San Francisco’s Rent Stabilization and Arbitration Ordinance allows landlords of rent-controlled units to legally evict their tenants without cause, if said eviction is intended to allow the landlord or landlord’s family to occupy the apartment as their principal place of residence.

Under the terms of an Owner Move-In (“OMI”) eviction, the unit is expected to remain off the rental market for at least three years. And if the unit is re-rented within 36 months of the previous tenant being evicted, it can’t be rented for more than the original tenant would have paid.

While not a loophole per se, the existing law is ripe for abuse, with limited accountability following an OMI-based eviction, including a landlord’s “good faith intent” to comply with its terms and a one-year statute of limitations for any wrongful eviction claims.

But as drafted and working its way towards San Francisco’s full Board of Supervisors, the existing law would be amended to require landlords to file a legal declaration, under penalty of perjury, stating their intent to occupy any apartment to be emptied by way of an OMI eviction as their principal place of residence for at least three years.

In addition, landlords would be required to file annual proof of occupancy for three years following an OMI following an eviction under penalty of perjury, a copy of which would be forwarded to the evicted tenant; San Francisco’s Rent Board would be required to notify the current occupants of any OMI effected unit as to the maximum allowable rent for the unit on an annual basis for the three years following an eviction; and the statute of limitations for wrongful eviction claims would be extended from one to three years.

The proposed amendments are expected to be recommended by the Board’s Land Use and Transportation Committee this afternoon and could be passed by the full Board tomorrow.

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Comments from “Plugged-In” Readers

  1. Posted by bachman_erlich_overdrive

    A virtuous circle here – you keep the units off the market for three years, you contribute to the diminution of available rental housing in the city, prices go up, and by the time you put the rental back on the market, you get back higher rents… If you can triple your rent after the fact, makes Net Present Value sense easily. Thanks again, Board of Supervisors.

    • Posted by BuildHighAndDense

      Yes, will create vacant rental units as as I read this there is a perverse incentive for the LL. A vacancy created by OMI on a deeply RC unit would be a good deal for the landlord to hold vacant and use the time for remodeling “to move in to an updated unit”. For example, an 850/mo RC in a 2bd would gross 30600, but the LL is already losing 113400 during the same period from not being able to charge market rate.

      An RC unit closer to market rate is not likely to cause vacancy problems under this proposed legislation.

      • Posted by anon

        How is a ban on holding the unit vacant after an OMI eviction, now with more teeth as there is a risk of imprisonment for perjury, an incentive to hold the unit vacant?

        • Posted by bachman_erlich_overdrive

          Re-renting within 3 years is banned, not holding the unit vacant.

          If people were ignoring the previous poorly-enforced requirement, then the units would go back into circulation relatively quickly. Now, aggressive owners can still do the same thing, but the city rental market will shrink by the # of units in question for three years.

          Also changes the equation for doing an Ellis. If you can OMI one single unit for a three year wait period, or the whole building for a 5 year wait period, why not just Ellis everyone? Low single digit cap rates and low single digit financing rates make current cash flow at rent control levels uninteresting.

          • Posted by SocketSite

            Again, the existing law would be amended to require landlords to file legal declarations, under penalty of perjury, stating their intent to occupy any unit to be emptied by way of an OMI eviction as their principal place of residence for at least three years.

            In addition, landlords would be required to file annual proof of occupancy, not vacancy, with the Rent Board (again, under penalty of perjury), a copy of which would be forwarded to the evicted tenant who would have three years to file an unlawful eviction claim.

          • Posted by anon

            Exactly, socketsite. After an OMI a landlord can neither rent the place out nor hold it vacant for 3 years. And he needs to verify he is doing neither with a declaration each year under penalty of perjury. The risks to skirting the OMI law will go from close to zero to quite substantial, including jail time.

