exceed the greater of $30.00 or
10% of a tenant’s petition base rent in any 12-month period.
Energy Conservation Work: For particular energy conservation work approved by
the Commission on the Environment, 100% of the certified costs may be passed
through to tenants of any property, regardless of the number of units. There is
no annual limit on the amount of the passthrough.
Imposing a Capital Improvement Passthrough: To impose a capital improvement passthrough, the
landlord must first file a Capital Improvement Petition at the Rent Board, and
then issue a written notice of increase to the affected tenants. The notice of
rent increase can be served at any time after the petition is filed, even after
the Rent Board issues a decision. However, if served before the petition is
filed, the notice is void and cannot be the basis for a lawful rent increase.
A capital improvement passthrough can be imposed at
any time and does not have to coincide with the tenant’s rent increase
anniversary date. Tenants are not required to pay the passthrough until a final
decision or order is issued by an Administrative Law Judge after a hearing.
However, the passthrough, if approved, will be retroactive to the effective
date of a valid notice of increase.
A capital improvement passthrough does not become
part of the tenant’s base rent and should not be included in the base rent when
calculating an annual or banked rent increase. The capital improvement
passthrough should be listed separately from the base rent in every notice of rent
increase. Once the passthrough is fully amortized, or paid back to the
landlord, it must be discontinued. If the landlord fails to discontinue the
passthrough at the proper time, the landlord is liable to the tenant for the
Some Tenants Are Not Eligible for Passthrough: A new tenant cannot be charged for a capital
improvement completed before the tenancy began since the owner was free to set
a new market rent at the time the unit was vacant. In addition, capital
improvement costs cannot be passed through to units that are first rented
during the construction period or rented within six months of the commencement
of work, unless ownership has changed in that period and the change of
ownership occurred after the new tenancy commenced.
Interest Allowed on Capital Improvement Costs: When calculating a capital improvement passthrough,
landlords are entitled to add a reasonable rate of interest to capital
improvement costs. Interest is computed by one of two methods. If the money to
do the work was borrowed with a fixed rate loan, the actual interest cost up to
10% can be used. If the interest rate on a loan is variable, or if no funds
were borrowed to pay for the work, then the imputed interest rate posted by the
Rent Board each year must be used. Please note that credit card charges are
subject to the imputed interest rate, since they have variable rates of
interest. Also, no interest is allowed for uncompensated labor costs.
Uncompensated Labor: Landlords may include the cost of uncompensated labor
in a Capital Improvement Petition. Uncompensated labor is labor performed for
no remuneration of any kind. In order to make a claim for uncompensated labor
costs, the petition must include a log of dates on which the work was
performed. The log should also include the number of hours worked each day and
the nature and location of the work performed.
If the uncompensated worker is licensed in the
particular craft for which costs are being claimed, the landlord must provide a
copy of the worker’s current license and evidence of the prevailing wage rate
for that particular craft. If the uncompensated worker is not licensed, the
landlord must use the uncompensated labor rate posted by the Rent Board, which
is based on prevailing labor rates as established by the California Department
of Industrial Relations.
Operating and Maintenance Expense
When the annual allowable increase does not
completely cover the landlord’s yearly increase in operating and maintenance
expenses for a property, a landlord
may petition for an additional base rent increase of up to 7%. This is known as
an Operating and Maintenance or O&M increase. In determining whether an
O&M increase is justified, all
operating expenses must be considered, including: property taxes, debt service
or mortgage, repairs, maintenance, insurance, pest control, garbage, water,
etc. Electric and gas costs are not included in the calculation since an
increase in utility costs may be passed through to the tenant by a separate
In order to qualify for an O&M increase, the
landlord must demonstrate that total O&M expenses increased from one twelve
month period to the next by more than the amount of the annual allowable
increase. Two consecutive calendar years or a 24-month period prior to filing
the petition must be used for the comparison of O&M expenses. For example,
if filing a petition in 2010, a landlord could compare the total O&M
expenses for 2009 to the total for 2008. Alternatively, the landlord could use
a recent 24-month period, such as July 2008 through June 2009 compared to July
2009 through June 2010. Please note that selection of a particular 24-month
period in order to create exaggerated results is disfavored by the Board.
