A buyout agreement is an agreement where a landlord pays a tenant to vacate. The San Francisco Rent Ordinance has a new provision which regulates buy-out agreements. Under this new provision, Section 37.9E, effective 3/7/2015, a residential landlord must, before commencing buyout negotiations, disclose to the tenant on a Rent Board form that the tenant (1) has a right not to enter into a buyout agreement; (2) may consult with an attorney or the Rent Board; and (3) may rescind the buyout agreement for 45 days. The landlord also must file a declaration with the Rent Board that states that she has served the tenants with the disclosure form.
Forms are available at the Rent Board. Copies of the buyout agreements must be filed with the Rent Board, and become public records, except that tenant information, but not landlord information is redacted. There are also provisions for penalties, damages and suits by the City Attorney or tenant organizations for a landlord’s failure to comply with section 37.9E. A buyout can bar a building from future condo conversion.
Consult with an attorney for more details.
The new law does not apply to settlements with tenants after an unlawful detainer (eviction) action has been filed. Section 37.9E is being challenged in Court as a violation of the free speech rights of landlords and as not consistent with a previous court decision which invalidated a Rent Ordinance amendment that criminalized non-coercive landlord communications concerning a tenant buyout. The law is expected to result in fewer buyouts and payouts to tenants and the service of more eviction notices on tenants for “fault” grounds for eviction, including nuisance and subletting.