The San Francisco Bay Area continues to be one of the most competitive markets for rentals. Even after 2016’s recent drop in rent rates by 2.7% year over year, the demand for housing is still consistently high.
Deb Follingstad is a tenant in San Francisco who received a 315% rent increase by her landlord in 2015. The monthly rent was $2,145 for her a two-bedroom flat above a former gas station in Bernal Heights. She received a notice to increase rent to $8,900 with an additional security deposit of $12,500 while having no physical additions to the unit. The landlord increased prices to forcefully evict the tenant with intensions to move in after.
Follingstad sued her landlord and was awarded a settlement of $400,000. Follingstad’s lawyer stated, “It's the highest amount we've ever settled a case [of this type]”. The reason for this high settlement is because rent and emotional distress damages are automatically tripled under San Francisco’s Rent Ordinance.
What Can Landlords Do?
Truth is, rental horror stories like this one happen all the time. Here are some tips for all landlords to make sure you will not be caught in this type of fiasco:
- Don’t spend the security deposit
The security deposit is not the landlord’s money! Landlord’s can only use these funds to repair the home after move out.
- Get an umbrella liability policy
This is necessary for landlords to protect themselves. It’s inexpensive and easy to add to an existing insurance policy. This is just another safety tip to protect your personal assets.
- Get advice from a professional
We recommend this tip to both tenants and landlords. Real estate law is tricky. Consulting with an attorney early on will mean any illegal or unjustified actions are averted.
If the Follingstad’s landlord talked to an attorney before posting a notice to increase rent, this entire lawsuit could have been avoided.