Topic No. 020: Partial Exemption for New Construction and Substantial Rehabilitation

In general, residential units constructed after June 13, 1979, and units that have obtained a Rent Board determination of substantial rehabilitation are exempt from the rent increase limitations (but not the just cause eviction provisions) of the San Francisco Rent Ordinance.

The partial exemption for new construction only applies if (a) the first Certificate of Occupancy for the unit was issued after June 13, 1979, and (b) there was no residential use of the unit prior to the issuance of the Certificate of Occupancy. If the unit is a live/work unit, there is an additional requirement that (c) there was no residential occupancy in the building (not just the individual unit) between June 13, 1979 and the date of issuance of the Certificate of Occupancy.

Previously, units constructed after June 13, 1979, and units that obtained a Rent Board determination of substantial rehabilitation were eligible for a complete exemption from the Rent Ordinance. In other words, these units were not covered by the rent increase limitations (aka “rent control”) or the laws regarding evictions (just cause provisions) contained in the Rent Ordinance. Effective January 20, 2020, the Rent Ordinance was amended to extend eviction controls and other tenant protections to these units, although they remain exempt from the rent increase limitations of the Rent Ordinance.

Accordingly, the landlord must comply with the notice and procedural requirements of the Rent Ordinance and Rules and Regulations in order to evict a tenant. This includes the requirement that a landlord must have one of the allowable “just cause” reasons to terminate the tenancy. In addition, the annual Rent Board fee is now collected for these units.

Please note that even if a unit is exempt from local rent controls, it may be covered by the California Tenant Protection Act of 2019 (AB 1482), which limits annual rent increases to no more than 5% plus the percentage increase in the local CPI.

 

June 2020