          • Posted by bachman_erlich_overdrive

            You’ll find that disproving occupancy is rather challenging, especially when the owner of the building can do things like “put the utilities in her name” or “subscribe to comcast” or “pay the bills.” If what you mean is that now displaced tenants will hire armies of private investigators to stake out the joint, they still would have a hard time. People move on, physically and emotionally.

            Also, pretty sure you can have relatives qualify for OMIs, right? I’ve never done one but heard of people moving their parents in for the sake of it.

          • Posted by The Milkshake of Despair

            BEO – You’re probably right that tenants themselves won’t spend the effort to prove that the owner is not living in the unit. However a tenant non-profit agency might be willing to hire a PI to investigate and shut down some of the more egregious violators. It is a pretty easy job for a PI. Just find out who in the owner’s family has allegedly occupied the unit, find their prior address, and then stake out that “prior” address to see whether or not they appear to be living there and not the OMI unit.

        • Posted by BuildHighAndDense

          This seems like a good question for your lawyer. As seen with the BMR program, people will risk imprisonment and fines if the incentives are large enough.

  2. Posted by sfdragonboy

    Since you [BoS] like to be cutting edge, why don’t you all actually brainstorm for once and come up with a creative and fair policy with respect to rent control? How about some type of means testing so that rich people that don’t need a rent controlled apartment (and who may already own investment property elsewhere) shouldn’t be allowed to have them? If the TRUE goal is to help truly needy folks I am all for it, so let’s get all of the fraud out of the system.

    • thank you so much. According to the NYTimes, by 2000 a quarter of renters protected by rent control already made more than $100K. Since then, tenant advocates have blocked research in order to preserve their political capital. I’m all for social justice, but SF Tenants Union and city government has gone too far. You are now building your social justice partly on the backs of small-time owners. Tax the windfall profits when we sell, by all means! But penalizing us unfairly to drive us out of business will do nothing except reduce affordable housing stock.

      • Posted by Mark F.

        Means testing for rent control makes a lot of sense. The only problem is that it would disadvantage potential renters who are not in ultra-high paying jobs, as landlords would give preference to the wealthy. How would this problem be dealt with?

        Of course, better sense would be a total phase out of all rent control and building a lot more housing.

        • New immigrants from China and nearby are now reporting they cannot find a rental for six months. So new tenants are subsidizing long-time tenants with rent control, including those in the high-income bracket.

          The policy problem you mention can partly be dealt with by phasing out rent control around tenants benefiting from rent control for ten years or more. They are now most likely middle-aged, and high-income ones can easily re-rent and re-buy. Ironically, they may then come to support the easing of rent control, as they realize how insane the prices have become.

      • Posted by moto mayhem

        id love to see an update on that. i bet its would be significantly more $100K + earning people in rent control now

  3. Posted by Fedup Daughter of Immigrant Owner

    My mom is a 72-year-old Asian immigrant who still works every day in her own Richmond small business, and we are thinking about closing down her one rental building with immigrants and students in it. We just can’t do this any more. $25k a year after repairs and taxes. If tenants make up fraudulent issues, then we may lose two or three years’ income to buy them out, not to mention lawyer costs. This has happened to other minority owners we know.

    Rent control and unfair rent board policies, by putting the onus of burdensome laws on non-English speakers and minority owners who are often moderate-income, force small landlords like ourselves to exit the rental market. We would love to be able to continue to provide affordable housing, and one estimate shows that we provide 1/3 of affordable housing in SF. But laws like these are making it impossible.

    I am no rabid conservative. I’m an Asian woman and 1.5-generation immigrant myself. I’m a Bay Area native, lifelong democrat and nonprofit worker. I grew up in San Mateo and went to grad school at Berkeley. I cannot believe how insanely lopsided the laws have become.

    If you want to make more housing available, allow landlords raise the rent 8% a year, means-test renters, and tax real estate flippers to provide subsidies for housing. Can anyone think of the price of any one item in the Bay Area that has not risen more than 1.2%, the allowable level by the Rent Board, over the years since the Great Recession?

