Am I required to have an on-site manager for my 16-unit building? There is a resident who takes care of the building’s maintenance for me in exchange for discounted rent. Is this good enough?
The short answer is “no.” There is common misunderstanding about this requirement in our industry. The law that speaks to this issue, 25 California Code of Regulations Section 42, states as follows:
“A manager, janitor, housekeeper, or other responsible person shall reside upon the premises and shall have charge of every apartment house in which there are 16 or more apartments, and every hotel in which there are 12 or more guest rooms, in the event that the owner of an apartment house or hotel does not reside upon said premises. Only one caretaker would be required for all structures under one ownership and on one contiguous parcel of land. If the owner does not reside upon the premises of any apartment house in which there are more than four but less than 16 apartments, a notice stating the owner’s name and address, or the name and address of the owner’s agent in charge of the apartment house, shall be posted in a conspicuous place on the premises.”
In essence, the 16 residential unit or more buildings do not need to have a resident manager living on-site, but in many instances the owner may want to have an on-site manager especially if the property is large and requires many daily functions. More commonly, however, a “responsible person” will suffice, which typically consists of an existing tenant that is charged with certain tasks such as (i) being the contact for all residents should an emergency arise; (ii) having access to the utility room and building systems to permit servicing or to perform emergency shut-offs; (iii) holding the master key to address accidental lock-outs; and (iv) administering building repairs with vendors. Indeed, a responsible person may simply act as the point-of-contact and not possess other significant management functions.
Whatever arrangement you elect to pursue or have otherwise inherited, please ensure that it is properly documented in a signed writing. For starters, you want a clear understanding of the nature and extent of the person’s responsibilities. Secondly, labor laws govern how managers and even in most circumstances janitors, housekeepers, and other responsible persons are to be compensated. While offsetting rent is oftentimes one manner of payment, both state and local law govern the amount and extent of rent offsets. State law limits the maximum monthly rent charged to an on-site manager, and the San Francisco rent law may deem a rent reduction to be permanent unless it is properly documented in a signed agreement.
Lastly, the Department of Building Inspection is actively enforcing this law. Violators will receive a “Notice of Violation” and given a short time period to appoint a responsible party. In addition, DBI takes the position that an owner owning neighboring buildings on separate lot and block parcels must likewise engage separate responsible parties in each 16 or more unit building.