Q&A on Richmond’s New Rent Control Ordinance

What rental property owners need to know about the new Richmond ordinance, effective December 30, 2016. - Written by Matthew Quiring - Posted Dec 30, 2016

Q&A on Richmond’s New Rent Control Ordinance

On November 8, 2016, voters in the Bay Area expanded the reach of rent and eviction control throughout the greater Bay Area. On December 30, 2016, the Richmond “Fair Rent, Just Cause for Eviction and Homeowner Protection Ordinance” went into effect, rolling back rents to July 21, 2015, and requiring “just cause” for most evictions in the city.

Which Units are Covered by the Richmond Ordinance?
As in other cities, there are two aspects to the ordinance: eviction control and rent control. Eviction control effectively applies to any property rented for residential use, except for units rented within the owner’s own residence, and “second dwelling” units. “Second dwelling” units are a type of unit which are added to, or derived from, pre-existing construction, sometimes called “in-law” units.

Rent control generally covers the same units as are covered by eviction control, with the added exemption of single family homes, per State law. It is noteworthy that “second dwelling units” are only exempt from eviction and rent control if the owner resides in the “primary” structure.

What Types of Evictions are Allowed in Richmond?
Richmond now has many of the same “just causes” for eviction that exist in Berkeley and Oakland. Below are the causes, and their noteworthy differences:

  • Nonpayment of rent: No special requirements.
  • Breach of Lease: This most closely resembles Berkeley, in that changes to terms of tenancy are unenforceable against the tenant unless the tenant previously agreed to them. Richmond is more permissive for subletting to family members, and prohibits denying sublessees on the basis of their creditworthiness, if the sublessee would not pay rent directly to the rental property owner.
  • Nuisance: As in Berkeley and Oakland, Richmond requires a written warning before terminating for nuisance. Richmond does not define exactly what a “nuisance” is, but a nuisance caused by a third party can be attributed to a tenant if the tenant “expressly permitted” the nuisance.
  • Failure to Give Access: Richmond goes further than Berkeley and Oakland, preventing eviction if the tenant had “good cause” to refuse access, or if the access request was unreasonable. However, showing the property to prospective buyers and inspections by the City of Richmond remain permitted grounds for access. The Richmond ordinance directs the Rent Board to create regulations for the process of rental property owners entering units for repairs, which are regulations that neither Berkeley nor Oakland have. Richmond also prohibits use of “lock boxes” on occupied units, without defining what a “lock box” is, although it presumably refers to the removable security lock commonly used by realtors.
  • Temporary Vacancy for Substantial Repairs: Richmond is very similar to Berkeley in its requirement for offering a replacement unit to the tenant, if available, and a mandatory minimum 30-day notice for repairs that can be completed in less than 60 days. However, unlike Oakland, Richmond does not require rent board permission if the repairs continue for more than 60 days, and does not set forth any other special notice requirements or instructions in that case.
  • Owner/Relative Move-In: Richmond combines elements from Oakland and Berkeley in regulating owner and relative move-ins (OMI). As in Oakland, qualified relatives include the rental property owner’s spouse, children, parents, or grandparents. Similar to Berkeley, Richmond requires that the owner have at least 50% ownership in the property, and creates a protected class of tenants who are over 62 years old, disabled, or terminally ill. The Rent Board is authorized to create regulations that define the owner’s good faith compliance with the OMI process.
  • Withdrawal from Rental Market: This just cause includes demolition as well as Ellis Act evictions. Richmond requires compliance with City regulations, and in the case of demolition, applicable permits. Standard Ellis Act restrictions apply.
  • Temporary Tenancy: Richmond recognizes a type of short-term tenancy the owner can create to temporarily rent their own home. This is similar to provisions in Berkeley and Oakland that allow owners to recover units they previously resided in, except that Richmond requires this tenancy to be for a term of less than a year.
  • Other Causes: Unlike in Berkeley or Oakland, there is no cause to evict tenants who refuse to sign a substantially identical lease at the expiration of a fixed-term lease. The Richmond ordinance also does not expressly reference illegal use of the premises as cause for eviction, although that may arguably be covered by “nuisance”, since the ordinance does not contain its own definition of “nuisance.”

Are There Any Special Notice Requirements?
In the case of breach of lease, denial of access, or nuisance, in addition to other standard requirements, a formal notice to cease must inform the tenant that they may request a reasonable accommodation. However, Richmond does not define “reasonable accommodation”, leaving it unclear whether this is the same standard which applies in accommodation requests under the Fair Housing Act, or a different standard entirely.

Richmond does not state how much time tenants must be given to comply with a warning notice, only that the owner should issue the warning a “reasonable” time following the triggering event.

Notices terminating tenancy must also include copies of the prior warning notices to cease. Berkeley and Oakland do not require prior warning notices to be attached to the termination notice.

Penalties for Noncompliance
In Berkeley and Oakland, failure to comply with their respective ordinances is an affirmative defense to an eviction action. Richmond goes further, granting a cause of action to the Rent Board itself against owners for wrongful eviction and injunctive relief if they fail to comply with the ordinance.
In addition, Richmond imposes a one-sided attorney’s fees award against owners if the tenant prevails, a provision found to be illegal in San Francisco (Larson v. City and County of San Francisco.)

