The owner of a building at Ellis and Hyde streets is in hot water with the city for not providing hot water for tenants, and a new city lawsuit says he also allowed rampant rat infestations, sewage leaks, and doors that didn’t lock.

A landlord named Charles C. Kartchner has owned the ten-unit residential apartment building at 646 Ellis Street for only less than a year and a half. Yet in that short time, SF Department of Building Inspection director Patrick O’Riordan says that Kartchner’s short tenure as landlord there “really stands out for the sheer number of violations that led to unsafe conditions for the tenants.” Those alleged violations and unsafe living conditions include tenants not having heat or hot water in their units, facing rodent infestations, sewage leaks, and mold problems, plus the building lacking functioning locks on some doors.

This is all coming to light now, as KRON4 reports that SF City Attorney David Chiu is suing Kartchner over the conditions at 646 Ellis Street. The lawsuit notes that the Department of Building Inspection (DBI) has slapped Kartchner with five notices of violations regarding the building, and that Kartcher has no-showed at all of the public hearings about these violations.

“This property owner took rent from each tenant then turned around and refused to provide the most basic necessities like hot water and heating,” Chiu said in a Wednesday press release. “Every tenant deserves a safe and clean place to live. It is the landlord’s responsibility to ensure their property doesn’t deteriorate. We gave this owner ample opportunity to address these issues to no avail. We have no choice but to file this lawsuit to bring accountability, protect the tenants living at the property, and cure the many health and safety violations.”

There are reportedly around 25 tenants in the building, and the Chronicle has the interesting footnote that they are all Vietnamese immigrants. Those tenants had already brought a separate lawsuit against Kartchner over these alleged violations, a suit filed in April by the Tenderloin Housing Clinic.

“It is essential to enforce tenants’ rights to promote a high quality of life for San Franciscan residents,” Tenderloin Housing Clinic program manager Gloria del Mar Lemus said in Chiu’s release. “Tenants are already paying a high price to live in the city. Landlords cannot continue to violate housing codes by allowing their tenants to live without hot water or in properties with pest infestations or collapsing ceilings. The role of the City Attorney is essential when the violations get out of hand.”

According to the full lawsuit, Chiu’s office is asking a judge to fine Kartchner “$1,000 for each day that the Housing Code violations alleged in the Complaint existed or were permitted to occur in the amount of at least $224,000 through October 18, 2025, plus $1,000 per day thereafter through the entry of judgment.”

Related: SF’s ‘Cruelest Landlord’ Back in News, Tenants Win $2.7 Million Harassment Appeal [SFist]

Image via Google Street View

When Elon Musk took over Xitter, he made headlines for apparently refusing to pay rent at the social media giant’s Market Street office.

Now, the company that owns the property, SRI Nine Market Square LLC, has sued X and is looking for $13.6 million to refill a line of credit, according to court filings, as the Chronicle reported.

The landlord reportedly used Xitter’s existing $3.6 million line of credit to pay the company’s rent in December of 2022 and part of January of 2023, right after Musk bought the company. SRI Nine Market Square is now looking to replenish that and increase the line of credit by an extra $10 million, which was in the original 2011 lease from when Twitter first moved into the offices at 1355 Market St., the landlord said.

X’s legal team had disputed that these claims, saying that the company did pay rent in December 2022, January 2023, and February 2023. But the New York Times reported at the time that the initial rent nonpayment was one of X’s “cost-cutting measures,” along with allegedly stiffing vendors, auctioning off office furniture, and negotiating limited severance packages to former employees.

It seems that Xitter did start paying rent on the space after all the initial chaos, because the nonpayment might have just been a negotiating tactic on Elon Musk's part to try to get better lease terms. But now such tactics are coming back to bite him: Musk reportedly tried the same tactic for X’s office space in Boulder, Colorado, and faced eviction last year, per Quartz.

But hey, sure, when you lay off more than half the company, including most of your legal team, who knows how much office space you actually need, not to mention how you’re going to hold up in court. And X is reportedly heading to trial with its SF landlord on May 6.

Previously: Twitter Reportedly Not Paying Rent as Musk Lawyers Up For That and Other Legal Battles [SFist]

Feature image of the roof of the former Twitter headquarters on July 28, 2023 in San Francisco, California. A week after X CEO Elon Musk officially rebranded Twitter as "X" and changed its iconic bird logo, an X logo was installed on the roof of the social media platform's headquarters. Photo by Justin Sullivan/Getty Images.

SF’s biggest residential landlord Veritas Investments reportedly has $1 billion in delinquent loans that the company is trying to sell off, and could lose about a third of its properties across town.