To determine the per unit O&M increase, the total
cost increase is calculated and then divided by 12 months. That amount is then
divided by the number of units in the building. Costs are allocated to the
total number of units in the building, including commercial units, not just to
the residential units.
If the per unit increase is not more than the annual
allowable increase at the time the petition was filed, no additional increase
based on O&M expenses will be granted. If the increase is more than the
annual allowable increase, then an additional increase of up to 7% may be
granted. The same landlord is limited to a total O&M increase of 7% in any
five-year period for any unit in a property with six or more residential units.
If an O&M increase is justified, it becomes part
of the tenant’s base rent. The O&M increase can only be imposed on the
tenant’s anniversary date and only after serving the tenant with a proper
written notice of rent increase. The landlord must file the O&M petition
before serving the notice of increase. The notice can be served at any time
after the petition is filed, even after the Rent Board issues a decision. If
the notice is issued before the petition is filed, the notice is void and
cannot be the basis for a lawful O&M increase.
Tenants who lived in the
building during any part of Year 1, the first comparison year, may be given an
O&M increase. Tenants who moved into the building during Year 2, the second
comparison year, may not be given an O&M increase unless ownership changed
during Year 2 after the tenant moved in. Only one O&M increase based on costs related to the transfer of
ownership of a property is allowed.
Helpful Hints for Landlords
Planning to File a
Capital Improvement Petition or
Operating & Maintenance Petition
· For owners or managers of more than one property,
get separate bills, invoices, contracts, receipts, statements, etc. for each
expense at each property.
Alternatively, make sure that the costs attributable to separate properties are
kept separate and can be identified as pertaining to a particular property.
Likewise, make payments for each property separately so that cancelled checks
pertain to one property only.
· Ask the contractor or service provider to clearly
describe the exact nature of the
work performed and to clearly identify the location of the property where the
work is performed. In addition, where multiple improvements and/or repairs are
listed on a single invoice, an itemization of costs should be provided. This is
particularly helpful if the expenses are challenged.
· At the time that checks are prepared, make a
notation on the memo line to identify the expense. For example, write “exterior painting – 25 Van Ness
Ave.” Or, identify the invoice number that corresponds with the payment.
· Make all payments by check or credit card. Cash
payments are difficult to document.
· At the time of purchase of a property, if you
anticipate filing a petition, you should require documentation of capital
improvement and O&M costs as a condition of closing escrow. It is often difficult to obtain these records from
the prior owner after the transaction is completed.
· Abate code violations promptly. The Rent Board cannot certify capital improvement
costs if the work was required to correct a code violation for which a notice
of violation was issued and remained unabated for 90 days unless the landlord
made timely good faith efforts within the 90-day period to commence and
complete the work but was not successful in doing so because of the nature of
the work or circumstances beyond the control of the landlord. In addition,
tenants may object to imposition of an O&M increase if the landlord has
failed to perform requested repair and maintenance that is required by law.
Based on Rents for
A rent increase that exceeds allowable annual and
banked amounts may be justified, even in the absence of an increase in
operating and maintenance expenses, if it is established that the rent for a
unit is significantly below those of comparable units in the same general area due
to extraordinary circumstances. A
Special Circumstances rent increase will be approved where the landlord proves
that (a) there were extraordinary circumstances such as a special relationship
between the landlord and tenant, fraud, mental incompetency or other
extraordinary circumstances unrelated to market conditions AND (b) that the
initial rent on a unit was set very low or the rent was not increased or was
increased only negligible amounts during the tenancy as a result of the
extraordinary circumstances AND (c)
that the current rent for the unit is significantly below those of comparable units in the same general area
with similar lengths of tenancy. The mere fact that a long-standing tenant is
paying significantly less than market rent is not considered an extraordinary
Before imposing a rent increase based on rents for
comparable units, the landlord must first file a Special Circumstances Petition
at the Rent Board and then issue a notice of rent increase to the affected
tenants. The notice of rent increase can be served at any time after the
petition is filed, even after the Rent Board issues a decision. However, if
served before the petition is filed, the notice is void and cannot be the basis
for a lawful rent increase.
