Here are some scenarios that concern real estate professionals in Marin:
A NextDoor exchange 3/2023
(Housing Provider) Christopher, I don’t think many people on these threads are against rent control. They are against the extreme rules in the just cause. Those laws could bankrupt a vulnerable old man on a fixed income. To pay the lawyers fees, relocation fees and loss of rent could push someone to selling their home. Is that reasonable and fair? These ordnances need to be amended. They should only apply to the apartments. Keep the rent control but rework the onerous extreme stuff like relocation fees, subletting without owner approval, allowing someone after 10 years to move back, (which puts a lien on someone’s property and makes it nearly impossible to sell), and allowing a caregiver protected tenant status which will absolutely destroy an elderly persons ability to have help in their homes. These laws will hurt tenants because units will be removed from the market and owners will discriminate against the protected tenant class, and No you will never be able to prove otherwise. Owners will sell and very very wealthy buyers from SF will move in and drive prices higher. It will backfire. That much is certain. All that will be left to rent in Fairfax will be an apartment on Drake. The cute cottages and duplexes will vanish. Christopher this is my business . I am a landlord in SF, Berkeley and Oakland. I know first hand how this will play out. I’ve been in this business for 30 years. I live in Fairfax and love my neighbors. They are not professionals. Some of them can hardly use a computer or smart phone. These ordinances will bury them in debt. To survive as a landlord in rent controlled cities you have to be very intelligent, track the law carefully, have an enormous savings account dedicated to fighting evictions, and watch out for professional tenants who abuse these laws to not pay rent and sue landlords. I’ve had 5 of those. They move in and then stop paying rent , get a free lawyer from Berkeley Rent Board, then accuse you of mold and not repairing stuff which is never true. These cases can go to court and the lawyers are all friends. Total racket. The lawyers suggest every time to settle out of court. Every single case cost me around 20 grand. Loss of rent for about 8 months, lawyer fees and then more often than not the tenants trash the unit. Christopher this is real. This exists in SF, Oakland, Santa Monica and Berkeley. This sort of stuff will bankrupt every single mom and pop landlord in Fairfax. These are not super wealthy people. This is the WRONG town to do this in. I am a shy and private person in my own town and don’t share easily but this topic infuriates me because I know what harm it will cause people. I can write an entire book on the racket of Rent control and Berkeley rent board. Rent control protects the worse of people. I’ve had severe domestic abusers, drug dealers, full on gangsters protected. Impossible to get them to move. Truly terrible people. Other tenants pleaded with me to do something. Nothing I could do. You are opening this can of worms in Fairfax. Most renters are just fine. Love 99 percent of mine and they love me back. But it just takes one!!! Just one..
From Christopher (DSA): To be completely frank, none of that really moves me, especially coming from somebody that owns multiple properties across the bay. I’m going to stick to advocating for the people that don’t have big real estate lobbying for them.
(other commenter)
Christopher, WOW, your lack of understanding and empathy is truly frightening. I am so glad that I see people here advocating for protection of the mom & pop housing providers that don’t have a national political organization helping them. By the way, it’s these folks that understand what it means to both develop good relations with their tenants and run a fair and reasonable business. Maybe if you are as focused and diligent as them, you’ll experience something akin to their pride in their accomplishment some day.
2/13/23: A realtor emailed another realtor in regards to a recent sale of a duplex in Fairfax. Duplexes built in the 60s-90s are a staple of Fairfax housing. Here is the disturbing experience surrounding the sale of the duplex:
We had quite a bit of interest but, ultimately, it was pretty apparent that the new rent control ordinances deterred a ton of Buyers. Of those that were aware of the ordinance, about half just wouldn’t touch the property and the other half were considering it but only at a discounted price to account for the inability to even raise the rents to keep pace with the inevitable maintenance. I had several young first-time homebuyers that caught wind of the ordinance and didn’t want to deal with the complexities and unknowns, a couple other investors that couldn’t make the numbers work, and other owner-occupiers that would ultimately displace the Tenant to utilize the rental space. We ended up dropping the price and eventually found someone. It’s hard to quantify exactly, but that was my first-hand experience of the ordinance negatively effecting values. It’s a no-brainer – it’s going to continue to put a major damper on demand, especially for these older small multi-family properties that are all over Fairfax. Hope that sheds some light.
We are hearing about other terrible situations that are caused by Rent Control in Marin. On 2/5/23, a retired FF Duplex owner sent this message to the FF Town Council:
Dear Fairfax Town Council,
I live in (just out of FF. ed). I have owned a duplex in Fairfax for over 30 years. During this time, I have been a good and fair landlord. I’ve always supported rent control, charged below market rates for the 2 units, and kept the property up. I’m not a rich and greedy landlord. I worked hard to buy and maintain the property for 30 years. I’ve been a working man all of my life.
