I inherited a house in San Francisco from my aunt.
My aunt had rented her basement to an elderly couple (probably illegally) for a few years at below market rates. I don’t believe there was a lease, and it’s probably against the building code to have tenants in the basement. The couple’s family lives nearby.
I really prefer not to continue with the lease because I live out of state and because of the strict rental laws in San Francisco.
What should I do if I don’t want to be a landlord? Can I just give them notice to terminate the lease? Do I have the right to throw them out? (I don’t plan on doing that, but just in case.) Or should I sell the property to terminate the lease?
I heard that California has very strong tenant protections and that eviction is difficult. The tenants are an elderly couple, but they are healthy.
I am afraid that if I accept rent from them, it is an acknowledgment of our landlord-tenant relationship. Would selling the property be a way to get them out? Or should I just ask them to leave and start eviction proceedings if they refuse?
I really need some advice. Can you help?
‘The big move‘ is a MarketWatch column that looks at the ins and outs of real estate, from navigating a new home to applying for a mortgage.
Do you have questions about buying or selling a home? Want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.
Before you move, consider whether you want to continue to own the home or sell it since you said you don’t want to be a landlord.
I would say step one is to contact the residents and politely ask them if they could move out of the unit since ownership of the home had changed hands. Explain the situation to them – after renting below market rates, you would like to terminate the pre-existing relationship, nor are you keen on managing a lease when you are out of state.
Also, be clear and firm and tell them you don’t want to rent the unit at all and that you plan to sell (or any other plans you may have).
You must be clear about your intention. Because if you want to clear the house of tenants before you sell the home, then you have a tough road ahead of you.
You can raise the rent to the market rate and then see if they are able to pay, which would be a difficult way to evict them. They would either pay or not be able to pay and be late with the rent or move out.
You can also consider selling it together with the tenants. Real estate investors may be interested in purchasing this property as it is in San Francisco. Some may be fine with being a landlord and dealing with the mess of tenants not paying the market rate.
However, if you are dead set on getting the tenants to leave, step two would be to contact an attorney to get a feel for how the eviction process works.
Scott Freedman, an attorney with the San Francisco-based law firm Zacks, Freedman & Patterson, told MarketWatch that since there is no lease, the unit is considered “illegal” under San Francisco law.
And “even if a rental unit is ‘illegal’ in San Francisco, it is treated as a legal entity for purposes of whether, how and under what terms a landlord can ask a tenant to vacate the unit,” he explained.
This means that a landlord needs at least one reason from a list of “Just Cause” reasons to ask the tenant to leave. You also have to pay for moving expenses. And generally, you must also give these people written notice, 30 or 60 days in advance.
It is not something simple that you can do yourself (unless you are a lawyer).
Freedman said there may be one or more “Just Causes” applicable in your situation. But he also emphasized that the list does not include asking a tenant to leave “simply because a landlord does not want to rent a particular unit anymore.”
And assuming these people have paid rent to your aunt on time at the rate she set, maybe you can’t just ignore the rent payments they make and pretend they haven’t since there is a history of transactions, that reveals a relationship.
But those payments also put you at risk, Freedman said. “It is also technically illegal to charge rent for [illegal units]and there can be difficulties in getting proper insurance for renting an illegal unit,” he added.
He recommended you contact the San Francisco Rent Board for information on Just Causes and illegal entities.
Also consult a lawyer. Freedman agrees with you that tenant protections are strong in SF, “and the consequences for even innocent mistakes can be significant.”
By emailing your questions, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story or versions of it in all media and platforms, including through third parties.