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San Francisco In-Law Units Can Now be Legal

Ordinance No. 43-14, which provides a process for real property owners to legalize existing in-law units, goes into effect on May 17, 2014. The ordinance applies to existing residential in-law units that were constructed prior to January 1, 2013 without a permit. Generally, the ordinance does not apply if a notice of eviction was served on a tenant after March 13, 2014 pursuant to the no-fault eviction provisions in sections 37.9(a)(8) through 37.9(a)(14) of the San Francisco Residential Rent Stabilization and Arbitration Ordinance.

To legalize an in-law unit, an owner, or an authorized agent of an owner, must first go through a screening process to determine whether the in-law unit is eligible for legalization. After completion of the screening process, the owner or agent may then apply for the necessary permits to legalize the uni. If a tenant must be temporarily displaced due to work required to legalize an in-law unit, the landlord must provide relocation assistance pursuant to section 37.9C of the Rent Ordinance or California Civil Code § 1947.9, where displacement is for less than 20 days.

Once the screening process is initiated, enforcement of any pending notice of violation issued by the Department of Building Inspection for the in-law unit is temporarily suspended if all violations in the notice would be corrected by legalization of the unit. Additionally, the notice of violation is rescinded if the in-law unit is legalized within one year upon commencement of the screening process.

The legalization of an in-law unit will not affect whether the unit is subject to the San Francisco Residential Rent Stabilization and Arbitration Ordinance. Accordingly, if an in-law unit was subject to the Rent Ordinance prior to legalization, it will remain subject to the Rent Ordinance after legalization. Further, a landlord may not pass the costs of legalization of an in-law unit to tenants via a rent increase.

For years, tenants who resided in unpermitted in-law units were at risk of losing their rent-controlled tenancies under section 37.9(a)(10) of the Rent Ordinance, which allows a landlord to recover possession of unit in order to demolish or permanently remove the rental unit from housing use. Many tenants in in-law units have also been left without administrative recourse for housing code violations, as an inspection by the Department of Building Inspection for habitability issues would often lead to a notice of violation being issued for the unpermitted in-law unit. With the passing of this Ordinance, these tenancies can now be given legal status, eliminating the fear of eviction pursuant to section 37.9(a)(10) and providing tenants with a means to force the landlord to maintain habitable premises. Although legalization of in-law units can only be initiated by owners, owners are incentivized to take advantage of this Ordinance, as they will be able to continue to collect rent for their in-law units without the fear of being forced to demolish them after being cited with a notice of violation from the Department of Building Inspection.