Tenants may object to imposition of a Special
Circumstances rent increase based on the landlord’s failure to perform
requested repair and maintenance that is required by applicable state and local
law. Tenants can also defend the petition by proving that the initial base rent
was not set low and/or was not set low due to special circumstances, as claimed
by the landlord. If a tenant disagrees with the amount of the landlord’s
proposed rent increase, the tenant can provide his or her own evidence of rents
for reasonably comparable units.
If a petition based on special circumstances is
granted, the base rent will be reset to an amount determined by the
Administrative Law Judge. Such a rent increase may be granted only one time
during the tenancy and precludes the imposition of all annual rent increases,
banked increases and operating and maintenance increases that the landlord
could have imposed prior to filing the Special Circumstances Petition.
Helpful Hints for Landlords
Planning to File
a Special Circumstances (Comparable
• Extraordinary circumstances can be
established through reliable written evidence and/or oral testimony of
witnesses with personal knowledge surrounding the creation and/or circumstances
of the tenancy. All written evidence must be attached to the petition.
To show that the tenant’s rent was set low, it may be necessary to present evidence of
market rents for reasonably “comparable” units in the same building and/or
general neighborhood at the time the subject unit was initially rented.
Sometimes, evidence of current rents for reasonably “comparable” units can be
used to show that the initial rent had to have been set low. This evidence must
be attached to the petition.
• To show that the tenant’s rent was kept low, it will be necessary to provide documentary
evidence of the tenant’s full rent history such as leases, notices of rent
increase, rent ledgers, rent receipts, etc. This evidence must be attached to
• A reasonably “comparable” unit includes
one where the length of occupancy of the current tenant is similar to the
length of occupancy of the tenant subject to the petition and where the size
and physical condition of the “comparable” unit and building and the
services/amenities enjoyed by the tenant of the “comparable” unit are
substantially similar to those of the tenant subject to the petition. Although
perfect comparability is not required, if the length of occupancy is not
substantially similar, then the units do NOT provide a fair comparison.
• There are various ways to gather evidence
of rents for reasonably “comparable” units which have a similar length of
occupancy including, but not limited to: examining other similar units in the
same building as the subject unit; canvassing the neighborhood and inquiring at
buildings which are similar in size and condition to the subject building;
contacting other landlords or tenants you know who rent units you believe to be
reasonably “comparable” to the subject unit; contacting trade organizations
and/or rental agencies and/or management companies which may have old leases or
other historical records of rents charged for reasonably “comparable” units in
the same neighborhood as the subject unit; reviewing classified ads in San
Francisco newspapers from the same time period that the subject tenancy began
and calling the phone number listed to see if the relevant information is
currently available. The Rent Board staff is not permitted to complete or fill
in your petition for you, nor do we maintain records of rents for reasonably
Petition for Rent
Increase Based on
Past Rent History of
Proposition I Affected Unit
Proposition I was passed by the voters of San Francisco on
November 8, 1994, and took effect on December 22, 1994. Proposition I repealed the exemption from rent control for owner-occupied buildings
containing 4 units or less, and established the base rent for Newly Covered
Units as the rent that was in effect as of May 1, 1994.
Landlords of Proposition I Affected Units may petition the Rent Board for a rent increase in
excess of the annual allowable increase where the landlord did not increase the
tenant’s rent between 5/2/89 and 5/1/94. Where there was no increase between
5/2/91 and 5/1/94, the landlord may be entitled to an increase of 7.2%. Where
there was no increase between 5/2/90 and 5/1/94, the landlord may be entitled
to an increase of 11.2%. Where there was no increase between 5/2/89 and 5/1/94,
the landlord may be entitled to an increase of 15.2%.
If a rent increase based on the past rent history of
a Proposition I Affected Unit is justified, it becomes part of the
tenant’s base rent and can only be imposed on the tenant’s anniversary date
after serving the tenant with a proper written notice of rent increase. The
landlord must file the Proposition I petition before serving the notice of increase. The
notice can be served at any time after the petition is filed, even after the
Rent Board issues a decision. If the notice is served before the petition is
filed, the notice is void and cannot be the basis for a lawful rent increase.
