Effective June 1, 2014, a landlord who evicts a tenant with a rent-controlled unit in San Francisco under the Ellis Act will be required to pay the tenant an amount equal to the difference between the tenant’s current rent and the market rental rate for a comparable unit over a two year period.
Under the former law, a tenant who received a notice of termination of tenancy between March 1, 2014 and February 28, 2015 pursuant to section 37.9(a)(13) of the San Francisco Rent Ordinance-which permits landlords to recover possession of a rental unit on the ground that the landlord “wishes to withdraw from rent or lease all rental units”-was entitled to receive a relocation payment of $5,265.10 plus an additional $3,510.06 if the tenant was disabled or over the age of 62. Under the new law, the tenant is entitled to receive the greater of said amount or an amount equal to the difference between the unit’s rental rate at the time the notice of intent to withdraw the unit is filed with the Rent Board and the market rental rate for a comparable unit in San Francisco as determined by the Controller’s Office over a two-year period (“Rent Payment Differential”). The formula for this calculation can be found on the Rent Board’s website. The tenant is also entitled to receive the additional $3,510.06 if he or she is disabled or over the age of 62. Like the old law, one-half of the payment is due at the time the notice of termination of tenancy is served and the other one-half is due when the tenant vacates.
The new law, Ordinance No. 54-14, seeks to “mitigate adverse impacts of tenant evictions” under the Ellis Act. For many tenants with long-term rent-controlled tenancies, the Rent Payment Differential will result in a payment substantially more than the payment provided by the old law. For example, a tenant who moved into his unit in 2000 and who currently pays $800 in monthly rent would be entitled to $16,446.72 under the new law whereas he would only receive $5,265.10 under the old law.
The landlord may request a hardship adjustment if payment of the Rent Payment Differential would constitute an undue financial hardship. If a hardship adjustment is requested, the Rent Board will hold a hearing and may order a reduction, payment plan, or any other relief that is justified. The landlord may also request a hearing to dispute the amount of the Rent Payment Differential. At the hearing, the landlord may submit evidence to show that payment of the Rent Payment Differential would result in an overpayment by the landlord because said amount does not reasonably reflect the market rental rate for a comparable unit in San Francisco.
Ordinance 54-14 retroactively applies to tenants who have received a notice of termination of tenancy, but who have not yet vacated the unit by the operative date of the ordinance, June 1, 2014.