A long-term tenant has passed away. His adult son, who previously lived in the apartment with his parents but now lives with his family in his own home, has taken over the below market rate lease. He claimed his intention had always been to return to the apartment eventually. Is there anything I can do to increase the rent or start a new lease?
Yes. You should immediately serve a notice of rent increase raising rent to market. Under a state law known as the Costa-Hawkins Rental Housing Act, a landlord may impose an unlimited rent increase when the last original occupant no longer permanently resides in the apartment and the person remaining behind is a lawful subtenant or assignee. The subtenant or assignee has the right to contest the rent increase by filing a petition with the Rent Board or challenging the rent hike in superior court. The adult son will likely contest this bump by claiming that he is still an “original occupant” despite having previously moved out.
There is no definitive law or decision which resolves the question as to when someone loses permanent occupancy status. Rent Board rulings have been all over the map. Two recent Court of Appeal decisions permit children to take over their departed parents’ lease at the rent controlled rate, but in both of those cases the now-adult offspring had continuously lived in the apartment or had departed temporarily. Similar Rent Board decisions afford kids the ability to return and to resume their original occupancy status if the period of absence was “justified,” meaning for school, military service, extended work travel and the like.
Here, you have a situation where the adult son lives with his family in his own home and is now taking advantage of his parents’ passing. His purported self-serving intention of wanting to come back should not be the determinative factor as to whether he should be able to resume his original occupancy status. Rather, because his absence was not temporary or transitory but instead permanent, the hope is that the Rent Board or superior court judge would hold that he was no longer an original occupant when his last parent passed away and that he cannot just unilaterally reinstate his prior original occupancy status because of the death.
The key, however, is to issue the rent increase immediately. The notice period will likely be sixty days as the new rent will exceed 10% of the current rate. During this 60-day period, you should not cash remitted rent from the son. As for starting a new lease, a Costa-Hawkins rent increase is an affirmation that the current tenancy with the current lease continues with a new monthly rent, so you can ask but cannot compel the son to sign a rental agreement.
The more complicated scenario is when an adult child returns during the lifetime of the parents. Had that occurred here, there would be a more compelling case that the son’s original occupancy status was reinstated. Indeed, there have been Rent Board decisions where an adult child divorces or undergoes a life change and does move back before mom and dad depart, and in some of those instances the existing rental rate was deemed to remain intact.
In sum, you should immediately issue the rent increase. Retain a competent attorney to guide you through the process and gather the evidence through a private investigator or any other reliable source to show when the son moved out, when he bought his own home, and when you first received notice of his alleged intention to move back in. If he is seen as simply trying to use the rent law not for his own legitimate housing needs but as a means to profit, then your rent increase should survive.