Petition for Approval of Utility Passthrough
and Utility Passthrough Worksheets
Where a landlord pays for gas,
electricity and/or steam provided to the tenant’s unit and/or to the common
areas of the property, the landlord may recover the increase in the cost of
these utilities from the tenants in the form of a utility passthrough. A
utility passthrough is a dollar for dollar passthrough to the tenants of any
increase in the landlord’s costs for utilities based on a comparison of utility
costs from one calendar year, known as the “base year”, to another calendar
year, known as the “comparison year.” There is a specific method for
calculating a utility passthrough that must be followed in order for the
passthrough to be valid.
The landlord must file either a Rent Board Petition
for Approval of Utility Passthrough or a Utility Passthrough Calculation
Worksheet form, depending on the tenant’s base year. The method for determining
whether to file a petition or a worksheet is explained in the instructions for
completing each form.
The petition or worksheet must be filed before giving
a legal notice of rent increase for the utility passthrough. The utility
passthrough does not become part of the tenant’s base rent and must not be
included in the rent when calculating an annual or banked rent increase. A
utility passthrough can only be
imposed at the same time as the annual allowable increase and applies only for
the 12-month period after it is imposed. After 12 months, the utility
passthrough must be discontinued. If the utility passthrough is not
discontinued after 12 months, the tenant can file a petition at the Rent Board
alleging an improper utility passthrough and seeking a refund of overpayments.
For more specific details on utility
passthroughs, see Rent Board Fact Sheet 9. Fact Sheet 9 is available at the
Rent Board’s office or on our website at www.sfrb.org or through our Fax Back
service by calling 252.4660.
1.21 Tenant In Occupancy Petitions
A landlord is permitted to impose an unlimited rent
increase pursuant to Rules and Regulations Section 1.21 when there is no tenant
in occupancy of the rental unit. The landlord must first file a petition at the
Rent Board seeking a determination that there is no tenant in occupancy prior
to issuing a notice of rent increase on such grounds. The notice of rent
increase can be served only after the petition is filed, or the landlord can
wait until after the Rent Board issues a decision. If the notice is served
before the petition is filed, the notice is void and cannot be the basis for a
lawful rent increase. If the notice is properly served after the petition is
filed, the rent increase will be inoperative until the Rent Board issues a
decision determining that there is no tenant in occupancy. However, if the
petition is granted, any sums
owing will be retroactive to the effective date of a valid notice of increase.
A tenant in occupancy is a person who actually
resides in the rental unit as his or her “principal place of residence” and who
is entitled by written or oral agreement, subtenancy approved by the landlord,
or by sufferance, to occupy the unit
to the exclusion of others. Occupancy does not require that the individual be
physically present in the unit at all times or continuously, but the unit must
be the tenant’s usual place of return.
The landlord will have to make a threshold showing
that the tenant does not reside in the unit as his/her principal place of
residence, and then the burden will shift to the tenant to show that the unit
is his/her principal place of residence and “usual place of return.” When
considering whether a tenant occupies a rental unit as his or her “principal
place of residence,” the Rent Board considers the totality of the
circumstances, including, but not limited to the following elements:
· whether the subject premises are listed as the
individual’s place of residence on any motor vehicle registration, driver’s
license, voter registration, or with any other public agency, including
Federal, State and local taxing authorities;
· whether utilities are billed to and paid by the
individual at the subject premises;
· whether all of the individual’s personal possessions
have been moved into the subject premises;
· whether a homeowner’s tax exemption for the
individual has been filed for a different property;
· whether the subject premises are the place the
individual normally returns to as his/her home, exclusive of military service,
hospitalization, vacation, family emergency, travel necessitated by employment
or education, or other reasonable temporary periods of absence; and/or
· whether there is credible testimony from individuals
with personal knowledge, or other credible evidence, that the tenant actually
occupies the rental unit as his or her principal place of residence.
A compilation of these elements lends greater
credibility to the finding of “principal place of residence” whereas the
presence of only one element may not support such a finding. Reasonable,
temporary absences from the unit, such as for work, travel or education, will
not warrant a determination that the unit is not the tenant’s principal place
of residence. A tenant can occupy two or more reasonably proximate rental units
in the same building as his or her principal place of residence.
