Reshuffling of owners and tenants during the pandemic is like a game of musical chairs
Throughout the long, dark winter of COVID-19, everyone has had ample time for life reassessment, and for many in the Bay Area, that has meant rethinking where to call home. This has a host of implications and opportunities for landlords.
There are several forces at play. During the height of the pandemic, family members and friends bunked together, and we later saw an "unbundling" of households as stay-at-home orders were lifted and the economy improved. Remote work has been reimagined, with two camps having formed: one that wants to work from home forever and another with cabin fever craving the collaboration and human interaction of the office.
Driven away by costs, some San Franciscans have migrated to the East Bay in the pursuit of cheaper homes and spacious backyards, while others have sought housing off the beaten path in places like Utah, Montana, Idaho, and Texas.
We won't dwell on the numbers or analysis of migration to and from San Francisco - we'll leave that up to the researchers and economists. Suffice it to say that there is a fluid nature of people coming to the city and people leaving the city. This societal shift has been consequential for rental property owners. While many landlords would like to recover possession of the rental unit for their own use - they want to come back home - many of our clients do not even know who is living in the premises.
Let's focus on the law given some “what ifs” in this overview.
The owner wants to move into a rental unit currently occupied by a tenant
The owner’s desire to use the dwelling for their own use, or to move in a close relative, is one of the "just causes" for eviction under San Francisco’s rent stabilization ordinance, so long as the owner move-in (OMI) or relative move-in (RMI) eviction is done “in good faith, with honest intent, and without ulterior reason.” In plain English, this means that the owner or their relatives plan to live there for a long time.
Owner move-in evictions have always been met with distrust and we were recently intrigued to come across this San Francisco Chronicle article about aggrieved tenants suing landlords over OMIs that allegedly defied the condition that property owners or close relatives use the rental unit as their principal place of residence for at least three years.
In reality, most OMIs our office effectuates are for clients who have just sprung for a huge mortgage and are not speculators, but merely want to live in the property they just purchased. Increasingly, we are seeing owners who have moved elsewhere during the pandemic and have a yearning to come back home.
Recovering possession of the rental unit through an OMI/RMI will not come without several procedural requirements and paying the outgoing residents for relocation. Keep in mind that certain vulnerable persons such as seniors, disabled persons, long-term tenants, school workers, and children during the school year will upset the applecart.
Tenants who have moved out but still paying rent
We have encountered situations in which the tenant has sought greener pastures and no longer uses the rental as a “principal place of residence.” In ordinary times, the landlord can argue in front of the San Francisco Rent Board that the rent can be raised under a “1.21 Petition.” The landlord basically states that the tenant may have a place to return to - have a soft place to land - but spends most of their time away from the residence.
If the tenant comes equipped with a California’s driver’s license, voter registration, pays taxes in the state, is paying utilities/insurance, and so forth, it is difficult for the landlord to prevail in a 1.21 hearing on the grounds that the tenant is not maintaining the rental unit as a principal place of residence. The tenant can claim they are away on business or part of a traveling theater.
Enter the pandemic and it is even easier for a tenant to win. The concern we have is if the tenant is no longer occupying the premises but there are signs of activity there, are they subletting the property in violation of the lease?
It may take a bit of personal sleuthing to discover unauthorized occupants, but it is worthwhile to know, as subletting without the owner’s consent is typically a violation of the lease.
Family members or guests who overstay their welcome
As we mentioned in our prelude, there are countless property owners who have welcomed family members and friends into their residence during challenging economic times. Most of them are appreciative of this shelter and transition out, but some of them refuse to leave. When it’s time to go, it’s time to go. If property owners give someone a temporary place to stay and they over warm their welcome, a forcible detainer action can be commenced.
Unlike the traditional unlawful detainer (eviction) action, a forcible detainer is appropriate when no tenancy was established - think temporary guests and squatters who have not signed a lease. The owner is the king or queen of their castle and while they can give a license to occupy the premises, they can revoke that license at any time.
Property owners need to be careful, however, when money is exchanged. Whenever rent is paid, a tenancy inadvertently can be created and what was once considered giving someone a temporary flop now becomes a full-blown rental relationship and the resident is afforded a host of tenant protections.
Tenants who prematurely break the lease and leave like a thief in the night
The "runaway tenant" is certainly not a new phenomenon, but has become a more common occurrence during the pandemic.
We would like to review the lease to see what contingencies are spelled out if the tenant leaves before the term expires.
At any rate, if a landlord believes that the tenant has left, they must follow a carefully choreographed series of steps that culminate in a Notice of Abandonment. As a sidebar, it is not "finder's keepers" when personal possessions are left behind - the landlord must make legally-defined and reasonable efforts to return these items to their rightful owner and if they go unclaimed, then dispose of them according to law.
When the tenant has prematurely broken his or her lease, there are several rules relating to the money owed for the remaining term.