I want you to know how the “Just Cause Evictions” legislation passed in November has effected me personally. This is my story. I made the decision in October 2022 to sell the duplex in Fairfax, due to getting older and finding it harder and harder to maintain the property. Selling the duplex has always been part of my retirement plan. I don’t have a pension.
In November, my real estate agent told me of the ordinance and it’s restrictions. I was shocked that this was passed without me ever hearing anything about it. My real estate agent advised having the house empty before putting it on the market, as it would speed the sale. She advised hiring a lawyer to draw up “buyout” plans. Again, I was shocked at having to do this. At this point, the tenants are out and I have paid $39,000+ to the tenants and lawyer . One tenant demanded cash and tried to “blackmail” me (my lawyer’s words) by threatening to stay in the unit for a year. Can they do that?
I feel abused emotionally and financially. So much anxiety. First, a lot of anger. Not sleeping well. It seems like a kind of “Elder Abuse”. This is not how I visualized my retirement.
I feel like the Town of Fairfax has stolen $39,000+ from me, money I counted on for my income in retirement; money I would still have if the Town Council had not sneaked this legislation thru.
Now the 2 units are vacant as I prepare the duplex for sale. I’m concerned now about selling it.
Is anyone going to buy in Fairfax now? Would anyone want to go thru what I just did? I think I will get a much lower price for the property now than I would have gotten before this new ordinance was passed.
My wife and I attended the Town Council meeting on 2/1 but ran out of energy before you got to this agenda item. I feel that it is important for you to know my thoughts and feelings about this.
Sincerely,
(FF Duplex Owner)
Scenarios: Possible situations that may be of concern as related by a real estate professional.
1/14/23
This scenario came from Brian S in Fairfax via NextDoor. Fairfax just had a mudslide on Olema Road. (Just outside the Town of FF Jurisdiction, so luckily, the Rent Control ordinances do not apply). It would be interesting how that will play out. I think about 19 people were displaced and many pets. Is there anything in new law about disasters? What I had read: landlord is responsible for putting tenants in other housing, hotel when displaced at: ● Hotel or motel accommodations: $168.15 per household per DAY; ● Meal expenses: $33.85 per occupant; ● Laundry: $1.12 per household; ● Pet accommodation: $32.73 per cat and $58.69 per dog. There is no adjustment as per what the tenant was paying for rent! So, If they are displaced the property owner would pay (if 4 tenants, two pets per month. 168.15 x 30 = $5044.50 motel 33.85 x 4 x30 = $4062.00 meals 58.69 x 2 x30 = $3521.40 pets That’s $12,628.00 per month! (Per unit) That’s under new law that the landlord is required to pay tenants. Do math for a 3-4 month project. Average rent around $3000. per month. Can be as low as $1000. Now landlord will have to to put and additional $50,000. to 500,00. ?? to structure and interior remodel. It’s also possible a homeowner could be displaced and have living expenses. It could be months to repair these apartments on Olema Road, also thousands to stabilize the hillside and waiting until rains are over, permits, engineering, construction.
So instead of Fairfax Town council just requiring tenants have renters insurance property owners are…screwed.
(ED.) The above represent a real world effect of these ordinances. In a storm, if a tree falls on your unit, destroys your roof and part of the structure, along with all of those costs, you will be paying $12,628.00 per month for the displacement of your tenants. Since your are remodeling more than 250 sqft, you may have to install electric appliances, wait for PGE to upgrade your electricity (extra month?), and be out the current month’s rent.
Other scenarios:
1. “Think about it, if you want to take more than a year off and travel to Europe or Southeast Asia, work remote and rent your house out…when you come back you may be faced with the inability to move back into your own house and be subject to extended removal process, including legal fees and 2 months of relocation fees for the tenants and their dog. You could opt for ‘taking your home off the rental market’, (Ellis Act) but then you could not re-rent it within 10 years, without being subject to fines and offering it first to that tenant from 10 years previous, at the original price, and requiring the new owner to offer the same, if you sold the house.”
2. “If I rent out the other half of the duplex where I live…a 2BR unit…to two people, those tenants could just go ahead and decide to sublet to two more people without your consent, and then you’d have 4 people living through the next wall…and there’s nothing you could do about it.”
3. And using the above example, if you rented out your 4 bedroom house for your trip to Europe to a couple with two kids, you might come back from Europe and find 8 people living in your house and again nothing you can do about it. And if they moved in their senior mother, who is entitled to one year’s notice, you wouldn’t be able to get your house back for at least a year. And think about all the legal fees you’d have to spend to get that house back plus relocation fees, or you could simply pay them whatever they wanted, to leave.”