Section 1.21 is not applicable if any co-tenant or
lawful subtenant meets the definition of “tenant” in the Rent Ordinance and
resides in the unit as his/her principal place of residence. In such situations
an unlimited rent increase will not be approved even if the unit is not the
original tenant’s principal place of residence. In such instances, the landlord
may be able to increase the rent under the Costa-Hawkins Rental Housing Act
and/or Rules and Regulations Section 6.14.
Rehabilitation Petitions for Exemption
Landlords may petition for exemption from the Rent
Ordinance because of substantial rehabilitation of a building. Due to the
stringent requirements to qualify for substantial rehabilitation exemption, very
few landlords have filed substantial rehabilitation petitions with the Rent
Board. On average, about two substantial rehabilitation petitions are filed
“Substantial rehabilitation” means the renovation,
alteration or remodeling of a building containing essentially uninhabitable
residential rental units of 50 or more years of age that require substantial
renovation in order to conform to contemporary standards for decent, safe and
sanitary housing. Substantial rehabilitation may vary in degree from gutting
and extensive reconstruction to extensive improvements that cure substantial
deferred maintenance. Cosmetic improvements alone such as painting, decorating
and minor repairs, or other work which can be performed safely without having
the units vacated, do not qualify as substantial rehabilitation.
Improvements will not be deemed substantial unless
the cost of the work for which the landlord has not been compensated by
insurance proceeds equals or exceeds 75% of the cost of newly constructed residential
buildings of the same number of units and type of construction, excluding land
costs and architectural/engineering fees. The determination of the cost of
newly constructed residential buildings shall be based upon construction cost
data reported by Marshall and Swift, Valuation Engineers, as adapted for San
Francisco and posted by the Department of Building Inspection for purposes of
determining permit fees. The schedule in effect on the date the Building
Inspector gives final approval of the completed improvements shall apply.
The landlord must provide specific evidence with the
Substantial Rehabilitation Petition, including: tenant histories and copies of
eviction notices to prior tenants; a detailed description of the work performed
and itemization of costs; proof that the building is over 50 years old; a
determination of condemnation and/or a determination by the Department of
Building Inspection that the building was ineligible for a permit of occupancy
and/or other evidence that the building was essentially uninhabitable; an
abstract of title; a complete inspection report issued by the Department of
Building Inspection prior to the commencement of the rehabilitation work; proof
of purchase price; a final notice of completion from the Department of Building
Inspection or other evidence of the date the Building Inspector gave final
approval of the completed improvements; copies of invoices, bids and cancelled
checks substantiating the costs for which the landlord has not been compensated
by insurance proceeds; a copy of the current assessment; and a work log for any
claims for uncompensated labor.
In general, a petition for exemption based on
substantial rehabilitation can be filed at any time after the work has been
completed. However, a landlord who recovers possession of a rental unit under
Ordinance Section 37.9(a)(12) in order to carry out substantial rehabilitation
must file the petition within the earlier of two years following recovery of
possession of the rental unit or one year following completion of the work. A
landlord who fails to file a petition within such time and thereafter obtain a
determination of exempt status from the Rent Board shall be rebuttably presumed
to have wrongfully recovered possession of the tenant’s rental unit in
violation of the Ordinance.
Tenants may raise objections to the Substantial
Rehabilitation Petition based upon any of the following: that the work was not
done; that the work was necessitated by the current landlord’s deferred
maintenance resulting in a code violation; that the costs are unreasonable;
and/or that the work was not principally directed to code compliance.
Petition for Extension of Time to
Complete Capital Improvements
Under the just cause eviction provisions of the Rent
Ordinance, a landlord may recover possession of a rental unit if the landlord
seeks in good faith and without ulterior motive to temporarily remove the unit
from housing use in order to carry out capital improvements or rehabilitation
work, and the premises will be hazardous, unhealthy and/or uninhabitable while
the work is in progress. The tenants are required to vacate the unit only for
the minimum time required to do the work as stated in the eviction notice,
which shall not exceed three months, unless the time is extended by the Rent
Board upon petition by the landlord.