We hate to see misfortune befall any business in San Francisco. Well, except for maybe on certain occasions, when the misfortune is befalling a company whose profitability depends on evicting rent-controlled tenants while racking up record numbers of code violations. We’re referring to Veritas Investments, who apparently have $1 billion in delinquent loans, according to a Thursday report in the Chronicle. That follows a January report in the Chronicle that Veritas had defaulted on a $448 million loan, and the company could end up losing up to a third of its inventory in the city over this accumulated debt.

In real estate and banking industry lingo, these defaulted loans are referred to as “nonperforming” loans, and a third-party brokerage called Eastdil Secured is trying to sell off these loans. The Chronicle obtained the marketing materials Eastdil is using to market these loans, and they use corporate marketing-speak that would make Kendall Roy proud.  

The brochures call these loans “an irreplaceable aggregation of high-quality assets at a highly opportune time in the San Francisco market” and “an exceptional opportunity to achieve immediate scale with tremendous downside risk protection and a compelling growth trajectory,” per the Chronicle.

But the San Francisco Business Times summarizes in plain English what this means for Veritas. “The latest move appears to indicate that the lenders would prefer to sell the loans to another entity that would likely foreclose and take ownership of the properties,” according to the Business Times.

There are two portfolios of loans Veritas is trying to unload. The first is a collection of 75 buildings with 45 commercial spaces (generally ground-floor retail on apartment buildings) that has defaulted to the tune of $802 million. The second consists of 20 buildings and defaulted in January on $138 million.

There may be more to the strategic story here, when it comes to these properties. Veritas said in a statement to the Chronicle that they are “continuing to work with our partners and lenders toward a resolution on a portfolio owned by institutional investors,” and that “one of the parties in the lending and ownership structure has taken another step in the special-servicing process previously reported, and the loan-note may be sold to other parties, or may continue to involve Veritas.”

You may recall that Veritas tenants formed a union and some even went on a rent strike, alleging a pattern of illegal evictions and unaddressed code violations.  One such code violation, according to Housing Rights Committee of SF organizer Brad Hirn, is a Mission District building that hasn’t yet had its required soft-story retrofit — something the city required all buildings to complete by 2021 out of earthquake safety concerns.

Hirn told the Chronicle, "The tenants have been told that Veritas isn’t doing the soft-story work because they are in debt."

Related: SF’s Biggest Landlord Insists It Won’t Delay Selling Its 67 Rent-Controlled Building [SFist]

Image: Veritas via Facebook

An angry group of San Francisco landlords and property owners are taking legal action against the city's recently passed "Empty Homes Tax" (Proposition M) to try to get it overturned, court records show.

The new lawsuit comes from a handful of San Francisco property owners, including Eric Debbane and Andrew Debbane, brothers who own several residential buildings in the city; Robert Friedland, who owns a NOPA apartment building; and Natasa Zec, who owns a Divisadero condo; as well as the San Francisco Apartment Association, the Small Property Owners of San Francisco Institute, and the San Francisco Associaiton of Realtors. It is suing the city and tax collector Jose Cisneros over the legality of the vacancy tax, the SF Standard reported.

The tax measure was approved by 54.5% of voters in November last year, and starting in 2024, charges property owners for each unit left unoccupied for more than 182 days annually — only for buildings with three or more units, not single-family homes or duplexes. The tax ranges from $2,500 for less than 1,000-square-feet units and goes up to $5,000 for units over 2,000 square feet, with increases for inflation over time.

Its goal was to put pressure on landlords to rent out vacant properties and help stabilize rent prices, and the revenue generated fom the tax would go towards rent subsidies for seniors and low-income households, plus developing affordable housing projects, according to the Chronicle.

RELATED: Final Local Ballot Measures Called: Prop M Vacancy Tax Wins, Prop E Affordable Housing Measure Falls [SFist]

Reports estimating how many units would be subject to the tax have differed, with the Budget and Legislative Analyst counting about 40,000 units, but the Controller’s Office saying there are only about 4,000 units subject to it.

However, the lawsuit claims that the new tax violates the law and is unconstitutional. The legal filing says that that “the government cannot compel a property-owner to rent his or her property to third parties without violating” the Takings Clause of the U.S. Constitution,” the Chronicle also reported.

Supervisor Dean Preston, who was a proponent of Prop M, said on Twitter called the group behind the lawsuit “real estate industry lobbyists.”

These real estate industry lobbyists are fighting for the nonexistent constitutional right to keep housing units vacant with no consequence. Imagine fighting for that while people are homeless. https://t.co/273cBnBACA

— Dean Preston (@DeanPreston) February 11, 2023

Spokesperson from the city attorney’s office, Jen Kwart, said that the office hasn’t been served with the lawsuit, according to the Standard.

Image via Unsplash/@nahshabear.

With a fondness for black and red ink, a tenant at Oak and Broderick seems peeved with their current living situation, which allegedly involves rats, urine, fecal matter, and an illegal rent increase.