Costa Hawkins v. Section 1.21

Posted by wasserman

I have an 80-year-old tenant that I have not seen in six months, though he continues to send rent checks postmarked from outside SF. The phone has been disconnected and the locks have been changed. I have posted a note on the door requesting a new set. The note was removed one month later but I got no response from the tenant. What should I do?

First, hire a private investigator to research his whereabouts. Second, ask a landlord-tenant attorney to help you navigate the ways to raise rent on this person if he is found to be living elsewhere. Rent on a unit may be increased beyond rent control limitations under two laws if the last original tenant no longer uses the apartment as a primary residence.

The first possible mechanism to consider, the Costa-Hawkins Rental Housing Act, is a state law that permits an owner to re-establish rent beyond local restrictions if the last tenant who is a party to the rental agreement with the landlord no longer “permanently resides” in the rental unit and there is a lawful subtenant in possession. Under Costa-Hawkins, a landlord need not (but may) petition the Rent Board for approval. Instead, the rent increase is imposed with proper 30-day (for a raise that is 10% or less) or 60-day (for an increase beyond 10%) notification and becomes effective unless the tenant files a petition with the Rent Board challenging the assertion that she no longer resides at the apartment. If a petition is filed, the Rent Board will conduct a hearing to determine whether or not the increase stands. Some landlord attorneys also believe that a determination of whether a Costa-Hawkins increase is allowed may be heard in superior court through what is known as a declaratory relief action, although some judges will force the dispute back to the Rent Board. The term “permanently reside” is not defined in the statute and has yet to be explained by the appellate courts, so there is much debate and confusion as to what it means. For example, the Rent Board believes that a tenant may in some circumstances have more than one permanent place of residency, whereas most landlord attorneys argue for a narrower interpretation that would relegate each person to one main place of abode. In sum, Costa-Hawkins is typically used when the landlord believes that the last tenant on the lease has departed and there remain lawful subtenants, meaning occupants that were living in the unit with either the actual or passive consent of management.

The second vehicle is known as the “Section 1.21” petition, which is named after a provision in the Rent Board’s Rules and Regulations. Section 1.21 allows for an unlimited rent increase when the landlord can show that the tenant no longer uses the apartment as his “principal place” of residency. Unlike Costa-Hawkins, Section 1.21 succeeds only if there are no lawful subtenants living in the unit. Indeed, Section 1.21 is used when the landlord believes that the unit is empty or used only occasionally by the tenant, or if the people now actually living there are legitimately unknown by the landlord. Also, unlike Costa-Hawkins, the landlord must file a petition for determination with the Rent Board before serving the rent increase notice. While the rent increase may be served before an actual hearing, a hearing is required. In addition, unlike Costa-Hawkins, the Rent Board has defined what constitutes someone’s principal place of occupancy. In sum, there are a number of factors that the administrative law judge will consider at the hearing such as where the tenant files taxes, registers vehicles, procures insurance, votes, and comes back to absent excused absences for military service, hospitalization, study engagements, and the like.

For both tools, you need a good private investigator in the event the rent increase is challenged. Obtain your evidence before issuing the rent increase notice. Unless you are in superior court (and you probably will not be), you have no ability to compel the tenant to produce evidence, so you need to come up with the proof that the tenant does not really live in the unit. The best way to tell this story is to ascertain where the tenant is actually residing, so good preparation is essential.

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