Mak v. City of Berkeley Rent Stabilization Board
Facts: The owner of a rental property serves a 60-day notice to vacate to a tenant stating the owner intends to occupy the unit. The property is subject to a local rental ordinance which prohibits owners from charging new tenants a higher rental rate if the prior tenant vacates as a result of the owner’s intent to occupy. The ordinance also requires an owner to prove the prior tenant vacated for reasons other than the termination notice related to the owner’s intended occupancy in order to increase the rental rate for a new tenant. On the last day of the tenant’s occupancy, the owner withdraws the termination notice and offers the tenant cash consideration to vacate. The tenant accepts and signs an agreement stating they are not vacating the unit due to the owner’s notice of their intent to occupy. The owner does not occupy the unit. Several months later, the owner rents the unit to a new tenant and charges a higher rental rate than the previous tenant. The new tenant applies to the local Rent Stabilization Board (the Board) to force the owner to lower their rent.
Claim: The owner claims the Board may not force them to lower the new tenant’s rent since the previous tenant signed an agreement stating they voluntarily vacated the unit and did not vacate due to the termination notice, and thus the owner is entitled to charge the new tenant a higher rental rate.
Counterclaim: The Board seeks to limit the new tenant’s rent to the same amount as the prior tenant, claiming the owner failed to disprove the prior tenant vacated the property as a result of the termination notice and thus the owner may not charge the new tenant a higher rental rate.
Holding: A California court of appeals holds the Board may force the owner to limit the new tenant’s rental rate to that of the prior tenant since the termination notice pursuant to the owner’s intent to occupy resulted in the tenant vacating the property and the owner failed to prove the notice was not cause for the tenant to vacate. [Mak v. City of Berkeley Rent Stabilization Board 240 CA4th 60]
Editor’s note – The local rent ordinance in the case above stipulates that if a tenant vacates a property within one year of the issuance of a termination notice stating the owner’s intent to occupy the unit, the legal presumption is the tenant vacated the unit due to the termination notice – even if the notice is later withdrawn by a written agreement. An owner may prove the termination notice did not cause the tenant to vacate by requesting a Certificate of Permissible Rent Level and following the proper legal channels to obtain higher rent.
However, if the owner fails to follow the proper procedure for obtaining permission from the rent board to charge a new tenant a higher rental rate, as in the case above, the legal presumption in the rent ordinance stands. [Berkeley Rent Stabilization Board Regulation 1016]