TIPS ON SUBLETTING

I have an ailing, elderly tenant with no nonsubletting clause in his lease. His nephew wants to move in to help him out. Do I have to allow this? If so, how do I make sure he doesn’t stick around at the old rent-controlled rate after the original tenant leaves?

You don’t have to allow it, as there is a stated prohibition against subletting and a nephew does not qualify as a direct family member under the local rent law. (Direct family members are limited to the tenant’s children, parents, grandchildren, grandparents, brother or sister, the spouse or domestic partner of the direct family members, and the spouse or domestic partner of the tenant.) Under a 2005 amendment to the rent law, direct family members may sometimes be able to move in even where there is a prohibition against subletting, but this regulation does not apply here.

However, you may want to help this tenant and allow the nephew to live in the unit. SFAA has spent much time educating the membership on how to allow a sublet without conferring co-tenancy status onto the new occupant. This topic is perhaps the most important facet of the local housing industry, as conferring recognition onto a subtenant may forfeit your ability to raise rent on the unit after the last original occupant vacates. A state law, known as Costa Hawkins, permits an unlimited rent increase when the last original tenant no longer permanently resides in the unit unless the landlord has “waived” this right to raise rent.

So let’s review how waiver is created. You should not place the nephew on the lease. In fact, there should be no subtenancy agreement or contract between you and the nephew whatsoever. The nephew is the elderly tenant’s subtenant, and not a co-tenant, and as such should have no lease with you. Rent cannot be accepted by the nephew. Rent checks must be submitted by the uncle, unless he is formally placed into a conservatorship by the court, in which case the appointed conservator, acting in that capacity, can issue payment. Thirdly, because the nephew is not your tenant, do not run his credit or accept any type of application from him. To that end, no communication of any kind should flow between you and the nephew. Rent increase notices, entry requests and the like remain addressed solely to the uncle. Moreover, any communication from the unit to management must likewise be communicated by the uncle. This means that all non-emergency repair requests, orders for additional key sets, and discourse about the unit must emanate from the uncle to management directly. The nephew is simply the uncle’s subtenant and should have no legal relationship (called “privity”) with you. Finally, when the uncle departs, you must promptly issue a rent increase notification to the nephew if he remains in the apartment.

This manner of behavior may seem rude and insensitive. However, when the uncle moves on, there presumably will be substantial upside to the unit’s rent. If you move to increase rent under Costa Hawkins, the nephew could file a petition with the Rent Board and argue that over time you created a direct landlord-tenant relationship with him. If the Rent Board accepts this argument, you lose your ability to bring the unit’s rent up to fair market value. Undoubtedly, the nephew, who is presumably much younger than the uncle, will then stay in the unit indefinitely enjoying his departed uncle’s rent control status. As such, make sure you do not fall prey to waiving your Costa Hawkins rights!

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