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Renting SF: Lease-locked in Mission Bay

– every day it gets more expensive to live in the city. I mean seriously, who can afford $4,500 bucks for a one-bedroom?

As evaporates (a staggering 5,470  control units lost since 2005 – thanks to abuse of the ) and gives way to luxury condos (which often make their way back onto the rental market as hotel rooms via AirBnB), the working class are left to choose between downsizing to a curbside tent, moving to Oakland or getting another roommate. Megalithic apartment complexes dominate the landscape, driving rent in SoMa and Mission Bay area to new heights and leaving even those with means in search of more affordable housing.

It’s fucked up.

So what do you do if you’re stuck in a one-year lease at one of these shiny new luxury tech-a-file biospheres and you need to get out? Lease clauses like this would lead you to believe there’s no way in hell you’re getting out of this without paying, at least, half of the remaining rent due.

Screen Shot 2016-01-28 at 10.31.29 AM
Screenshot of lease clause that conceals tenant rights under Cal. Civ. Code 1951.2 “the landlord’s duty to mitigate damages.”

Can you imagine a lease that would hunt you after death, to recoup damages?

Even if you’re savvy enough to try and negotiate with the property management, it’s likely the will just cite some clause like this, and point to your signature on the lease agreement. That job must suck. Imagine having to tell a person who has just lost their job and can’t afford to live in their house any longer, that you still need your money?

In the case of one (anonymous) tenant of (newly erected) 185 Channel Street apartments, they went as far as telling him that even if he finds a new renter to take over his lease, he will still be responsible for the remainder of the loss of rent damages (meaning the money they expected to make for the rest of his lease).

This is totally illegal. But, that’s nothing compared to the infractions cited in a 2009 federal class action lawsuit filed by Bad Biz Finder (a consumer advocacy group) on behalf of California tenants, against UDR, Inc, according to Bad Biz Finder. UDR is a real estate investment trust (REIT) that owns, acquires, renovates, develops and manages apartment communities nationwide, including the (aforementioned) 185 Channel Street property.

For shits and giggles check out the cited preliminary causes of action:

“1. Illegal collection of early lease termination liquidated damage fees (amounting to 2.25 times base rent)

motivating a higher than industry-standard eviction rate to facilitate a “double rent” revenue stream on vacated

and quickly re-letted apartments.

2. Illegal withholding of security deposits via unconscionable and oppressive hidden fees and penalties not apparent, nor defined at the time of lease execution, nor within the standard of acceptable normal wear and tear as prescribed by law.

3. Illegal and intentional misrepresentation, concealment and omission of proper legal name of “Landlord/Owner” on Lease contracts and illegal and intentional misrepresentation, concealment and omission of proper agent for service of process of “Landlord/Owner” in order to obtain and sustain a legal advantage over tenants resulting in a extremely low probability of tenant-based litigation. This also amounts to a violation of the tenant’s civil right to expeditiously bring a grievance to a court of competent jurisdiction.

4. Illegal profit-earning as a publicly-traded non-utility business via its Ratio Utility Billing System (RUBS) in violation of the Public Utilities Commission Act forbidding said profit. UDR is liable for deferring common area property utilities, utilities to vacant units and units under repair to tenants without a logistical need with the motivation of defraying property costs to tenants. In addition, UDR sustains another double revenue stream by not only charging its tenants to source the energy and water being supplied to the onsite public laundry rooms but by also charging them to use the coin-operated machines. Finally, UDR’s Lease requires that tenants deem the RUBS formula as fair and equitable even though it is solely comprised of calculated variables outside the control and knowledge base of its tenants.

5. Illegal deferral of liability via “hold harmless” clauses creating a “perception of justifiable negligence” in UDR’s failure to maintain habitable premises with regard to vector control, water quality, construction defects, as well as tenant and guest safety standards for security against unit and vehicle intrusion, sexual offenders, theft, and violence.

6. Illegal collection of late fees in excess of the standard of law which must be set at an annualized and non-compounded 10% interest rate.

7. Illegal and intentional misrepresentation, concealment and omission of material facts in Lease agreements with the express purpose to defraud tenants in order to create a cause of action for unlawful detainer to perpetuate the collection of early lease termination liquidated damage fees.”

Here’s an overlooked code you need to know about; Cal. Civ. Code 1951.2 “the landlord’s duty to mitigate damages.” This code says that your landlord must make reasonable efforts to mitigate damages, which means ‘reduce’ or ‘eliminate losses’ caused by early lease termination i.e. “ your shitty lease cuz it’s illegal, asshole!” This same code also allows for the lessee to attempt to mitigate damages.

What does that mean? That means that rather than just waiting for them to find a renter, you can provide a list of valid candidates. The property management can turn down any potential replacement tenant, but if they do so without cause (meaning your friend meets all the credit and background check criteria) you might only be responsible for the losses the lessor would incur, had they mitigated damages by allowing the lease takeover.

So for example, let’s say you want out of your fucking ridiculously expensive $3,500 per month, one bedroom. You find a viable tenant to take over your lease, but the property manager turns them down. Because they could have mitigated the damages, and chose not to, you are now off the hook. You might be responsible for the cost to market the unit and other incidentals, but you are no longer responsible for the remaining rent…according to many legal interpretations of the code.

“Yes, that is arcuate in the theoretical applications. The problem is, most of these cases end up in small claims court. Not really a hotbed of real estate tenant rights awareness” according to Dave Crow, a real estate attorney and partner at Crow & Rose law firm.

David Crow
Dave Crow, a real estate attorney and partner at Crow & Rose law firm

“When you’re talking about San Francisco, there should never be a case where the property manager couldn’t

find a new tenant. Just look at the lack of available housing and the climbing rent prices. If you’ve been in

your apartment for more than three months, I guarantee you they have increased rates. So then you have to think – they will have no trouble renting out a lower priced unit. And, they can’t require you to continue paying damages once the unit has been re-rented, this is called unjust enrichment. It’s double dipping, and you can’t do that. You can’t collect rent twice.”

It was interesting to hear Crow explain the issue in this light. When I asked him if these leases are intentionally crafted to exploit the man-on-the-street lack of tenant rights awareness, and he said yes. He’s quick to follow with another choice quote:

“I’m not saying all of them do it, but many of those management companies are real shit-heels, by the way” he laughs.

So what do you do?

A few tips from Dave Crow:

1. When you send in your notice to vacate, remind them of their obligations to mitigate damages. If you want to cite the civil code, it’s Cal. Civ. Code 1951.2

2. Ask them how they plan to market your unit.

3. Provide them with a list of potential tenants that are interested in taking over your lease.

4. To avoid other charges, make sure you leave the apartment in good condition.

5. Some properties charge up to $30 per nail hole in walls. You can get a tube of spackle and just walk around filling them with your finger.

Lastly, read your lease thoroughly and make note of any clauses that may attempt to obscure or hide your

rights.

Links to sites with helpful information:

How to break your lease

Tenant Lawyer, Crow & Rose

Evict This! (blog dedicated to tenant issues)

CA.GOV – Landlord/Tenant

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