Baychester Shopping Center, Inc. v. San Francisco Residential Rent Stabilization & Arbitration Board

Baychester Shopping Center, Inc., Thomas Iveli, and 406-10-12 Realty Corporation (collectively, Baychester) appeal from the trial court’s order upholding respondent San Francisco Residential Rent Stabilization and Arbitration Board’s (Board) decision finding Baychester liable for rent overpayments charged to tenant Larry Fingerhut by the former landlord and owner of a nine-unit apartment building. Baychester contends that it cannot be held liable for the unlawful rent increases imposed by the former landlord. We affirm.

I. FACTUAL BACKGROUND

In December 2005, Baychester purchased the nine-unit building located at 1040 Ashbury Street in San Francisco from Svend Hansen. Hansen rented unit No. 8 in the building to Fingerhut in 1991. The building was subject to San Francisco’s Residential Rent Stabilization and Arbitration Ordinance, San Francisco Administrative Code, chapter 37 (rent ordinance).

In 1991, Hansen and Fingerhut entered into a lease agreement under which the rent for unit No. 8 was $950 per month. In 1994, Hansen and Fingerhut agreed that Fingerhut would manage the building in exchange for a free rental of unit No. 8. Hansen terminated the management…