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San Francisco couple’s suit over tripled rent could have dire consequences

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Upcoming appeal might decide if huge rent hikes are de facto evictions or business as usual

A boxy square house in the Sunset.
The house that litigation built (center)
Google

In February of 2016, San Francisco couple Danielle Phillips and Paul Kelly discovered that their new landlord had more than tripled the rent on their home at 1591 45th Avenue, from $1,900 to $6,700/month.

Ouch.

As San Francisco Magazine’s Lamar Anderson reports, the pair allege in an ongoing lawsuit that landlord Matthew Dirkes—a lawyer with experience in real estate law who bought the place the previous year for $750,000—used the rent hike as a de facto eviction before moving in himself, doing an end-run around the Ellis Act.

Although huge rent increases are often in the news as of late, and although common sense tells us they amount to an eviction in practice, it’s unclear whether such a maneuver is illegal or not.

“We’ve probably had 20 of these cases and they’ve all settled,” Kelly and Phillips’s lawyer Joe Tobener explained. As such, there has been no opportunity for precedent.

Which means that the couple’s outcome could decide the potential fate for thousands of other renters whose landlords might be interested in a quick, convenient, legal way to oust them.

The Sunset District pair’s suit made no bones about the fact that they think their landlord simply wanted to railroad them out of the house without bothering with a formal eviction:

Dirkes purchased the building with the intent of making it his primary residence. Dirkes never intended to continue renting to the plaintiffs. Instead he used the above-market rent increase to force Plaintiffs out of the unit, which was protected by the just cause provisions of the rent ordinance. [...] A few weeks after plaintiffs were forced out, Dirkes moved in.

The suit also notes that Dirkes first demolished part of the home’s in-law unit, apparently so that the building no longer qualified as a two-unit building and thus was no longer subject to local laws that would bar such a rent increase in a multi-unit home.

The pattern of behavior appears damning at face value. The defendant’s attorney, Andrew Zacks, told the court there’s no disagreement about the facts of the case.

Zacks’s defense was simply the cold, hard letter of the law: It doesn’t matter why Dirkes did what he did, the lawyer said in his petition asking the court to throw the suit out. All that matters is that it was legal.

“Defendant’s right to raise the property’s rent under Costa-Hawkins [California’s rent-control law] is unimpeded,” wrote Zacks. “Recognizing that owners of qualified properties have unfettered right to raise their rents, San Francisco expressly exempted such properties from the rent ordinance.”

The judge agreed and dismissed the whole suit earlier this year. But the plaintiffs have decided to appeal.

Here’s where it gets problematic: If a second court decides that there’s no grounds for such a suit, owners of non-rent controlled, single-family homes in San Francisco and beyond could increase rent at their leisure and at any amount.

“If we lose this case on appeal, there will be no eviction protections at all for single-family homes and condos across the entire state,” lawyer Tobener told San Francisco Magazine.

Or rather, there will be plenty of protections—and not a single way to effectively enforce them. The heaviest door lock doesn’t do any good once someone knocks a giant hole in that wall.

Stilfehler