Rent Gouging

Rent control is a tremendous benefit to tenants. However, there are those master tenants who take advantage of the high cost of rent in the Bay Area by overcharging roommates. While some tenants may feel they have a right to charge a roommate whatever they want, the Rent Ordinance expressly forbids master tenants from rent gouging. Here we offer a breakdown of the laws on this issue and some suggestions on how to handle the situation if you find out you are being overcharged.

What is a Master Tenant?

A master tenant is a tenant who sublets a room in an apartment to another person. Most commonly this comes about when someone signs a lease and then has a roommate move out. When the remaining tenant brings someone else in to replace their roommate, they become the master tenant.

The master tenant acts as the landlord for the subtenant. This type of relationship differs from co-tenants in that with co-tenants, each of tenant has a direct relationship with the landlord (i.e. a situation where you both sign a lease with the landlord). When there is a master tenant involved, the subtenant doesn’t have any sort of rental agreement with the landlord/property owner and the master tenant acts as a sort of go-between between the two.

How Much Can a Master Tenant Charge a Subtenant?

A master tenant can only charge a subtenant a “proportional share” of the total rent. So, how does this play out? If you live in a two-bedroom apartment where each of the rooms is roughly the same size, then the rent should be divided evenly. However, where one room is bigger, or has additional amenities, that can and should be taken into consideration in determining each person’s rent. It is reasonable and fair for the person with the bigger room or private bathroom to pay more.

One way to quantify this is to look at the respective square footage. If the master tenant provides additional services such as furnishings, they can charge extra for those as well – within reason. What a master tenant cannot do is set the rent for a room at market rate when they are paying below market for the apartment.

How do I know if I’m Being Rent Gouged?

To help ensure that subtenants aren’t being rent gouged, the Rent Board rules require your master tenant to tell you what the total rent for the entire apartment is at the beginning of your tenancy. If they don’t tell you, then you can of course ask. One way to make this less awkward is to ask for a copy of the lease. That way you don’t have to come right out and imply you don’t trust them not to rip you off.  If the master tenant refuses to show you the lease or share information on the amount of rent with you, that should be a big red flag, and a tip off that you might be better off looking for another apartment.

If you aren’t sure if your master tenant is overcharging you, consider how long they have been living in the unit. If they’ve been living in the apartment for years and are charging you $1,600 a month, chances are good that you’re overpaying.

What Can I Do if I Find Out I’m Being Overcharged?

If you live in Oakland or San Francisco, you can file a petition with the Rent Board against your master tenant and seek compensation for overpayment of rent. The Rent Board will then hold a hearing on the issue where you will have an opportunity to present your case in front of an Administrative Judge. The Rent Board has the power to reduce a subtenant’s rent going forward, and compensate the subtenant with a further reduction in rent to cover the overpayments of the past.

The other option is to sue the master tenant in Superior Court. If the amount being sued for is under $10,000, then it will likely make sense to file in Small Claims Court.

The downside of going the legal route is, of course, that it’s not going to do anything to improve your relationship with your roommate. No one wants to live in a hostile environment, and bringing a case against your roommate could lead to other, bigger problems.

With that in mind, you may want to try working it out informally first.  If you reach an understanding, be sure to memorialize it in writing so you have a record. There are also cost-effective services for mediation such as Community Boards, which can provide a forum for talking out a solution with the help of a third party. Ultimately you will have to decide what the right choice is for you and whether it is worth it to take legal action.

Whatever you decide, keep yourself as informed as possible and remember there are options if you need them. For questions about your legal rights, contact the SF Tenants’ Union or the Housing Rights Committee.