WHAT IS A BUYOUT IN SAN FRANCISCO
What is a Buyout in San Francisco?
A Buyout or “cash for keys” is a procedure by which a Landlord pays a tenant to
voluntarily vacate a rental unit. In San Francisco, the law has changed drastically
regarding this process.
Most San Francisco residential rental units are covered by eviction control – this
means that a Landlord can only evict a tenant for what is known as a “Just Cause.”
These “Just Causes” include fault evictions like non-payment of rent, but there are
also a limited number of no-fault evictions such as Owner Move-In and Ellis Act
evictions. Sometimes a Landlord wants or, more often, needs to recover a rental
unit but either may not have a Just Cause or simply does not want to engage in an
eviction. In these instances, a buyout is a great solution. However, it must be
approached carefully, as the law has added traps to the uneducated that carry stiff
penalties.
The first trap that San Francisco has added occurs before negotiations even begin.
Before a Landlord can begin to discuss a Buyout with a tenant of an eviction-controlled
rental unit, they first must provide the tenant a written disclosure and
then file a declaration with the San Francisco Rent Board. Dangerously to the
Landlord, this legal requirement applies even if the tenant initiates the Buyout
conversation. Thus, if a tenant approaches a Landlord and starts to ask about
being paid to vacate an eviction-controlled unit, a great response from the
Landlord is “Let me take care of a few things and get right back to you on this.” In
this way a Landlord has not shut down the conversation, but has also not engaged
in the discussion prematurely.
Once the disclosure has been provided and the declaration filed with the San
Francisco Rent Board, a Landlord can now engage in discussions with their tenant.
If they are able to agree upon a price and a vacate date, the law requires that the
agreement then be memorialized in writing that includes specific language and
questions. The agreement must also be filed with the Rent Board, but not too
early and no too late; otherwise, it is another violation of local law. Because San
Francisco law creates many opportunities for a Landlord to unintentionally violate
the law, obtaining expert legal assistance is the wisest course of action.
We can help with a Buyout in many ways and all the way through the process.
First, we take care of the preliminary requirements so that negotiations can
proceed lawfully. Second, we can perform the actual negotiations using our
experience and expertise to not only get a “yes” from the tenant but to also get
the best possible price for the Landlord. Third, we will draft a legally compliant
Buyout Agreement and make sure all requirements are complied with. Fourth, we
stay available for questions as the vacate date approaches. At the end of the
process, a Landlord will have their unit back and will have avoided the eviction
process. Truly a winning result.
By Andres Sanchez
Partner, McLaughlin Sanchez LLP
McLaughlin Sanchez is a property owner/Landlord law firm in San Francisco. We
are dedicated to representing property owners and Landlords in protecting their
interests and recovering their rental units. We specialize in residential and
commercial property and provide service throughout the Bar Area. Call us for a
no-cost no-obligation telephone consult.
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