Dear MarketWatch,
I’ve inherited a house in San Francisco from my aunt.
My aunt had rented her basement to an older couple (probably illegally) for a few years for below market rates. I don’t believe there was a lease, and it is probably against the building code to have tenants in the basement. The couple’s family is living nearby.
I really prefer not to continue with the leasehold because I live out-of-state, and because of the tough rental laws in San Francisco.
What should I do if I don’t want to be a landlord? Can I just give them notice to terminate the lease? Do I have rights to evict them? (I am not planning to do that, but just in case.) Or do I have to sell the property to terminate the leasehold?
I heard that California has very strong protection for tenants and eviction is difficult. The tenants are an older couple but they are healthy.
I am afraid, if I accept rent from them, that’s an acknowledgment of our landlord-tenant relationship. Would selling the property be a way to get them out? Or should I just ask them to leave, and start eviction proceedings if they refuse?
I really need some advice. Could you please help?
Signed,
Puzzled
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Dear Puzzled,
Before you make a move, consider whether you want to continue owning the home or to sell it since you said you don’t want to be a landlord.
I’d say step one is to contact the residents and ask them, politely, if they could move out of the unit since the ownership of the home had changed hands. Lay the situation out to them – having rented below market rates, you’d like to terminate that pre-existing relationship, and you’re also not keen on managing a rental when you’re out of state.
Also be clear and firm and tell them you don’t want to rent the unit at all, and that you plan to sell (or any other plans you may have).
You have to be clear about your intention. Because if you want to clear the house of tenants before you sell the home, then you have a tough road ahead of you.
You can raise the rent to market rate and then see if they’re able to pay, which would be a hard way of possibly pushing them out. They would either pay, or not be able to pay and be late on rent, or move out.
You can also consider selling it with the tenants. Real estate investors may be interested in buying this property since it’s in San Francisco. Some may be fine with being a landlord and dealing with the mess of the tenants not paying market rate.
But if you’re dead set on having the tenants leave, step two would be to contact a lawyer to get a sense of how the eviction process works.
Scott Freedman, an attorney at San Francisco-based law firm Zacks, Freedman & Patterson, told MarketWatch that since there is no lease, the unit is considered “illegal” under San Francisco law.
And “even if a rental unit is ‘illegal’ in San Francisco, it is treated as a legal unit for purposes of whether, how and on what terms a landlord can ask a tenant to vacate the unit,” he explained.
That means a landlord needs at least one reason from a list of “Just Cause” reasons to ask the tenant to leave. You also need to pay for relocation expenses. And generally, you also have to give these people a written notice, 30 or 60 days in advance.
It’s not something simple that you can do yourself (unless you’re a lawyer.)
Freedman said there may be one or more “Just Causes” applicable in your situation. But he also stressed that the list doesn’t include asking a tenant to leave “simply because a landlord does not want to rent a particular unit any longer.”
And assuming these people have paid rent to your aunt on time at the rate she set, you may not be able to just ignore the rent payments they make and pretend they didn’t pay, since there is a history of transactions that reveal a relationship.
But these payments also put you at risk, Freedman said. “It is also technically illegal to collect rent for [illegal units], and there can be difficulty with obtaining proper insurance for the rental of an illegal unit,” he added.
He recommended you reach out to the San Francisco Rent Board to get information about Just Causes and illegal units.
Do also consult an attorney. Freedman agrees with you that tenant protections are strong in SF, “and the consequences for even innocent mistakes can be significant.”
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