“My tenant owns a home with a homeowner’s exemption. Why isn’t that enough to prove before a Rent Board that he/she doesn’t really live in my rent-controlled property?”
We have heard that question many times from clients. Seems like in a perfect world, that oughtta work, right? Unfortunately, in the real world, or at least the world of rent control, those facts alone are often not enough. This week, we will provide a brief explanation of why that is so.
Principal and Permanent Place of Residence:
There is one state law, the “California Costa-Hawkins Rental Housing Act of 1995”, and in San Francisco County an additional code, “Rent Board Regulation, Section 1.21,Tenant In Occupancy”, that regulates rent control locally. While the two regulations use different terms, “Permanent Place of Residency” and “Principal Place of Residency”, for the purposes of today’s blog we can understand both to require that in order to enjoy rent control protections, a tenant must use the landlord’s property as his “usual place of return” – in plane language, where he typically lays his head each night and normally resides.
So, it is not sufficient to simply establish that a tenant is living elsewhere, but rather it is necessary to prove the following:
1) That he/she is using the second residence as his usual place of return.
2) The living arrangement is not a temporary condition.
3) The living arrangement was the status on the date an initiating Petition was filed with the Rent Board, or that a Costa Hawkins rent increase notice was served on the tenant.
So, there are two big take-aways here: 1) In order to arrive at a decision regarding which residence was the tenant’s principal (or permanent) residence the Rent Board will consider a variety of evidence that addresses the tenant’s frequency and duration at the respective properties. That evidence includes his/her indicia footprint (records and documents tying him/her to the property), the reasons for his/her presence at one property vs another and his/her future plans. Only after considering the totality of the evidence will the Rent Board reach a decision. 2) In reaching a decision, the Rent Board is only concerned with where the Tenant principally (or permanently) resided on the date of the initial petition with the Rent Board, or the date that a Costa Hawkins rent increase notice was served on the tenant. This means that where the tenant may have principally/ permanently resided before or after the filing date is largely irrelevant.
So, as you can see from the above, usually there is no single piece of evidence, or silver bullet, such as a property ownership record or a homeowner’s exemption filing, that decides these matters.
Next week we will take a look at some of the criteria the Rent Board considers when deciding these issues and the types of evidence that are persuasive.