    Don’t tell us that we are fat cats who are sitting on a goldmine. That would only be true if we sell. But we didn’t want to sell. My mom used to cook for her tenants, to help them look for work, and to refer them to services. Now I’ve told her not to talk to tenants any more, for fear of lawsuits. If we do end up selling, some likely rich white buyer or rich Chinese buyer who may well be bearing the fruit of their family’s corruption, will benefit. You can say we’d have made a windfall. But then why not tax that windfall across the board? We’d be happy to pay up then. Why toss the uncertainty, fear and high transactional cost on the most vulnerable class of owners? Is this my beloved city’s radiant vision of social justice, to shake an elderly Asian woman to her core so that she almost ran over a child on her way to work the other day?

    White educated owners got the memo quite a while back. My poor mom and people like her got it too late. Now she’d have to pay tens of thousands — more than she made in rent in some tenants’ cases – to get them out, before they hear about all the fraudulent habitability claims and gimmicks that can get them buyouts. Another four units of affordable housing gone (she split a single family home and rented out the rooms.) Such are the consequences of these progressive policies.

    • Posted by Amewsed

      Your mom should consider selling her rental property and let the new buyers do with the property as they wish, especially since she doesn’t have the stomach for hard $$$$ negotiation tactics with the tenants’ attorneys. For a rent-controlled building, the property value has already been diminished by several hundreds of thousands of dollars. You can either recoup this amount by emptying the building yourself (with an attorney) or be prepared to accept a reduced sale price for the new buyer to do it.

      This isn’t a recent problem but the result of decades long Democratic progressive politics where the effects of unintended consequences are never examined or thought out.

    • Posted by Lori

      Fedup, you’re incorrect about the allowable rent increase amount. It varies every year. From 1982-1992, it was 4%. It has decreased since then, but it is not a fixed 1.2% annually.

    • Posted by Sabbie

      Wow, this is one of the most twisted rants I’ve ever seen on this website, and the definition of entitlement. Not only are you fat cats sitting on a goldmine, but you want to have your cake and eat it too.

      The fact is that investors are still falling all over each other in bidding wars to get their hands on rent controlled San Francisco real estate, which tells us that maybe you are taking the wrong attitude towards it. Another fact is that there are plenty of properties here in San Francisco that do not fall under rent control, as well as many nearby communities that do not impose rent control; you could always perform a 1031 exchange if you find it that intolerable.

      And don’t tell me you didn’t know what you were getting into, unless you bought before 1978, really not that many new rent control laws have been added over the years. You locked in your monthly payment for 30 years thanks to the taxpayer backed 30 year mortgage, you locked in your property tax thanks to Prop 13, you can pass through improvements, you can write off expenses. The State has already given you plenty of advantages over the lowly renter.

      Stop trying to pass yourself off as progressive when you are clearly motivated by pure greed.

      • I am sure you mean well. So please kindly take a look at what I am saying here. Labels will not get us far here.

        As for suggesting that we do a 1031 exchange, may I point out that my mom and I are also part of San Francisco’s lovely communal fabric? That our pearl tea, eateries, Chinese antiques and Korean DVDs enrich the city’s cultural life? That we had over the years helped Iraqi musicians and Chinese chefs stay in the city? That we shouldn’t be forced to choose, just like the Salvadorean janitor or the homeless artist, to move out of town because of hot money we never asked for? Why don’t we have a right to stay? How are we acting entitled? Why aren’t we seen as part of the solution but part of the problem? Why are we letting the class warfare rhetoric divide us?

        Given the outrageous rents in SF listings, of course the public would be against an 8% raise. I was myself until this happened to my family. What we don’t realize is that some loosening would increase supply and lower the rents. The greed of astronomical rents you mention comes at least partly from landlords who’d seen their costs rise over 8 or 15 years or more. Knowing that there is virtually no way to part ways from a tenant, the next time they rent out, they attempt to recover the money they had lost. Make it 6% or whatever, pick a number, pick your housing supply – we’d be happy so long as there is some positive change.

