Rebate Coupon Scheme at Large San Francisco Apartment Complex Violates Rent Control Laws, Tenant Class Action Suit Says
SAN FRANCISCO, CA -- October 4, 2006 -- Exposing a rebate coupon scheme used by one of the Bay Area's largest apartment building owners in an effort to avoid San Francisco's rent control laws, tenants of The Villas Parkmerced apartment complex filed a class action suit in San Francisco Superior Court to restore their rents to their legal maximums and for restitution of unlawful rent increases.
According to the complaint, The Villas Parkmerced routinely uses a rebate coupon gimmick to obscure the true base rent charged tenants upon initial occupancy. Tenants sign leases that state a significantly higher rent price than what they actually pay. This allows Parkmerced to raise the rent 20%-30% after one year, when the laws of rent control only allow a 1%-2% increase.
This violates San Francisco's Rent Control Ordinance, which allows a landlord to raise the rent on a unit to market rate when it becomes vacant and a new tenant moves in; once this new rent is determined, however, the rent is again controlled during this tenant's occupancy.
"The case exposes Parkmerced's illegal efforts to make an end-run around San Francisco's rent control laws, which allow a landlord to set the rent on a vacant unit at any level, but strictly controls rent increases during an existing tenant's occupancy" said an attorney from Brayton Purcell. "The Villas Parkmerced's rebate gimmick is a blatant attempt to subvert the basic legal rights of San Francisco renters by 'contracting around' rent control, a clear violation of the law. The goal of this lawsuit is to bring these rents back down to their lawful maximums and get restitution for former and current tenants who paid illegal rents."
Brayton Purcell cited the named plaintiffs in the lawsuit, David Franklin and Derek Tanguay, as an example of this scheme. The two tenants agreed to rent a unit for $1325 per month in September of 2005. The Villas Parkmerced arrived at that rent by creating both a lease document that stated a monthly rent of $1675 per month and a second document, an addendum to the lease, which issued 12 coupons called "Bonus Bucks" that deducted $350 per month from the purported $1675 rent. Under the rent control ordinance, this year a landlord charging $1325 a month rent would have been able to legally raise an existing tenant's base rent by only $22.52 (1.7%). Instead, effective October 1, 2006, The Villas Parkmerced raised these plaintiffs' rent from $1325 to $1703 (28.5%).
"Preventing such drastic rent increases for existing tenants is precisely why the people of San Francisco instituted rent control in the first place. This conduct hurts the tenants of course, but it is also very unfair to the thousands of mom-and-pop landlords in San Francisco who do the right thing and obey the rent control laws," a Brayton Purcell attorney said.
Current or former tenants of The Villas Parkmerced who wish to participate in the class action may contact us via email.