Are Relocation Payments Required?
Tenants are entitled to relocation payments if they vacate for substantial repairs, an OMI, demolition, or pursuant to the Ellis Act. The amount of relocation payments are to be determined by a future ordinance to be passed by the City Council, but at the time of publication of this article, no such ordinance had yet been passed.

Does Richmond Prohibit Retaliation Against Tenants?
Richmond specifically protects tenants who exercise their rights under the ordinance, withhold rent under “common, state, or local law”, as well as tenants with the same owner who seek to organize with each other. Tenants may claim a defense against owners who seek to evict tenants “knowingly in retaliation” for doing those things. This retaliation protection appears to be open-ended, in contrast with Berkeley, which creates a presumption of retaliation if an eviction action is taken against a tenant within six months of that tenant exercising their tenancy rights. Oakland creates no special defenses or presumptions concerning retaliation, except to require the owner to seek possession with “good faith, honest intent, and no ulterior motive.”

Who Can Serve on the Rent Board?
There will be 5 members, appointed by the City council. No more than 2 of the Board members may own or manage real estate, or be “realtors.” Any violation of local, state, or federal law pertaining to housing may be a disqualification from service on the Board. All Board members must disclose all of their property ownership and dealings for the three years prior to Board nomination. Board members serve 2 year terms, up to 10 years total.

In Oakland, the board has 7 members: 2 residential rental property owners, 2 residential tenants, and 3 persons who neither rent nor own residential rental property, appointed by the city council.

In Berkeley, the Rent Board has 9 members, which are elected by city residents. There are no restrictions on professional status or property ownership, but candidates’ asset holdings must be disclosed when they run for office.

How Will the Rent Board Control Rent?
As of December 30, 2016, all rents are rolled back to the rental value of each unit then existing on July 21, 2015, or the amount of rent first paid if the tenancy began after July 21, 2015. This means a unit rented August 1, 2015 for $1,500, with rent raised to $1,575 August 1, 2016, would have its rent reduced to $1,500 on January 1, 2017. However, owners are not obligated to return or refund the difference in rent received since July 21, 2015.

The Rent Board may adjust individual rents upward or downward based on owner or tenant petitions, but it is unclear if petitions are mandatory for any particular rent increase. Instead, the Richmond ordinance states that “limits on the total increase per month and length of monthly increase shall be promulgated by the Board through regulations.”

In Oakland, any increase other than CPI or banking requires rent board approval by owner petition. In Berkeley, the rent board tracks the “rent ceiling” of each individual unit in the city, and owners may only change the rent ceiling by petitioning the Board for an adjustment. In this aspect, Richmond appears to resemble Berkeley more closely than Oakland.

Can the Rent Board Charge Any Fees?
The Rent Board can charge a “Residential Rental Housing Fee” alongside any business license fees imposed by the City. Click here for more information.

Does the Rent Board Regulate Utility Fees?
Owners are prohibited from charging for utilities unless the utility is separately or individually metered. Neither Berkeley nor Oakland have a similar restriction.

What are Owners Required to File with the Rent Board?
Rent increase notices, notices of change of terms of tenancy, and termination notices must be filed with the Rent board before serving. The Richmond ordinance also includes the paradoxical instruction that, “A proof of service of with time and date of service of notice shall be included with notice filed with the City.” Until there are regulations or other action taken to clarify this cryptic provision, we recommend that proofs of service filed with the Rent Board state the owner’s intention to serve the notice on the tenant immediately following filing the notice with the Board, and that the owner file the complete proof of service with the Rent Board afterwards.

Oakland requires that termination notices be filed with the rent board within 10 days after service on the tenant, and Berkeley requires termination notices and unlawful detainer complaints to be filed with the rent board within 10 days after service.

Can Owners Contract Around the Richmond Ordinance with Their Tenants?
Any provision of the ordinance which benefits the tenant cannot be waived or contradicted by an oral or written lease, agreement, or other contract.

Does Richmond Impose Any Other Obligations Upon Owners?
Owners must distribute the informational brochure that will be published online by the Rent Board at the commencement of each tenancy, and also with every rent increase. This is similar to the Rent Adjustment Program form Oakland requires to be delivered at the start of a tenancy and with every rent increase. Berkeley does not require any special rent board notices or literature to be distributed by the owner.

Conclusion
A review of the Richmond ordinance reveals that it incorporates some of the more restrictive elements of both the Berkeley and Oakland ordinances, while adding additional limitations of its own. In other areas, there is still a significant amount of rulemaking yet to come, particularly for limits on rent increases, procedures for repairing units with tenants in possession, setting standards for owner move-ins, and when and how certain documents should be filed with the Board. Finally, certain other provisions of the ordinance remain unclear, and at least one appears to be illegal on its face.
Until the Richmond ordinance is challenged in court, and the rulemaking is complete, Richmond rental property owners should (1) take care to ensure that their 2017 rents match their July 21, 2015 rents, (2) update their notices to include the required information about the Richmond Rent Board, and (3) make sure that all notices are filed with the Board prior to service on the tenant, and the proofs of service are also filed with the Board after service. RH

The information provided herein is intended to provide general guidance and awareness on recently passed laws and regulations and shall not be construed in any way as a substitute for individual legal advice. Those that require specific advice should consult an attorney. Matthew Quiring is an attorney with Fried & Williams LLP. He can be reached at 510-625-0100 or .

Photo by Flickr User Calmuziclover

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