If, prior to commencement of the work, the landlord
knows or should know that the work will require the removal of the tenants for
more than three months, the landlord must file a Petition for Extension of Time
at the Rent Board before giving
the notice to vacate to the tenants. If, after the notice has been given or the
work has commenced, it becomes apparent that the work will take longer than
three months (or longer than the time approved by the Rent Board in a prior
Petition for Extension of Time), the landlord must immediately file a Petition for Extension of Time along with a
statement explaining why the work will take more time. A hearing will be
scheduled to determine the reasonableness of the landlord’s time estimate.
The Petition for Extension of Time must be
accompanied by copies of all necessary approved building permits, a written
breakdown of the work to be performed and the location and cost of the work, an
estimate of the time needed to complete the work, and the approximate day and
month when each tenant may reoccupy.
Where a tenant has vacated a unit to allow a landlord
to carry out capital improvement work, the landlord must advise the tenant, in
writing, immediately upon completion of the improvements, that the tenant is
allowed to reoccupy the unit. The tenant shall have 30 days from receipt of the
landlord’s offer of reoccupancy to notify the landlord of acceptance or
rejection of the offer and, if accepted, shall reoccupy the unit within 45 days
of receipt of the landlord’s offer.
Petition for a Determination
Section 6.14 and/or Costa-Hawkins
Rental Housing Act
San Francisco’s Rent Ordinance does not regulate the
initial rent for a new tenancy, so landlords are permitted to set rents for new
tenancies at market rate. The landlord may also be entitled to increase the
rent to market rate in certain roommate situations when the original tenants no
longer live in the unit. Rules and Regulations Section 6.14 or Civil Code Section
1954.53(d) of the Costa-Hawkins Rental Housing Act are the provisions that may
apply in this situation.
Section 6.14 and Costa-Hawkins can be very
complicated. For that reason, landlords and tenants are strongly encouraged to
seek legal advice concerning whether a “6.14 rent increase” and/or a
“Costa-Hawkins rent increase” is available in particular situations. The
following description gives only a very general overview of the scope of the
Rules and Regulations Section 6.14 provides for an
unlimited rent increase on remaining occupants when the last original occupant
vacates the unit, as long as the landlord timely served all remaining occupants
with a written “6.14 notice.” A proper 6.14 notice must inform each subsequent
occupant that the landlord can impose a rent increase without limitation when
the last original tenant vacates the unit. The 6.14 notice must be served on
each subsequent occupant within a reasonable time after the landlord knows or
should have known of the occupancy. Generally, sixty days is considered
reasonable. A 6.14 notice can be served on any subsequent occupant, whether the
subsequent occupant is a subtenant or a co-tenant.
Costa-Hawkins provides that when the last original
occupant no longer permanently resides in the unit, the landlord may increase
the rent by any amount to a lawful subtenant or assignee who did not reside in
the unit prior to January 1, 1996. Thus, a subtenant who resided in the unit
before January 1, 1996 is not subject to such a rent increase. In addition, any
co-tenant who moved in after the original occupant is not subject to such a
rent increase, regardless of when the co-tenant moved in. A co-tenant is
someone who has an oral or written agreement with the landlord, or who the landlord
has treated as a tenant by the acceptance of rent or other conduct.
There are several clear distinctions between Section
6.14 and Costa-Hawkins. For example, Section 6.14 provides that an unlimited
rent increase may be imposed on subsequent occupants who are co-tenants or
sublessees or assignees, regardless of when they moved in. Costa-Hawkins rent
increases are limited to sublessees or assignees who moved in after January 1,
1996. In addition, Section 6.14 requires the service of a written notice upon
the subsequent occupant when he or she first moves into the unit. Such notices
are not a prerequisite to a Costa-Hawkins rent increase. Finally, Section 6.14
requires the last original occupant to “vacate” the unit, while Costa-Hawkins
only requires the last original occupant to no longer “permanently reside” in
the unit. Reasonable, temporary absences from the unit, such as for work,
travel or education, will not warrant a determination that the original
occupant has vacated or no longer permanently resides in the unit.
