Facts: A landlord of a residential unit governed by rent control laws decreased tenant services by lowering the temperature of a common area hot tub and shortening its heating cycle. Upon the tenant’s petition, the city Rent Control Board (RCB) ordered the landlord to decrease the rent, reducing his resulting profit to comply with rent control limits.

Claim: The landlord sought to avoid the RCB’s order, claiming he was wrongly required to decrease the tenants’ rent since no evidence was presented to prove the landlord profited from the decreased tenant services.

Counter claim: The RCB claimed the landlord must lower the rent since a landlord’s profits can reasonably be presumed to increase beyond rent control thresholds as a result of decreased operating expenses related to tenant services.

Holding: A California appeals court held the landlord was not required to decrease rents since no evidence was presented to prove the decreased services increased his profit. [Santa Monica Properties v. Santa Monica Rent Control Board (2012) 203 CA4th 739]

Editor’s note —The reduction of tenant services in this case was so minor that the landlord’s profit could not be presumed. A RCB must base its reduction of rent on the dollar amount of the increase in the landlord’s profit due to a reduction in services.