Rental Basics in 94116>Question Details

John S, Home Buyer in San Francisco, CA

I am currently interested in renting a place out I plan on owning after purchase for a year. My question is

Asked by John S, San Francisco, CA Wed Feb 25, 2009

once that 1 year lease is over, do the tenants need to move out if I don't want to renew the lease? If the lease isn't renew, does it jump to a month to month lease? If I tell them I want them to leave at the end of the 1 year lease, do they have to go? San Francisco I knpw is very pro-tenant, so I prefer to avoid the pitfalls and problems as much as possible renting out the place.

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San Francisco's Rent Ordinance clearly favors tenants and you will necessarily encounter pittfalls and problems if you decide the rent. However, that does not mean it does not make sense to rent. Its a matter of understanding the risks and evaluating the reward.

The primary risk you face is the uncertainty of taking back possession of the premises after a year if the tenant does not voluntarily vacate. Under California law, after the expiration of a lease, it becomes a holdover, month to month lease. Under San Francisco's Rent Ordiance, a month to month tenant cannot be evicted unless one of the 15 just cause grounds for eviction exists. A tenant in SF is not required to vacate upon expiration of a one year lease. In fact, the Ordinance was created in order to give people the right to stay in their units.

Depending upon the number of units your property has and you plans for use of the property after a year, there may be one or more grounds for eviction. If you want to live in the premises, the most obvious one is Owner move-in. That would require you to live in the property for three years as your promary place of residence. If you wanted to sell the property off in year, depending upon the number of units and the marketing plan, you could consider using the Ellis Act, which requires you to evict ALL tenants from the building. The building could not be used as a residential rental property for the next five years (with some exceiptions).

If you find a ground for eviction that works for you, you must be aware your tenants would be entitled to relocation expenses of something less than $5000 per persion up to three person per unit. Plus, if any tenant is "protected" or disabled, you may also have to pay an additional $3300 per person.

The above is a very superficial analysis. There are other details to consider in light of your intended uses of the property and the under of units the building contains. However, as you can see, there are risks which are associated with renting and the fact that the lease expires will not give you the flexibility that you would undoubtedly desire. However, a year's worth a rent is substantial, so you will have to evaluate the worth of that beneift vs. the risks of renting.

Jeffery Woo, Esq.
Sedgwick, Detert, Moran & Arnold LLP
Complex Rental Property Group
415-627-3607
jeff.woo@sdma.com
1 vote Thank Flag Link Sun Mar 1, 2009
Dear John,

A few things to be aware of. After a year lease, you need to give tenants 60-days notice. You also need to do a tenant buyout. This varies drastically if any tenants claim protected status.

As Eileen said, talk to an attorney. Jeff Woo is one of the best and well-knpwn for getting tenants out of buildings.

Rebecca
P.S. Ignore any out of City advice. Why the guy from North Carolina chimed in is unfathomable.
1 vote Thank Flag Link Wed Feb 25, 2009
Hi John--I recommend you consult with an experienced real estate attorney prior to taking on a tenant. As you've noted, San Francisco has very specific rental ordinances, and you need to be aware of the whole scope of the situation and how any actions you take could impact you in the future.

Your consultation can be as simple as a phone call with an attorney. Jeff Woo, a San Francisco real estate attorney who is also very active in the Trulia Voices forum, would be a good place to start. You can email Jeff at jeff.woo@sdma.com. You can look up his bio within Trulia, as well.

Good luck. Also, as a landlord myself, I can say that not every tenant creates issues. I have had really good luck over the past 11 years.
1 vote Thank Flag Link Wed Feb 25, 2009
Jeff

My problem is almost identical with a slight twist. I only want to rent out the unit for 6 months rather than a year. I will obviously specify that in the lease agreement and the potential tenant has agreed to the terms. Will I have the same problem if the tenant does not want to move after 6 months? Thank you very much for your advice?
0 votes Thank Flag Link Sun Oct 16, 2011
John,

Every one telling you to speak to an attorney is correct. What you are going to ask them for is a lease, which is a contract, that spells out to the prospective tenant that the term is for one year and only one year. I believe, but I'm not an attorney, that if the terms are clear and entered into with full knowledge at the start of the contract the terms can be enforced.
Clearly a normal lease won't be sufficient. If I was your property manager I could write something in the lease to make it clear but I wouldn't. I'd have you talk to an attorney that is knowledgable about such matters.
0 votes Thank Flag Link Wed Feb 25, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
I am in North Carolina. You would have to speak with an attorney for the answer to your question. I would tell you though I think it would be a good idea to talk to the tenants about this. If you want until the lease is over and than go over to the house and they are there and you act like well the lease is over you got to go today. They dont than yes they are probably in the wrong, but you would have hard time convincing a jury in that case why you did not notify them and than expect them to be gone in a day. Plus it would cost you money and time to go and get them out. You cant just kick them out anymore, especially with states that are pro tenant and not pro landlord. They will be able to live in the place until the courts go thru with there spill. They may just tear the place up and than when it goes to court they may walk in and say heres the keys were gone. It is better to talk to them and keep the courts and attorneys out of the issue. Remember there are only 2 people smiling in a court room. The offensive attorney and the defensive attorney. They are the only 2 making money. Everyone else wishes they were somewhere else. Hope this was helpful.
0 votes Thank Flag Link Wed Feb 25, 2009
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