A landlord is not required to file a petition with
the Rent Board for approval of a rent increase pursuant to Section 6.14 or
Costa-Hawkins Section 1954.53(d). However, if a landlord is unsure whether a
rent increase is justified, the landlord may file a petition at the Rent Board
to seek a determination that either or both sections authorize a rent increase.
The petition can be filed before or after the notice of rent increase is served
and any rent increase imposed pursuant to Section 6.14 or Costa-Hawkins is
effective on the date stated in the notice of increase, regardless of whether
the landlord filed a petition.
Petition for a Determination of
Residential units in
structures for which a certificate of occupancy was first issued after June 13,
1979 are exempt from the Rent Ordinance. Ordinance Section 37.2(r) and Rules
and Regulations Section 1.17 list other types of dwelling units that are also
exempt from the Rent Ordinance, regardless of when the building was constructed.
For example, dwelling units whose rents are controlled or regulated by another
government agency or authority are exempt from the Rent Ordinance. In addition,
single-family homes and condominiums are generally exempt from the rent
increase limitations of the Rent Ordinance (but not the just cause eviction
provisions) as of January 1, 1999, unless the tenancy commenced before January
1, 1996, pursuant to the Costa-Hawkins Rental Housing Act.
If there is a question about whether or not a unit is
exempt from the Rent Ordinance, either a landlord or a tenant may file a
petition at the Rent Board for a determination of exempt status.
Petition for a Determination of
Tenant’s Protected Status from
Owner/Relative Move-In Eviction
Under Ordinance Sections 37.9(i) and 37.9(j)
who are at least 60 years old or who meet the disability guidelines for
Supplemental Security Income and who have lived in the unit at least 10 years,
or tenants who are catastrophically ill and who have lived in the unit for at
least 5 years, have a protected status and generally cannot be evicted for
either the owner or the owner's relative to move into a building. Such
protected status does not apply, however, where there is only one rental unit
owned by the landlord in the building, or where the landlord’s qualified
relative who intends to move in is 60 years of age or older and each rental
unit owned by the landlord in the same building (except the unit occupied by
the landlord) is occupied by a tenant with protected status.
tenant who has resided in the unit for at least one year and has a child under
the age of 18 who is also residing in the unit, has protected status and may
not be evicted during the school year for an owner or relative move-in
eviction. However, there are two exceptions: an owner move-in eviction may
proceed if there is only one unit owned by the landlord in the building; or, if
there are multiple units in the building, an owner move-in eviction may proceed
if the owner will move into the unit with a minor child. These exceptions do
not apply to relative move-in evictions.
eviction notice for owner/relative move-in must inform the tenant of these
restrictions. Any tenant who claims to have a protected status must notify the
owner of the tenant’s protected status within 30 days of receiving either a
notice to vacate or a written request from the owner to declare the tenant’s
status. The tenant must also include evidence supporting the claim. Owners who
seek to recover possession of the rental unit for owner/relative move-in may
file a petition at the Rent Board to contest a tenant’s claim of protected
Bond Measure Passthroughs
A landlord may pass through to tenants 100% of the
increase in the landlord’s property tax bill resulting from the repayment of
general obligation bonds approved by the voters between November 1, 1996 and
November 30, 1998. For general obligation bonds of the City and County of San
Francisco approved by the voters after November 14, 2002, the landlord may pass
through 50% of the property tax increase resulting from repayment of these
bonds, provided that the rent increase is disclosed and approved by the voters.
For general obligation bonds of the San Francisco Unified School District or
San Francisco Community College District approved by the voters after November
1, 2006, including the Prop A 2006 Bond, the landlord may pass through 50% of
the property tax increase resulting from repayment of these bonds.
The landlord is not required to file a petition with
the Rent Board for approval of the Bond Measure Passthrough. However, the
landlord must use the Bond
Measure Passthrough Worksheet in order to calculate the passthrough. To impose
the passthrough, a copy of the completed Worksheet must be provided to the
tenant in addition to a written notice of rent increase.
