Protecting Your Tenancy from Rent Increases

If you have rent control your landlord can’t give you a rent increase above two or three percent a year right? Not exactly. Enter Rent Board Rules and Regulations Section 1.21 . Section 1.21 allows a landlord to raise a tenant’s rent to market rate where the tenant no longer uses their home as their “principle place of residence.” Our office regularly represents tenants in rent increase disputes at the Rent Board.

What is a 1.21 Petition?

Section 1.21 allows a landlord to issue an unlimited rent increase once a tenant is no longer “in occupancy.” To be “in occupancy” means that the unit must be is the tenant’s your principal place of residence. This law is meant to prevent tenants from moving away but hanging onto a cheap rent-controlled pied-a-terre.

If a landlord thinks for whatever reason that they have evidence a tenant doesn’t  live in their home, the landlord can file a 1.21 Petition with the San Francisco Rent Board in order to raise the rent on an existing tenant to market rate.

Landlords don’t want to miss out on opportunities to charge the highest rent possible on a unit that tenant does not even live in. Unfortunately, this law can be used as a weapon. We see this most often when a building has undergone a change in ownership. New owners will regularly perform an “audit“ of their building to see if there are any tenants who may be vulnerable to a rent increase.

How does a landlord issue a 1.21 rent increase?

In order to issue a rent increase under 1.21, the landlord must file a petition with the San Francisco Rent Board. The Rent Board then schedules a hearing.  At the hearing, an administrative judge will listen to both sides’ arguments and review the evidence presented. Because these petitions are filed by the landlord, the landlord has the burden of proving the property is not a tenant’s primary place of residence. Note that 1.21 petitions are different than a rent increase pursuant to Costa Hawkins

The Rent Board determines a tenant’s primary residence based on a number of factors, including:

  • The address listed on any motor vehicle registration, driver’s license, voter registration, or any other public agency, including Federal, State, and local taxing authorities;
  • Whether utilities are billed to and paid by the tenant at the subject premises;
  • Where the tenant stores their personal possessions;
  • If the tenant has taken a homeowner’s tax exemption on a different property;
  • Where the tenant normally returns as their home, exclusive of military service, hospitalization, vacation, family emergency, travel necessitated by employment or education, or other reasonable temporary periods of absence; and/or
  • Credible testimony from individuals with personal knowledge or other credible evidence that the tenant actually occupies the rental unit as their principal place of residence.

If the judge rules in the landlord’s favor, the landlord can impose the rent increase. Tenants do not have to pay the increased rent amount until the landlord has prevailed at the Rent Board. However, in cases where the landlord does prevail, the tenant is liable for that increase going back to the date it was first issued. (That is, if your landlord issued a $200 rent increase starting in September, and your case was tied up at the Rent Board until February, you might owe an extra $1,200, to make up for those six months that your landlord didn’t get the $200 increase.) Because of this, tenants who are fighting 1.21 rent increases should try to sock away money in case they end up losing their case and need to pay up.

How Can You Avoid This Situation?

Being “in occupancy” doesn’t mean that you have to sleep in your apartment 365 days a  year. It doesn’t mean you can’t travel, and it doesn’t even necessarily mean you have to sleep in your apartment the majority of nights. It simply means that your apartment is your “usual place of return.” In other words, when you’re not traveling for vacation or family matters, or staying elsewhere as required by hospitalization, school, or work (or military service, jail, or prison), you generally end up back at your apartment. That being said, there are a number of factors that can be useful in showing the Rent Board that your apartment is your primary residence.

  • You are registered to vote at the unit’s address.
  • Your driver’s license and car registration show the unit’s address.
  • You ONLY receive mail at the unit, including bank statements and pay stubs. (Make copies of any mail you’ve received recently.)
  • The unit’s utilities are in your name, and you’re the one who pays for them. Also, the utility company mails the bills to the unit.
  • Your personal belongings are stored at the unit. (You can submit pictures of the clothes hanging in your closet, your sleeping area, and your kitchen or food storage area as evidence.)
  • Third-party witnesses say that you live in the unit. (You might ask friends, co-workers, or neighbors to sign simple statements testifying that they’ve visited you in your home, or in the case of neighbors, seen you coming and going in the building.)

If you’ve recently had to travel due to school, work, or family issues, you might submit plane tickets, hotel receipts, or affidavits from supervisors describing the nature of the travel.

What evidence can sink your case?

Landlords often hire private investigators who can run detailed background checks on tenants. Beware that landlords will be able to see if a tenant owns property, or is registered to vote elsewhere.  Oftentimes, a background check is all a landlord will do before they fire off a rent increase notice. Sometimes, however, private investigators will stake out an apartment building, take photos of residents coming and going, and interview neighbors.

If a tenant has sublet their place to a friend or third party, doesn’t pay a portion of the rent, or registers at a different address, chances are that a landlord will find out. 

If a tenant owns property elsewhere, a landlord will likely dig up those records. It’s not against the law to own  an out-of-town vacation home or rental property. However, many homebuyers unthinkingly take a homeowner’s tax exemption on that property (which involves certifying that you live full-time at the property you own). In our experience, this is one of the worst choices a tenant can make. If the primary occupant of a rent-controlled apartment is receiving a tax break on a different property meant for homeowners, it can be hard to convince a judge that the tenant is not playing fast and loose with the rules.

Even if a tenant has good explanations for why they changed their mailing address, moved items elsewhere, or registered a car elsewhere, these are hurdles that a tenant will have to overcome.

By knowing what the Rent Board will be looking at to determine a tenant’s principle place of residence live, tenants can (hopefully) avoid finding themselves having to fight to maintain their rent control.