A “buyout” occurs when your landlord gives you a sum of money to permanently vacate your apartment/home. Typically, when your landlord approaches you about a buyout he or she wants you out because they are looking to do one of two things: 1) charge higher rent; or, 2) sell the property. In San Francisco, buyouts are governed by Rent Ordinance Sec. 37.9E.
San Francisco recently enacted new legislation governing the procedure for tenant buyouts. The San Francisco Rent Ordinance was amended to include a new section, 37.9E governing buyout negotiations. This new section went into effect on March 7, 2015. The new law includes the following requirements:
- Landlords are now required to provide tenants with a written disclosure form created by the San Francisco Rent Board before he or she can even talk to you about a buyout. - Provides tenants with 45 days to rescind any written buyout agreement - Landlords must file and register buyouts with the SF Rent Board. - As with "no fault evictions" Buyouts now can impact a landlord's ability to convert a building into condos. More information about the requirements of this disclosure can be found on the Rent Board website: here.
Buyouts can run the gambit from a few thousand dollars to the six figures. The price you arrive at will ultimately depend on strategy, needs and relative bargaining power. Your landlord is almost certainly looking at this as a business decision. You should too. Consider these questions –
Where will you move? If you're staying in San Francisco will you be paying higher rent? What are the risks if you don’t take a deal? Are you okay taking those risks?
While a lump sum of money in the bank in exchange for moving out of your apartment may seem like a good deal be sure to think about the implications such an agreement is likely to have on your life in the long term and how far that money will really go in the current housing market if you're planning to stay in the area.
Our office regularly provides consultation to tenants contemplating how to move through this process, and represents tenants in negotiating tenancy buyouts. If you have to negotiate a buyout having an attorney by your side can be extremely helpful but because our office cares about keeping tenants in their homes, we want to be sure that you consider your options thoroughly before you decide to agree to move out.