Rent regulation & tenants
Fair return petition
An owner's petition to a rent board for an above-cap increase where the capped rent denies a constitutionally required fair return, usually on an MNOI standard.
Definition
A fair-return petition asks the rent board for an increase above the ordinance's cap on the ground that the capped rent denies a constitutionally required just and reasonable return — the condition on which Birkenfeld v. City of Berkeley (1976) upheld rent control and Kavanau v. Santa Monica Rent Control Board (1997) refined it. Within the stock that Costa-Hawkins leaves subject to local caps, the petition is the constitutional relief valve.
Most ordinances implement the floor through a maintenance of net operating income (MNOI) standard: base-year NOI, indexed by an inflation factor, sets what the current rent structure must support, with operating-cost spikes and capital improvements adjudicated through the petition or a separate pass-through process.
Why it matters in an underwrite
For an owner squeezed between capped revenue and uncapped costs — insurance, utilities, seismic retrofit — the petition is the lawful route to recovery, but it is slow, documented, and discretionary: expect a base-year NOI reconstruction, an audit-grade expense file, and a hearing measured in months. Treat fair-return relief as downside protection, not projected income, and keep clean historical operating data — a petition is only as strong as the base-year books.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.