Paul Kelly and Danielle Phillips had a good deal: They paid $1,900 a month for their 1,000-square-foot two-bedroom apartment in the Outer Sunset neighborhood of San Francisco. At the time, that was well below the $4,650 median rent for a two-bedroom apartment in the city, according to financial website Smart Asset.
Then, in January 2015, the couple's new landlord, attorney Matthew Dirkes, tripled the rent to $6,700. He gave the pair until April to comply.
Kelly, an electrician, and Phillips, a bank manager, opted to move out and to take the matter to court. They filed a lawsuit, claiming Dirkes' rent hike was a play to get them out of the house without serving them with a formal eviction.
"Let's be honest," Kelly tells San Francisco Magazine, "any person could see that he was doing this to get rid of us. He knew we couldn't pay $6,700 in rent — nobody in their right mind would pay it."
The judge sided with the landlord. According to the California Costa-Hawkins Rental Housing Act, there are no limits on rent increases for single-family homes, regardless of the landlord's motives.
"Their lease expired in April," Dirkes tells CNBC Make It. "I complied with [the laws]. I gave more than 60 days' notice. I let them know what was going on."