Is My Single-Family Home or Condo in San Francisco Exempt From Rent Control?

Exterior view of multistory single family homes built close to one another in San Jose, Silicon Valley

The short answer is: Maybe. Whether San Francisco single-family homes or condos are exempt from rent control is a highly nuanced area of California law.

To explain the current state of the law, it makes the most sense to start at the beginning. Prior to 1979, San Francisco rental units were not subject to rent control. Assuming the tenant was not on a fixed-term lease, the landlord could increase the rent for any reason or no reason at all, just not the wrong reason. (For example, tenant retaliation in the form of drastic increases in rent was a defense to an eviction.) Come June 12, 1979, however, the San Francisco Rent Ordinance became effective, and rental housing stock that existed on that date was subjected to rent control.

Under San Francisco local law, a residential dwelling that received its certificate of final occupancy on June 13th, 1979 or later was exempt from rent controls as “new construction.” Even older housing stock in San Francisco would “decontrol,” i.e. be subject to market rents, upon a vacancy or some partial vacancy. But with “vacancy control”—deemed the strictest form of rent control—adopted in five California cities and poised to hit San Francisco, California intervened and passed the Costa-Hawkins Rental Housing Act.

Costa-Hawkins’ most noteworthy feature is “vacancy decontrol,” that is, preserving the ability of a landlord to increase the rent-to-market rate once the last original occupant vacates. As enacted and later amended, it also categorically exempted certain kinds of dwellings: housing that received certificates of occupancy after 1995, single-family homes or condos (regardless of their date of construction), and new construction that had already been exempt prior to Cost-Hawkins’ enactment. For instance, an apartment building that received a certificate of occupancy in 1980 was thus “locked in” as new construction, regardless of changes to local law.

This statutory scheme ended up leading to some abuse. To escape rent control, some owners of older rent-controlled apartment buildings would obtain approvals and new certificates of occupancy to subdivide them into condominiums. After receiving these post-1995 certificate of occupancies, they would then serve rent increase notices on (formerly) rent-controlled tenants, claiming an exemption under Costa-Hawkins’ “single-family home/condo” exemption. To cure this “loophole,” the Legislature amended Costa-Hawkins in 2001 to now require that a condominium is only exempt if a bona fide purchaser buys it from the subdivider (preventing the practice of “paperwork subdivisions”). And with respect to the post-1995 certificate of occupancy exemption, the Court of Appeal later clarified that post-1995 certificates of occupancy for housing that was simply rehabilitated or converted did not meet this exemption; new construction was required.

Adding to the complexity is AB 1482. The Tenant Protection Act of 2019 imposes statewide price controls on all housing stock, unless it is newer construction or it is “separately alienable” (i.e. a single-family home or condo) and owned by a non-entity (i.e., a human being). AB 1482 is not a model of clarity. It pays deference to Costa-Hawkins, but does not clarify its role in the statutory scheme. It suspends its eviction controls if local law is more protective but does not explain whether an ordinance that exempts, e.g., a condo (because Costa-Hawkins requires it to do so) is also exempt from these price limits.

In sum, the answer to whether your single-family home or condo is exempt from San Francisco rent control is not straightforward; it requires some analysis on a case-by-case basis. Importantly, an unlawful rent increase can lead to devastating legal consequences for owners, thus, legal advice on this issue is always recommended.

If you have questions about whether your property is exempt from local rent controls, you should contact Justin A. Goodman at Zacks & Freedman, PC for guidance. Contact us at your convenience to request a consultation.

Neither this website nor this post is intended to create an attorney-client relationship.