        The notorious urban blight in New York City came in part from rent control policies, including vacancy control. By 1994, 75% of units in NYC were out of rent control. The city became more affordable; a friend of mine, a filmmaker and artist, moved there from SF during that time.

        No, we did not know what we were getting into, because the city changes its rent laws five or six times a year. Pro-immigrant advocates are dead right. It’s hard for small-time folks busy with work and child-rearing to track policy changes written in legalese. Hard for my my mom, a long-time widow with a high-school education and minimum English, to send out late-rent notices and not run afoul of the law. Lawyer fees are now $500 an hour. Tenants can allege malicious intent where only language and cultural barriers are to blame. In one lawsuit I heard about, the free SFTU lawyer threw out more than 100 habitability claims, when the landlord has not had prior violations. The court combed through each one anyway. The legal bill came to more than $80,000.

        If we want to maintain that it is compatible with social justice to make vulnerable populations bear more than their portion of a policy fallout, so be it. But then, maybe let us do so without the moral jouissance of having punished the strong and favored the weak. The spectacle of Asian grandmas subsidizing white middle-age high-tech managers with pied-a-terres is not a particularly appetizing sight. Anyone who doubt the reporting on this should call for the city to conduct an income assessment of rent-controlled tenancies, which has not been done since 2000. Let the facts come out.

        • Posted by Sabbie

          At this point, it’s hard to tell if this is satire or not. You want laissez faire free market on one hand but special consideration for cultural enrichment on the other hand. You want every possible privilege without a single one of the responsibilities.

          What do you mean by “don’t we have the right to stay”? You have every right to stay- you can keep collecting rent and appreciation, you can sell or exchange this building if you don’t like it, you can OMI or Ellis to get the tenants out, you could even hire a property manager to handle the headaches for you. But you don’t want to do any of these, because you don’t want to give up some sort of financial benefit that you are not being honest with us about. You might get some sympathy here if you were forthcoming about the situation. But it’s obvious that you’re just manipulating socially progressive buzzwords to get support for your agenda that is garden variety greed.

          • Posted by that_dude

            Sabbie, you’re quite delusional with your comment about “The fact is that investors are still falling all over each other in bidding wars to get their hands on rent controlled San Francisco real estate, which tells us that maybe you are taking the wrong attitude towards it.” is completely inaccurate.

            Look at what buildings go for: $5.3 mill for 8 units that generate a meager $129,195/year. If this was market rate, these units would all go for at least a $1 mill each, substantially more than the asking price.

            No landlords/investors are falling all over each other to make $129k after headaches and laws on $5.3 million investment. Give me a break.

          • Posted by Sabbie

            They’re falling over each other if the price is right. I never said rent control does not affect price. That said, show me a rent controlled property that has not experienced massive appreciation over the past couple of decades, even the ones with protected tenants paying ridiculously low rents. Every landlord knows that it’s a gamble whenever you accept a new tenant, myself included. For San Francisco rent control properties, that gamble is much greater, but smart investors know they are compensated for this higher risk with higher reward in terms of appreciation, that’s why they still buy them.

          • Posted by SocketSite

            More to the point and counter to the rebuttal for which it was meant, the 2.61% CAP rate at which the eight-unit building has been priced – which is around a quarter to a third of the average return demanded by investors to justify buying an investment property in the US – actually supports your argument as to the appetite for rent-controlled properties in San Francisco.

    • Posted by Jeremy Harrison

      Your supervisor and your mayor don’t care a whit about your mother. She is one vote in a city with 65% of the electorate being renters. The politicians only care about themselves.

      I don’t care HOW many “virtue signals” you hit – be female, minority, elderly, Democrat, “progressive”, whatever – if you’re a rental property owner, you’re nothing but a political football to them. They laugh at your mother as they turn and look for the next highest office to run for.

