A perceived rash of resident displacement and rampant homelessness has led to clarion calls for Berkeley to increase housing stock, with the latest proposal to put a $135M affordable housing bond on the November ballot. Until the city finds a way to put a dent in the affordable housing dearth, though, a cramped two-bedroom studio apartment can easily go for more $3,000.
It’s no wonder, then, that there has been some inherent friction between landlords and tenants in a city that has some of the most ensconced tenant protections anywhere. Although Berkeley’s labyrinth of rent control rules is particularly complex, we provide an overview here.
The Berkeley Rent Stabilization and Eviction for Good Cause Ordinance have two distinct protections that are best compartmentalized. On one hand, the ordinance dictates permissible rent increases and the other arm of the law spells out “just cause” eviction protections. Collectively, the ordinance is referred to in most parliaments as Berkeley Rent Control.
Is the building subject to Berkeley Rent Control?
The first algebraic equation to solve is whether the rental unit is governed by rent control and if so, which tenant protections apply. To find the answer, we have to look at the year the building was constructed, the number of units, date of occupancy, and ownership stakes among other factors.
Some units in the City of Berkeley have eviction protection but do not have limitations on rent increases. Other units have both the eviction protection and the rent increase protection. Still other units have no protections.
An interesting side story is underway, as efforts to repeal the Costa Hawkins Rental Housing Act are gaining traction. The longstanding law limits rent control and mandates “vacancy decontrol.” Forward-thinking municipalities with comprehensive rent-control measures are starting to consider how to modify their own ordinances if the state law is repealed. Berkeley hasn’t meddled with its original 1980 rent-control ordinance since Costa Hawkins, but the Berkeley Rent Board and Councilmembers are taking a hard look at making changes as November marches closer. Get a behind-the-scenes look: Berkeley prepares for potential repeal of Costa Hawkins Rental Housing Act.
Rental property owners can raise the rent once a year, but only to the tune of 65% of the annual increase in the Consumer Price Index, or CPI. You can consult this calculator on the Rent Stabilization Board’s website.
Reasons to evict
If the rental unit is indeed covered by eviction protection, Berkeley landlords can only evict for one of 12 reasons, also known as just causes. Some examples include failing to pay the rent, damage to the unit, creating a nuisance for neighboring tenants, or otherwise being culpable a lease violation – all permissible reasons to evict are delineated here.
Owner move-in evictions in Berkeley
The term “eviction” may be synonymous with bad tenants, but there may be circumstances when studious tenants can be legally transitioned out of the unit for the owner’s or a close relative’s own use. Also known as an OMI or RMI, this “no-fault” eviction comes with many caveats. Berkely’s Rent Ordinance prohibits owner/relative moves under two sets of circumstances:
- The tenant has lived on the property for five or more years and the landlord has a 10% or greater ownership interest in five or more residential units in Berkeley, or
- The tenant is at least sixty years old or disabled and has lived on the property for five or more years. If all the landlord’s units are limited by the above, an eviction for the owner or relative to move in is only permitted where: the landlord has owned the property for five or more years and is at least sixty years old or disabled, or the landlord’s relative is at least sixty years old or disabled.
Owners should also be aware that they cannot pursue an owner or relative move-in eviction during the school year where there is a school-aged child in the dwelling. A similar measure was unsuccessfully challenged in San Francisco, a topic we took on in this article. When an owner or relative move-in eviction is permissible, the landlord must afford a minimum of sixty days’ notice to recover possession of the unit.
Tenant buyouts in Berkeley
Berkeley landlords should understand the Tenant Buyout Ordinance (TBO), a law that regulates a quid pro quo – in exchange for compensation, the tenant voluntarily agrees to vacate the rental unit. A properly structured buyout agreement is a particularly attractive vehicle when there are no convenient legal grounds to evict a tenant.
With tenant lawsuits proliferating throughout the Bay Area, buyout agreements have the added advantage of cauterizing risk, to the extent that the tenant generally releases the landlord from liability.
Effectuating a proper buyout agreement is never easy going and Berkeley has erected many rules to make sure they are done right. Like most other bodies throughout the Bay Area, Berkeley lawmakers had a natural distrust of these voluntary agreements when enacting the ordinance, for fear that the tenants may not enter into these negotiations so voluntarily.
The overarching goal of the ordinance is to afford residents who are approached with the offer of a buyout to make an informed decision and sleep on the proposal without coercion, but the tenant need not carefully deliberate on their own – they are entitled to consult with the Rent Board.
That is if they choose to entertain the offer at all – under Berkeley’s Tenant Buyout Ordinance, the tenant can give the landlord a cold shoulder. If the tenant doesn’t want to even open the discussion of a buyout, the topic is shut and closed.
Once a Berkeley buyout agreement is inked, tenants with buyer’s remorse (or shall we sell seller’s remorse) can change their mind – vacillating tenants have 30 days after signing to rescind the agreement. If the requirements of an executed TBO has not been met, however, the tenant can rescind the agreement at any time.
From our hard-won experience, it is rare for a tenant to rescind their agreement. It seems that once the outgoing tenant affixes himself or herself on the dollar signs, they take the money and don’t look back. Nonetheless, the law demands that the tenant is aware of their right to bow out.
The cost of buyouts
Every circumstance is different. The tenant’s leverage in negotiating a payout amount will vary by zip code, the nature of the landlord-tenant relationship, whether the uprooted resident is disabled, elderly, or itching to leave, and the landlord’s own urgency to make way for incoming residents.
As a sidebar, although we are willing and able to negotiate buyouts with tenants, it is sometimes advisable for the landlord to initiate the actual discussion with their tenants, leaving us to stay “behind the scenes” to handle the hard legal lifting. If we broach the conversation of a buyout with the tenant, they may get intimidated or over exuberant and then elicit the help of a tenant attorney who will come back to us with an overly aggressive offer.
At any rate, rental housing providers doing business in Berkeley is tough stuff – contact our office to navigate the minefields.