4. “When inflation gets back to where it’s historically been, 2%, a housing provider will only be able to raise the rent by 60% of CPI or 1.2%. Think about that…for a $2000 rental, that would be a $24/mo yearly rent increase. And with CPI coming in at 6%, the max even in these hyper-inflationary times would be 3.6%. So the often-referenced 5% that tenants groups say the ‘housing providers should be OK with’ would only be available if inflation were 8.3% or higher…which it’s barely ever been during this current inflationary period”
5. Finally, “given the 1-year notice to terminate the tenancy of a senior tenant, a by-product of all of this will be an increase in the difficulty of seniors finding housing in Fairfax. Whether it’s illegal or not, the cold hard facts are that seniors will face increased housing discrimination in Fairfax, complements of this ordinance.”
6. X-number of housing providers have already pre-emptively given eviction notices to tenants prior to the implementation date.
7. Several housing providers are considering not renting out their spaces because of this added liability. They are concerned about the sub-lease sections and added restrictions re renting to 62+ yo, renting to school district employees or people with kids in school.
Additional scenarios of concern:
- The definition of “Housing Services” includes the tenants “right to have pets”.
- The tenant may petition to have their rent lowered by any amount. One reason would be – “Failure on the part of the Landlord to provide adequate Housing Services, or to comply substantially with applicable state rental housing laws, local housing, health and safety codes, or the Rental Agreement.” This could include non-conforming or un-authorized units. It can also be for any decrease in the maintenance of the property including common areas.
- Tenants can add sub-tenants up to the maximum allowed under the Housing Code. The most conservative interpretation of this is the 2+1 rule – two per bedroom, plus one. Other interpretations would allow for more people. For a 700 sf, 2BR/1BA apartment, this would be five people. Now let’s say they add pets. Let’s say each of the new tenants has their own dog. You may have rented to a couple with no pets, but now have five people with three dogs in a small apartment, and this is only one of your units. This doesn’t touch on the strain on parking.
- As we consider sub-tenants, there seems to be little control over who is allowed as a sub-tenant if they are not one that is responsible for paying rent. When qualifying tenants, it is much more inclusive than just their ability to pay rent. You would normally do a background check and ask for references. What about registered “sex-offenders” or those with a history of abuse or neglect. (See changes to the law section.)
Experiences:
Here are some real estate experiences that were recently told by home owners. They may or may not represent identical situations that Fairfax home owners/landlords may encounter. They may not be ‘typical’, but they do indicate that potential reasons for concern may be valid.
K. in Marin:
My friend who inherited millions was able to rent a pied a terre near union square for extremely low rent while she also enjoyed her huge home that she owned in the peninsula. She held this unit hostage for 20 years at extremely low rents, the owner of the unit/building finally gave up and had to sell the building to the tenants for a song. Berkeley and SF rent control allow tenants to do this, even with rich tenants. Next example: 5 years ago, my neighbor did a rent control eviction on her duplex and a tenant lawyer cold called the recently evicted tenant and together they sued my neighbor (the landlord) for wrongful or bad faith eviction. The lawyer got a warrant to search the landlords home, even looking into her underwear drawer to prove that she was not really getting a divorce as she claimed and therefore was not really doing an owner move -in. The tenant lawyer was trying to prove that the husband and wife were still having sex. This cost the landlord (my neighbor) $100,000 – (not including lawyers fees) and the experience unnerved her so, she had a nervous break down. The experience so shook her up that she now is no longer renting her duplex that she was renting for her retirement and that she bought with her own hard earned cash. But it gets worse, 5 years later, a landlord was recently sued for wrongful eviction and the SF courts ruled that landlord had to pay 1 million dollars in damages. So in 5 years it has gone from 100K to one million . Here is my fun story: I had let my aupair live in our downstairs room as a favor, her fiance soon joined her and I was all of a sudden under rent control. When I moved back to San Francisco, I wanted my house back and I could not afford to get her out. My boys were not able to return to their beloved school. Now days to get someone out can cost including lawyers fees $150,000. That is assuming you fall under the just cause evictions. There is the Ellis Act which costs even more, but you then cannot rent out your house for ten years, it is outrageous.
Buyout Story – SF 12/22
Landlord pays $470,000 for ‘buyout’ – Chronicle
If you have had recent experiences that are relevant to the current rental climate, please email us and we will post them if appropriate.
If you want to support our cause to educate and take action around the issues of housing and extra rent control in Fairfax and Marin, please contribute to the Marin Residents PAC.
Thank you.