      • You’re right. The politicians are talking one thing and doing another. I have been away for years, and had no idea this has been happening to my hometown.

        Our communities are for the first time mobilizing. People who are terrified of going to a march, the trauma of political campaigns and government shootings fresh on their minds, are now registering to vote. We have to at least get heard.

    • Posted by bachman_erlich_overdrive

      It sounds like your mother’s landlording situation is causing her some grief. Dug a little bit of a hole by breaking the house up into multiple rooms to rent. If there’s only one kitchen, seems like it’s still a SFR. You should offer to move in and do an OMI. Live there for three years or whatever. Or just sell it to one of us white devils to resolve it for you.

      Buy munis and be happy. Is she hoping to own it when she dies so you get a stepped up basis in cost? That’d really be sad. Help your mother by encouraging her to sell.

    • Posted by Hola SF

      Tell your mom to Ellis them all out of there. There is no point in proving housing in SF any more. Always keep an arm length w/ tenants.

      All the developers want all us mom+pop LL’s out, and the BOS allows it. It’s really the developers that give the City $$$$, and they wipe out the mom + pops. It’s disgusting. A warning to property owners of any kind of property in the City.

      SF will be run by corporations. This is such a screwed up city.

      I think all small property owners should be able to sue the City for having to put up w/ this endless crap.

    • Posted by BobN

      “her one rental building with immigrants and students in it

      Uh, how many buildings does she own? Don’t you expect pretty quick turnover with the students?

      It sounds like your complaint, as a provider of affordable housing, is that you’d prefer to provide unaffordable housing. 8%/yr gets you there pretty quickly. It sounds like your mom’s mistake was to buy an older home a long time ago. You’ll have to bite the bullet and makes tons of money instead of TONS of money.

      • She owns one rental building, meant to provide her with supplemental retirement income when she retires.

        Please see rent control easing analysis above. It can be means-tested, loosened after 10 years of RC, etc. Not across the board and not immediate. Moderation is key, especially since knee-jerk unilateral reaction has gotten us to this place to begin with.

  4. Posted by two beers

    If landlords are going to go Galt – take their ball and go home – with rent control, perhaps it’s time to implement western European-style vacancy control?

    • Posted by folderpete

      Yes! So new, high-income tenants can find a great deal! (you think some service worker and her family will ‘qualify’? They could get fired, have domestic trouble, have general bad habits. Better off renting to someone who’s educated, works a lot, and won’t be home much, and will probably move on in a few years.

      Course the bldg will most likely deteriorate, with no incentive for maintainance.

      But I’m curious if you can point to locales where this regime really works.

  5. Posted by Amewsed

    As for the declaration under the penalty of perjury, I don’t see this requirement as placing an undue burden on owners. It may actually take away the tenants’ argument for a $$$$ buyout (leveraging their a waiver of any future claims.)

    After taking hundreds of depositions (where they are under oath, under the penalty of perjury,) deponents still outright lie and/or exaggerate their claims. Nothing new there.

    • Posted by Jack

      I’m kind of with you on this. It doesn’t sound like much of a burden, unless I missed something.

      I had to do a buyout on one of my purchases (the place I live in now), and it was pretty annoying, even though I supposedly paid a third of the “going” buyout rate by telling her I was perfectly willing to OMI and was only offering the buyout so I could move in sooner.

      If OMI was more straightforward and idiot proof it would be the route all real owner move ins followed, while in fact many do a buyout!

  6. Posted by Miah

    Housing rental should not be a business, anyway. That is the more fundamental issue.

    • Posted by Mark F.

      Right, the state should provide for all, Comrade. Just like the lovely well kept up housing blocks of the USSR and Cuba. I bet you have a Che Guevara shirt, am I right?

