San Francisco Legislative Updates for 2015: Regulation of Tenant Buyout Agreements


Ordinance 225-14 becomes operative on April 6, 2015. It adds section 37.9E to the Rent Ordinance, and it imposes onerous requirements to the conduct of an owner/landlord who wishes to negotiate for a “buy-out” with their tenants. Some of these requirements even apply prior to the commencement of negotiations.

The Rent Board will create a form with some required information that a landlord needs to provide a tenant prior to commencing negotiations. The form includes a dated signature from the tenant, indicating when they received the disclosure. Then – and still prior to “negotiating” – the landlord has to file a form with the Rent Board with some biographical information about the landlord, tenant and property and an affidavit that the tenants received the form.

Then… the landlord can start negotiating. The actual agreement must be in writing, and it must include several specific statements – the lack of any of which will allow the tenant to rescind the agreement at any time! And, even if all of those statements are included, the tenants may rescind for up to 45 days after execution.

Buy-out agreements must also be filed with the Rent Board, after the tenant’s right to rescind has expired, but no later than 59 days after execution (i.e., there’s a two week window).

This also requires the Rent Board to make a searcheable database of buyout agreements. So, this is probably headed toward creating an “MLS of buy-outs” to equip tenants with better information for fetching the highest price for their rent controlled tenancies.

This section creates civil liability and provides an attorneys’ fee provision for tenants in suing landlords who haven’t complied with the requirements, and it has a four year statute of limitations.

It also imposes strict limitations in the condo conversion lottery. This will add language to section 1396 of the Subdivision Code preventing conversion if the owner has bought out a single elderly or disabled tenant, or if they’ve bought out any two tenants within ten years of final map approval.

Legislative language available here.