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Fred, Other/Just Looking in San Francisco, CA

Considering buying a TIC, renting to our daughter and her sublets in San Francisco

Asked by Fred, San Francisco, CA Mon Sep 1, 2008

Since we are in a rent controlled city, any advice for us? The property we are looking at is a Victorian so we would fall under the protection of rent control in the city. Are there issue for our daughter to be aware of when she sub leases? Do shared housing arrangements have the same rent control protection (and difficulty for our daughter should she need to evict someone?

Also, we are looking for a way to hold the property for as much as 6 months before we rent it to her, what are the rules regarding short term rentals? Thanks ahead, F

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6
Dear Fred,

I would suggest you go to the website of David Gellman, an attorney who specializes in real estate law. His website has a lot of information about TICs, condos and TIC conversions. You need to be quite careful about all of the laws. They are far too many and too lengthy to discuss in this small space. http://www.g3mh.com

I would also go to the Mayor's website - http://www.sfgov.org - and go to the information on rent control. With regard to short term rentals, you need to consult the TIC Agreement for your building. They may or may not allow them. Renter's have a ton of rights in San Francisco that they do not have elsewhere. Please be truly prepared when you purchase!

Cheers,
Sally
1 vote Thank Flag Link Mon Sep 1, 2008
If you rent to your daughter, and she sublets to other subtenants, she can avoid the restrictions of the Rent Ordinance if she has a has the subtenant sign a sublease which, in addition to the ordinary provision, states (1) that the San Francisco Rent Stabilizaiton and Arbitration Ordinance does not apply to the subtenancy; and (2) the amount of rent your daughter pays to you. If this is disclosed in writing prior to the subtenancy commencing, the subtenancy is exempt from the Ordinance. That would allow your daughter to evict without just cause.

As for rent, your daughter is not allowed to charge more than a pro rata share of the rent she pays. For instance, if the unit has three bedrooms, and she sublet's two of the rooms, the total rent she collects must be equal to or less than 2/3 of the rent she pays to you. If you were not intending on charging your daughter rent, I suggest you charge her, and give it back to her.

The above only apply if your daughter and her subtenants are living in the same unit sharing common facilities like kitchen and bath.

There are no rules for short term rental. Once a tenant is in, he cannot be evicted except for one of the 15 just cause reasons. It is not possible to include an enforceable provision that requires a tenant to vacate after a specific time.
0 votes Thank Flag Link Sat Feb 7, 2009
There are no "short term rentals" of rent controlled housing in San Francisco. Once tenancy is established the tenant may remain as long as he wishes. There are only 14 legal reasons to evict, and it takes months to years to evict, with attorney fees often reaching into the five figure range. The usual practice is to pay the tenant to go away. A couple I know settled for $30,000, but that was six years ago, so who knows....
0 votes Thank Flag Link Fri Sep 12, 2008
Hi Fred,

Realtors can point you in the right direction on this but you really need legal & tax advice on the intricacies of landlord-tenant law, condo conversion issues and tax implications/benefits.

This is a fantastic idea however! Your daughter can benefit from your investment and subsidize her living expenses through roommates. You can have an appreciating asset with tax benefits too! Sorry to state the obvious but it is a great idea and I've seen it work very sucessfully over the years.

I am not an attorney but if memory serves, roommates are not afforded the same rights as tenants. From what I know, if you own your place and have a roommate, you can end their tenancy unlike in a standard rental situation here in SF.

The TIC market is one of the areas you will see the benefit of this transitional market. There are some great deals out there....

For legal advice, try these websites and/or attorneys. For real estate help, contact one of us! :)

http://mypropertyrights.com/
http://bornsteinandbornstein.com/
http://g3mh.com/
http://www.andysirkin.com/HTMLArticle.cfm?Article=3&Hit=1
Web Reference: http://sfhotlist.com/blog/
0 votes Thank Flag Link Mon Sep 1, 2008
Fred,
It looks like your bark is is pretty harmless. What a mug! If you are going into the landlord business take the advice of my associates and get to know a good landord tenant attorney. Wiggle & Freid is a very good firm also.
Send you daughter to the rent board and have her do the research for you on the questions of the rights of her tenants. It will be a very valuable experience for her to do the research and report back to you. If you have questions remaining after her report she can go find out. The office is on Van Ness just off market. They are very nice and have tons of information.
She should know what are the 14 just cause reasons for eviction, and how to avoid wrongfull eviction.

Be sure that the TIC you are looking at allows her to rent rooms.
0 votes Thank Flag Link Mon Sep 1, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
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Hi Fred,

It would really depend on the specifics of the property. For example, if the building was ellis acted then there are certain rent restrictions that apply and you might not be able to rent the property out during that six months. I would consult the Andy Sirkin Faq section for the current regulations. Furthermore, in the TIC agreement there might be a clause preventing subleasing or requiring approval from all the other members.

To sum it up, you really have to take it case by case. If you have any questions please feel free to email me at peter_brunton@yahoo.com.
0 votes Thank Flag Link Mon Sep 1, 2008
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