      • Posted by Miah

        Nope. Not at all. I’m not a proponent of prevalent state-run housing. I’m a proponent of more even resource opportunity. The issue is more complex than immediately lumping folks into absolute categories. But your cynicism is noted, a typical characteristic of those who know they have abandoned a more ethical worldview.

        • Have you taken a look at the failures of Communist policies around the world? I am leftist, but that means I am aware of the left’s shameful past of endorsing dictators such as Mao. Even now I hear liberal friends saying that things are not as bad as the American imperialists paint them in Cuba, as food shortages are gone. It never occurred to them that the Cubans want their living standard to be comparable to that of, say, Norway or Argentina. That Cubans would have every right to ask why their government’s human rights violations and economic failure are now held up as shining proof that they are better off than before, therefore as well off as they deserve to be. How is that just? I don’t understand the unconscious and fatal error of siding with third-world oppressors just to get back at the oppressor here in America.

          • Posted by Brahma (incensed renter)

            What in the heck did the comment you are responding to say about Communist policies? Mark F. shamelessly red baited Miah and you just assumed, regardless of context, that Miah is somehow endorsing dictators such as Mao? Because Mark F suggested it?

            And btw, the literacy rate was as low as 60 percent in Cuba before the revolution, and afterwards it’s one of the highest in the world at over 95%. I’m sure you and Mark will read that fact and just assume that means I am defending all the excesses of the Castro regime and that somehow I am trying to “get back at the oppressor here in America” whatever that means, if it even means anything.

          • Brahma, please look over what happened in China and Cambodia to figure out how much faith to place in the 95% literacy rate claim. The Chinese government claims that no one died in Tiananmen. That pollution is no worse there than elsewhere. And that they will honor the climate change agreement, even as they lock up environmental activists. They also told the world that they provided healthcare to the rural area during the Cultural Revolution. It turned out the barefoot doctors didn’t have even the most basic medical training or supplies. When there is no free press and no rule of law, the government can make any claim it wishes.

            It’s understandable that you, as a pure-hearted idealist who grew up in a democracy, fail to see the wholesale deception behind such claims. But then, please understand how they sound to the people affected. No one here would dare to claim that, for example, because HItler ramped up the industrial production of Nazi Germany, that postwar Germans ought to appreciate what he did. Why would we do differently elsewhere?

  7. Posted by wapu

    How about they do something to put teeth behind preventing tenants from illegally overcharging subtenants and living in their apartment for free or making a profit? That’s a lot more pervasive than this.

    • Posted by folderpete

      No data. Yeah, happened to my niece. Know a guy who brags about it (like he’s “earning” money!) And then, the Master Tenant can evict roommates where an owner subletting can not!

      Not quite sure what the argument is for not keeping track of actual rents and to whom; if just for statistical purposes. Of course, its not really any business of the govmint anyway, but … I’d be curious to know.

    • Posted by folderpete

      @BRahma – Cuba had always one of the highest literacy rates in LA, before and now, according to OxLAD (btw, it was 78% in 1950, not 60%). And most countries in the world have increased their literacy rates, although many in Africa are still painfully low.

  8. Posted by LBD

    I don’t think a local municipality can extend the statute of limitations, unless they are strictly speaking of a local administrative claim. Has the City Attorney issued an opinion as to this proposed ordinance?

    The law used to require that the unit be offered back to the evicted tenant at the old rent if the LL moved out after an OMI eviction. Is this still the case?

  9. Posted by SF'er

    Be sure to Ellis then sell.
    Easier sale w/ tenants gone.
    Good luck to you & your mom.

  10. Posted by dB

    Strange that so many commenters (soccermom leading the charge) discuss this as though it is any sort of change to rules and regulations.

    The OMI rules have been on the books for ages. This is simply an enforcement/accountability measure to prevent dishonest moves on the part of the landlord, for the three years following the OMI. It changes nothing, unless lying was part of the landlord’s business plan to begin with…

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