Kathy Wall

Rent Control – Out of Control
December 31, 2008 ·  

I have an elderly client who purchased a home in San Francisco’s Sunset District many years ago.   A few years after the purchase, he and his wife decided to move to Marin and rented the house out to a “friend.”  

It’s now about 30 years later and my client desperately needs to sell the home so that he can keep up with ongoing medical bills.   You see, his wife had a very bad stroke while on an airplane about 8 years ago and, a year later, ended up with kidney failure.   She’s been in a wheelchair and on dialysis ever since.  Sadly, they had no insurance at the time of his wife’s stroke and certainly can’t get any now, so he’s been borrowing on the San Francisco house in order to keep up with her numerous and never ending expenses.   Now, the payments are ballooning up to a point that he can no longer afford to pay them. 

His savings have been wiped out and all the income that he has left is this home.  Unfortunately due to San Francisco’s rent control ordinance, the not-so-great friend/tenant is only paying $850 a  month (for an entire house!)  and he can’t raise her rent.   Needless to say, the current rent won’t come close to covering the payment when the low “teaser” rate on his mortgage goes away at the end of this month and he has to make the full blown payments.   

Worse still, even though he really needs to sell it, he has almost no recourse to get the tenant to move so that the home can be marketed properly.  Potential buyers and agents know that it will be difficult to get out a long term tenant, so no one is even looking at the property.    For all intents and purposes, the tenant is holding him hostage.   

His choices?  Not many.   He can offer her money to move, but it’s unlikely that she will take that option, since there is almost nowhere that she can move where she will get  rent as low as she is currently paying.  Or, it’s possible that he could force her to move by moving back into the property, which in light of his wife’s health, would be a hardship. 

Frankly, it all seems extremely unfair to me.   This couple had a dream of home ownership.  They worked hard and bought the house making payments on it for many, many years.  And now, the tenant basically owns it.   She has gone so far as to let neighbors store their stuff in the garage and she has so many things of her own in the house that, even if agents want to show it, it looks so cluttered that no one will be interested.   Or, only interested if they get it for rock bottom price. 

Please don’t get me wrong.   I believe that tenants should be protected from landlords that take advantage of them and gouge them with constant huge rent increases, but it seems inherently wrong that property owners have virtually no rights to their own property.   In my opinion, these laws have gone way too far towards the tenant’s side and left the people who actually paid for the buildings out in the cold.  This is just plain wrong.

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Comments

3 Responses to “Rent Control – Out of Control”

  1. Adam Chinn on January 1st, 2009 7:21 pm

    Hi Kathy,
    Sorry to hear about your clients situation. I too know people who have property in San Francsico and their current rents are not close to the market value, but I have yet to hear a situation to the extent of yours. I’m guessing your client will try his best to figure something out and although some of the options do not seem too likely to work out, it may be worth a try. It can be difficult to deal with “friends” as tenants or business partners of any sort.

    I wish both you a your client the best.

  2. Larry Franzella on January 7th, 2009 9:01 pm

    It can be a real difficult situation in
    San Francisco. In today’s paper Supervisor Peskin recommended a tax on rental income – thankfully if will have to be approved by 2/3 of the voters and hopefully will never happen.

  3. Max Reinhardt on January 11th, 2009 11:06 pm

    It seems like a very sad situation, but a few facts make me a little less sympathetic to these fine people. Removing the very sad element of the wives medical condition, it appears that the loan which is re-adjusting from a teaser rate is one major thing that will put this person into financial peril. That is sad, especially since they won’t be able to cover it from the 850 per month in rent. But if it is a teaser rate, wouldn’t it be for a fairly short period (we will say anywhere from three months to three years). If they were unwise and misguided in getting an adjustable loan with teaser rates that is sad, yet if they rented out an entire house in San Francisco for 850 dollars within the last few years they were beyond misguided, they were foolish investors themselves. Sorry to hear about the sad situation…

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