Inheriting a rent-controlled apartment is like achieving rental nirvana: a state of housing bliss where your rent is always below market rate. But rent-controlled apartments rarely become available to the public, so it’s not an easy dream to realize. However, with a little grit, determination, and luck, depending on where you live, you might just be able to make it happen. For those interested in giving it a shot, here’s where to start.
What is rent control?
“Rent control is a form of rent regulation that prevents landlords from raising the rent on a unit above a certain percentage each year,” says New York City attorney Jesse Gribben, whose law firm, Himmelstein, McConnell, Gribben, Donoghue & Joseph LLP represents tenants. Though rent control is the common term, some cities use the term stabilization, which differs slightly. Both are a form of rent regulation.
One common rent control myth is that a tenant’s rent is permanently fixed after signing the lease. But in reality, the landlord is allowed to increase the rent each year by a limited amount, often determined by that city’s rent board. In San Francisco, for example, the San Francisco Rent Board determined a landlord could raise the monthly rent by 1.6% in 2017.
So signing a new lease on a rent-controlled apartment doesn’t mean immediately scoring cheap rent. The benefits increase over time, assuming the market rate in the area continue to rise—which is exactly why it’s better to inherit rent control from a tenant who has held the lease for a significant amount of time, than it is to sign a new lease on a rent-controlled unit.
Are rent-controlled apartments rare?
To score a rent-controlled apartment, you would need to live in one of the cities where rent regulation exists—like New York City, Washington, D.C., and some cities in New Jersey, Maryland, and California—the supply is strictly limited. In New York City, for example, there are 27,000 rent-controlled apartments, while San Francisco has roughly 172,000 rent-controlled units.
More so, the rules for inheriting one of these rare gems from someone who you know differs by city. “In New York City, they must be close, immediate family members like a spouse or child, or have a family-like relationship, like a domestic partner,” explains Gribben.
But in San Francisco, a family relationship isn’t necessary, explains attorney Dave Crow, of Crow & Rose. “Anyone who has lived with a master tenant as a co-tenant for at least the two years immediately before the master tenant vacates the unit can take over a leasehold,” he says. Since it’s not within the landlord’s best interest, prepare for an uphill battle.
How can you secure a succession?
Inheriting a rent-controlled apartment means receiving it through legal succession from the master tenant after they vacate, often a friend or family member. If you have enough time and the willingness to become roommates with your friend, that’s the best route to legal succession. But it’s not the only requirement. The handoff requires strict legal steps.
The steps vary by location, but in San Francisco, you have to follow the process detailed in the Costa-Hawkins Rental Housing Act. Here’s a brief overview of how it works in San Francisco, but to find out your city’s rules, check on the local rent board’s website.
- You must prove a minimum of two years of uninterrupted occupancy immediately prior to taking over as the master tenant.
- You must be more than just a roommate. It’s crucial that the landlord accepts you as a co-tenant, meaning you’re on the same legal level as the master tenant. You’ll pay rent to the landlord (not to your roommate) and work with them on repairs, maintenance, and other issues. Of course, it all must be in writing, too.
- When the original tenant vacates the unit, they’ll notify the landlord in writing to let them know. The landlord should then send a “6.14 Notice” informing you that you’re subject to a rent increase. If you believe you’re the rightful successor, you’ll have to file a petition with the San Francisco Rent Board to prove it.
- Closely follow the instructions for filing a tenant petition, and provide written documents showing the landlord recognized you as a co-tenant—like emails or letters about repairs—as well as your canceled rent checks.
Is it worth it?
Because rent-controlled units are usually far below market rate, landlords would rather not let a new tenant inherit low rent. Not only do they often fight successor tenants during the transfer process, they also work to find loopholes, even in an otherwise legal succession.
Yes, it’s complex. It’s difficult. It’s rare. Start with the question of whether or not it’s worth it. If often depends a lot on your resources—as well as just how much rent you’d be saving in the end. Your chances are best with the legal assistance of a tenant lawyer. If you follow the rules, understand the challenges, and go in ready for a fight, trying for legal succession of a rent-controlled apartment is totally possible.