Rebate Coupon Scheme at Large San Francisco Apartment Complex Violates Rent Control Laws, Tenant Class Action Suit Charges

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The Villas Parkmerced, San Francisco's largest apartment complex, allegedly uses rebate coupons to conceal the true base rent on apartments in an illegal effort to circumvent rent control, according to a lawsuit filed by plaintiff's firm Brayton Purcell on behalf of tenants in 3,456 units.

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Alleging a rebate coupon scheme used by one of the Bay Area’s largest apartment building owners is 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.

Plaintiff’s firm Brayton Purcell is representing the tenants in the case, titled Franklin v. The Villas Parkmerced, et.al (#CGC-06-456720).

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, the complaint alleges, allowing Parkmerced to raise the rent 20%–30% after one year, when the laws of rent control only allow a 1%–2% increase.

The complaint alleges that this process 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. Then, once this new rent is determined, 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 Brayton Purcell attorney Peter Fredman. “The Villas Parkmerced’s rebate gimmick is a blatant attempt to subvert the basic legal rights of San Francisco rentors 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.”

Mr. Fredman 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, according to Mr. Fredman. 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%), according to Mr. Fredman. 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,” Mr. Fredman said.

Current or former tenants of The Villas Parkmerced who wish to participate in the class action may contact Peter Fredman, Esq. at pfredman @ braytonlaw.com or by telephone at 415–898–1555.

About Brayton Purcell

For over 20 years, Brayton Purcell has helped clients protect their legal rights in the face of devastating problems such as illness, injuries, financial losses and harm to family members. For more information about our services, call 415-898-1555 or visit the firm web site at http://www.braytonlaw.com

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