Only tenants in residence as of November 1st
of the applicable tax year are eligible for the Bond Measure Passthrough. The
passthrough must be imposed at the time of the annual rent increase, on the
tenant’s rent increase anniversary date. It shall not become part of the
tenant’s base rent, and it must be discontinued after 12 months.
A landlord may elect to pass through the property tax
increase attributable to the repayment of bonds as part of an Operating and
Maintenance Expense Petition instead of calculating a separate Bond Measure
Passthrough. In such cases, the landlord must elect one or the other method,
but may not choose both.
Bond Measure Passthroughs may be “banked” and imposed
in future years, provided that the applicable Bond Measure Worksheet is
completed for each banked passthrough and attached to the notice of rent
increase. There is a different Worksheet for each tax year, since the
percentage of the property tax rate attributable to repayment of general
obligation bonds varies from year to year. All of the prior Worksheets are available on our
website at www.sfrb.org.
A tenant may file a petition for an arbitration
hearing at the Rent Board to challenge an improper Bond Measure Passthrough. In
such a hearing, the landlord shall have the burden of proving the accuracy of
the Bond Measure Passthrough calculation. Such petitions must be filed within
one year of the effective date of the passthrough.
Revenue Bond Passthroughs
A landlord may pass through to tenants
50% of the water bill charges attributable to water rate increases resulting
from the issuance of Water System Improvement Revenue Bonds authorized at the
November 2002 election. Water bills prepared by the S.F. Public Utilities
Commission commencing July 1, 2005 specify the water bill charges that are
eligible for the passthrough.
The landlord is not required to file a petition with
the Rent Board for approval of the Water Revenue Bond Passthrough. However, the
landlord must use the Water
Revenue Bond Passthrough Worksheet in order to calculate the passthrough.
The landlord may base the calculation of
the Water Revenue Bond Passthrough on a single water bill OR, in the
alternative, on all the water bills for any calendar year. Where the landlord
elects to calculate the Water Revenue Bond Passthrough based on a calendar
year, the passthrough must be imposed at the time of the annual rent increase,
on the tenant’s rent increase anniversary date. Where the landlord elects to calculate
the passthrough on a single water bill, the passthrough need not be imposed on
the tenant’s anniversary date; however, the landlord must serve notice of such
passthrough within 60 days of receipt of the water bill. In any event, the
passthrough shall not become part
of the tenant’s base rent.
There are several
specific requirements for the notice of rent increase for a Water Revenue Bond
Passthrough, including the following:
· The notice shall specify the dollar amount of the
monthly passthrough, the period of time covered by the water bills that are
used to calculate the passthrough and the number of months that the tenant is
required to pay the passthrough.
· The notice must include a copy of a completed Water
Revenue Bond Passthrough Worksheet.
· The notice shall explain that the passthrough is
based on the issuance of Water System Improvement Revenue Bonds.
· The notice must state that the tenant can receive a
copy of the applicable water bills from the landlord upon request.
· The notice must also state that the unit is in
compliance with any applicable laws requiring water conservation devices such
as the Residential Water Conservation Ordinance which is found in Chapter 12A
of the San Francisco Housing Code. You can fax yourself a copy of Chapter 12A
through our Fax Back system or find it on our website.
In addition to these specific notice requirements,
the landlord must comply with state law requirements governing service of a
rent increase notice.
A tenant may file a hardship application with the
Rent Board requesting relief from payment of all or part of the Water Revenue
Bond Passthrough. Once a hardship application is filed, the tenant need not pay
the passthrough until a decision is made by an Administrative Law Judge after a
hearing on the tenant’s hardship application. The hardship application must be
filed within one year of the effective date of a Water Revenue Bond
Passthrough. A tenant may also file a petition for arbitration at the Rent
Board to challenge an improper Water
Revenue Bond Passthrough. Such petitions must also be filed within one year of
the effective date of the passthrough.
Civil Code Section 827
Requirements for Notice of Rent Increase
A thirty-day notice is required if the increase,
either by itself or combined with any other rent increase in the one year
period before the effective date, is no more than 10%. A sixty-day notice is
required if the increase, either by itself or combined with any other rent
increase in the one year period before the effective date, is more than 10%. If
the rent increase notice is served by mail, the required notice period must be
extended by an additional five days.