NCR Properties, LLC v. City of Berkeley
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Landlords purchased two derelict Berkeley single-family homes and converted them into triplexes. One house had been operated as an unpermitted rooming house and the other had been registered as a rooming house since 2000. After the units were rented, a dispute arose as to whether the properties were subject to Berkeley’s Rent Stabilization and Eviction Ordinance. Landlords contended the new units were exempt from local rent control under the Costa-Hawkins Rental Housing Act, Civil Code 1954.50, which provides an exemption for residential units that have a certificate of occupancy issued after February 1, 1995. Berkeley’s Rent Stabilization Board disagreed as to four of the six units. The Board concluded two units in each building were carved from space that had been rented for residential use before the current certificates of occupancy were issued; those units reflect a mere conversion from one form of residential use to another, rather than an expansion of the housing stock. Only an attic unit in one building and a basement unit in the other are exempt from local rent control as new construction
The court of appeal agreed. Because the four units in dispute were converted from space long dedicated to residential use, precedent indicates that Costa-Hawkins does not exempt them from local rent control as new construction.
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