California has some of the strictest tenant protections in the country.
San Francisco has some of the strictest tenant protections in the state.
How can you protect yourself and ensure you’re compliant with all the federal, state, and local laws pertaining to your investment?
The laws are changing all the time, so it’s not always easy. It is, however, imperative. A legal mistake is an expensive mistake. We recommend staying up to date on everything you need to know, and following the relevant court cases and legislative proposals.
If you don’t have the time or the resources to do that, you’ll want to surround yourself with professional partners who can protect you. Work with a San Francisco property management company. Network with attorneys who specialize in landlord and tenant law.
Here’s a brief guide on the laws you need to know when you own a San Francisco rental property. We’re covering a lot of ground, but keep in mind that this is not an exhaustive list of the laws you need to know. There are always nuances, exceptions, and additional considerations that we cannot possibly consider in a single blog.
Start your education on San Francisco rental laws here. Then, make a plan to continually educate yourself on how these laws impact you and your investment properties.
Fair Housing Laws in California
The logical place to start is fair housing. This is often the most challenging legal area for landlords to deal with when they’re renting out homes. Fair housing laws include a lot of specifics. The federal Fair Housing Act was signed into law to protect classes of people who are often discriminated against unfairly. According to the Fair Housing Act, you cannot consider race, sex, national origin, religion, disability, familial status, or color when you’re making decisions about who you will rent your property to.
You’d probably never discriminate against someone intentionally when renting out your property. Not only would it make you a questionable persona ethically, but it’s also bad for business.
However, it’s easier than you imagine to discriminate unintentionally.
When you’re advertising your property and screening tenants, you can use language or make subjective decisions that are not consistently applied. If you screen two tenants to different standards, it could be seen as discrimination. If you market your property as not being great for kids or as being close to a specific house of worship, someone could complain about discrimination.
Be deliberate and attentive to language and consistency.
The federal laws are one thing. California has additional protections in place when it comes to fair housing. The state has a longer list of protected classes than those on the federal law list. In California, we get into protected classes that cover all the federal classes plus:
- Sexual orientation
- Gender identification
- Gender expression
- Veteran or military status
- Primary language
- Marital status
- Source of income
- Genetic information
When we talk about fair housing laws, you need to protect your property in San Francisco by paying special attention to service and companion animals. You also need to think about renting to Section 8 tenants, even if you never did previously.
Here’s what the law says about such matters:
- Service and Companion Animals
Pets are not a protected class. You don’t have to allow them. But, you cannot deny a tenant a service animal or a support animal, even if you have a no-pet policy. The law does not see service or support animals as pets. They see them as accommodations.
You are required to accept qualified tenants and their service or companion animals, and you’re not permitted to charge a pet fee, pet deposit, or pet rent.
Service animals are trained in specific tasks and they are always dogs. Companion animals provide support, therapy, or emotional help to their owners. When a tenant has a service animal, you need to allow that animal without any questions. It will likely be identified easily.
Companion animals, however, can be questioned carefully. They are prescribed by healthcare providers, and you can ask your tenant for a copy of a letter or other documentation from their doctor or provider. This should outline why the animal is necessary.
- Section 8 Tenants and the Leasing Process
The Tenant Protection Act was passed in 2019, and went into effect in 2020. This law is best known for statewide rent control and just cause evictions, but there’s also something in it that applies to Section 8 tenants and their legal right to apply to rent your property.
Housing vouchers can be used as proof of income. It cannot matter how tenants make their money when they apply to live in your home. As long as they have the required income that meets your screening criteria, you must consider them.
Previously, landlords could advertise “No Section 8” when marketing properties. That is not the case any longer. You must consider every applicant, regardless of income type.
Following fair housing laws is a lot more complex than simply making a policy of not discriminating against those protected classes. You have to have policies that reflect equal opportunity when it comes to advertising, screening, leasing, and managing your home.
Rent Control Laws in San Francisco
Statewide rent control arrived in California starting in 2020, but in San Francisco, we’ve been ahead of that curve for years.
The San Francisco Rent Board protects tenants from large rent increases and unjust evictions. Every year, The Rent Board announces the annual allowable rental increase for San Francisco rental properties. You can only raise the rent once in a period of 12 months.
Rent control depends on what type of property you have, and when it was built.
Properties that were built and received their original certificate of occupancy after June 14, 1979 are exempt from rent control in all forms. It doesn’t matter if you have a single-family home, a condo, or an apartment building.
If your property was built before that date, your rent control laws will depend on the type of property you have.
- Single-family homes and condos are exempt from the rent control mandate, but are still subject to eviction controls.
- Multi-residential apartment buildings built before that date are subject to both rent control and eviction control.
If you own a multi-family building or you’re renting out units in a building, you’re likely going to need a solid understanding of rent control limits and requirements.
As a San Francisco rental property owner, you must remember that there is no limit on the amount of rent can charge the tenant when renting out a vacant unit. You’ll need to do some market research so you understand the competition and the range of local rental values. During your lease renewal period, check out where market rents are landing before you decide how much you’ll raise your rent.
San Francisco Just Cause Eviction Laws
To evict a tenant in California and throughout San Francisco without penalty, you must have just cause. This generally means the tenant is at fault for the eviction. Either they’re not paying rent, they’re violating the lease agreement, or they’re engaging in criminal activity inside the rental home.
The just cause eviction law is part of the Tenant Protection Act of 2019, which went into effect on January 1, 2020.
If the eviction needs to occur for a reason that is not the fault of your tenant, you may have to pay a relocation fee to your tenant, which is typically the equivalent of one month’s rent. This will apply if you’re evicting the tenant because you need the property back to live in yourself, for example, or because you want to sell the home.
You can evict a tenant to make the necessary repairs and remodels that will keep the home habitable. But, you need to offer the property back to the tenant once the work is complete.
San Francisco Security Deposit Law
We’ve been managing San Francisco properties for a long time, and we’ve noticed that if there’s going to be a dispute or a conflict with your tenants, it will likely involve the security deposit. That’s where expectations can fall short, and it’s also an easy place to make expensive mistakes.
To protect yourself from any disagreements, make sure you document the condition of your home and follow all of California’s security deposit laws in the way you collect, hold, and return this money. San Francisco also has some specific rules about interest and how it’s paid to your tenants.
Legal limits are in place for how much you can collect in a security deposit. When you’re renting out an unfurnished property, the maximum amount you can collect is the equivalent of two months of rent. So, if you’re renting out a home for $3,000 per month, your security deposit can be no more than $6,000.
You have 21 days to return the deposit to your tenants. If you make deductions, you must provide an itemized accounting statement that reflects what was deducted and why. Interest must be paid every year to tenants, either with a direct payout or with a credit against rent.
These are some of the most important laws to know when you’re renting out a home in San Francisco. If you’d like some help understanding and complying with these laws, please don’t hesitate to contact us at Sharevest Property Management.