San Francisco's deadline for its rent registry has passed.
Laggards should know this applies to all residential properties and includes illegal units.
My, time is flying by at breakneck speed. It seems not so long ago we were talking about New Year resolutions for landlords and property managers. Now well into 2023, we will soon be bathed in the golden light of longer, warmer days, decked with pretty blooms and blossoms, and the sweet scent of jasmine filling the air.
We’ll also have to peel open the books and share reams of information with the Rent Board if we haven’t done so already, and we suspect that there are many in our community who have not bothered.
Christina Varner, the Executive Director of the Rent Board, issued a statement on February 1 that up until that date, only 12,000 units have been brought up to compliance, representing less than 5% of residential units in the city. We suspect that there have been a great number of property owners who have gotten with the program since then, and there will be laggards who will register after the March 1 deadline passes.
Re-defining licenses
Real estate brokers/agents need a license. We need a license to practice law. Medical practitioners need a license. The next time you board Boeing 747, rest assured that whoever is at the controls has an Airline Transport Pilot license and they are qualified to fly that plane. For the privilege of getting behind the wheel of a 2,000-pound lethal weapon, you need a driver’s license. We all understand the concept that people with certain responsibilities need to know what they are doing and prove so.
What San Francisco has done is extraordinary by telling landlords that they need a license for the privilege of raising the rent,
Why are so many owners disregarding the city’s edicts?
There are, however, some misled owners under the false impression that the registry only applies to properties subject to San Francisco’s Rent Ordinance. Not true - it applies to all residential properties, including single-family homes and condos.
We can’t blame the lack of participation on technical glitches. Unlike the technological marvel of applying for a slice of the billions of dollars offered in rental assistance funds doled out by the government for COVID-related debt (this process was oftentimes an unmitigated nightmare), it’s not all that difficult to register units.
The lackluster participation, then, can only be explained because there are a sea of owners who just don’t give a hoot, or are perhaps uninspired by a license to raise the rent by 3.6%, the maximum allowable rent for controlled units adjusted for CPI.
We've seen this resistance to registering before with short-term rentals.
Way back when we did a talk with the San Francisco Association of Realtors and one of the topics was the requirement for hosts to register their Airbnb with the city. At the time, there was a hearty laugh in the room when we said that out of the thousands of short-term rentals in the city, only 40-some were registered.
At some point, this became no laughing matter. Airbnb may have won many people's choice awards, but it didn't get many points with the city in charge of its birthplace.
As we pointed out years ago, owners who were hiding their short-term rentals in the shadows got a day of reckoning after there was a new Sheriff in town, Kevin Guy. As the Director of the New Short-Term Rental Administration & Enforcement Enforcement Office, Guy clamped down on the modern-day iteration of the temporary flop. Big time.
Read our earlier article: Half of San Francisco's Airbnb listings are nixed overnight
As a sidebar, the city's insatiable desire for control over short-term rental stock also extended to Intermediate Length Occupancy Units (ILOs), known more popularly as corporate rentals. We discuss it here.
Yes, San Francisco wants to glean information about illegal units, as well.
We recognize the concerns of those of you with “unwarranted”/in-law units and seek to keep these dwellings “under the radar”, a concern epitomized by a recent question we received on social media.
A topic of interest by many of my LinkedIn followers is registering an illegal unit under the new SF registry. Will the Rent Board and other SF agencies use this registry to go after illegal units and force them to do expensive upgrades, pay exorbitant permit fees, etc. It might be better to just not register and lose the annual increases.
For sure, this uneasiness is legitimate, and there are many owners who have faced legal/financial liability by renting out these units, particularly when there is acrimony in the rental relationship.
Owners typically find that when everything is going good, it's great and there is a nice, steady stream of income from the tenant housed in a unit that is not in good graces with the city. Yet when things go bad, it's awful. The landlord who has been collecting rent for a long time may find that legal counsel for the disgruntled tenant seeks the prior rent “disgorged” as part of the litigation strategy.
San Francisco's ordinance is explicit in stating that all rental units be reported and makes no distinction as to whether the unit is up to compliance with applicable building codes.
Should owners encounter friction between tenants in an illegal unit, it is advisable to reach out to Bornstein Law. We certainly can discuss the benefits/risks regarding the SF Rental Registry, especially as it relates to your unwarranted unit(s).
What will the data be used for? We are not conspiracy theorists but are troubled by the possibilities.
The San Franciso Rent Board says that it only wants an overall, birds-eye view of rental housing stock in the City, hence the program is called a "Housing Inventory." Yet they hasten to say that much of the information collected will be public record.
The question is how this vast database can be used by regulators, and whether we believe the Rent Board and sister agencies at their word that this is not a witch hunt to identify and persecute what they consider to be rogue landlords.
Assemblymember Buffy Wicks has been hellbent on establishing a statewide rent registry and failed four times. We have predicted that if sweeping, radical measures are defeated on the state level, tenants' advocates would take the fight to the local level. And that's exactly what happened with rent registries.
Although state bills have failed, it is nonetheless instructive to get a glimpse into the mindset of those advocating for a rent registry. However outdated the webinar with the UCLA Lewis Center, it gives a good window into what the intentions are of policymakers and regulators pushing for rent registries.
Parting thoughts
Rental property owners are already scrutinized, but any landlording mistakes will become more perilous as the government has a direct line of communication with tenants and gains unprecedented access to just about every aspect of an owner's business.
Tether yourself to Bornstein Law to avoid costly mistakes that can be found like a heat-seeking missile by Big Brother.