Topic No. 154: Limits on Rent Charged By Master Tenants
For subtenancies that commenced after May 24, 1998, the master tenant is required to provide each subtenant, prior to commencement of the subtenancy, with a written disclosure of the amount of rent the master tenant is obligated to pay the owner. There is also a limit on how much rent a master tenant can charge a subtenant.
Where a master tenant shares a rental unit with one or more subtenants, the master tenant cannot charge any subtenant more than a proportional share of the total rent the master tenant pays to the owner. The subtenant’s allowable proportional share of the total rent may be based on equal division by the number of occupants or bedrooms, or the square footage of exclusively occupied space. In addition, the reasonable value of housing services provided by the master tenant such as furnishings, utilities, parking, storage, cable or internet may be taken into account when setting the subtenant’s rent.
If the total rent paid by the master tenant to the owner increases due to a lawful rent increase or passthrough, the subtenant's share of the rent may be increased even if it has been less than 12 months since the last rent increase, as long as the subtenant’s share remains proportional.
Where a master tenant sublets the entire unit to one or more subtenants and does not occupy the unit, the master tenant may not charge the subtenant more rent upon initial occupancy of the subtenant than the rent that the master tenant is currently paying to the owner. Where a master tenant incurs out-of-pocket expenses such as utilities that are not paid by the owner, the subtenant’s payment of those expenses is permissible, even though it may result in a total payment to the master tenant that exceeds the rent paid to the owner.
If a subtenant believes that he or she is paying a master tenant more than a proportional share of the total rent or that the initial rent paid to a master tenant for a sublet of the entire unit is more than the master tenant is paying to the owner, the subtenant may file a Rent Board petition against the master tenant on that basis. If the subtenant prevails, the Administrative Law Judge will adjust the rent to the proper amount and order the master tenant to refund any past rent overpayments.
If the master tenant’s rental unit is exempt from the rent increase limitations of the Rent Ordinance, the Rent Board does not have jurisdiction over any subtenant’s claim against the master tenant. For example, if the master tenant’s unit is exempt as a newly constructed unit after June 13, 1979 or as a single family dwelling or condominium that is separately alienable from any other dwelling unit on the property, the subtenant cannot pursue a claim against the master tenant at the Rent Board.