Are There Drawbacks Of Trying To Buy My Tenants Out?

Virtually all San Francisco residential tenants enjoy eviction controls after they have continuously been in possession thirty days.  This means that although a tenant’s lease may have expired after its initial term, that tenant cannot be evicted unless the landlord has one of the sixteen grounds for eviction authorized in the San Francisco Rent Ordinance.  The sixteen grounds for eviction are considered either “fault” or “no fault”.  The distinguishing factor between fault and no fault is whether the tenant is being evicted for something they did or for some reason other than having done something wrong.   Fault evictions include failing to pay rent, causing a nuisance, habitually paying rent late, or breaching a term of the lease.  In each of these cases the tenant is alleged to have done some act, or failed to act, as required by their lease, the law, or both.  No fault evictions include owner move-in evictions, capital improvements, seismic retrofitting, lead paint abatement, or the building’s withdrawal of residential rental use entirely.  Although a landlord would have little reason to be concerned with issues affecting the property after an at-fault eviction, no fault evictions most always have certain constraints associated with them, such as rental constraints, occupancy requirements, re-rental rights, or limitations on use.  

Often an owner may have just cause to evict – such as wanting to recover possession for personal use – but may be unwilling or unable to commit to the constraints, such as the 36-month occupancy requirement for an owner move-in.  Owners are always free to first approach tenants about buyouts before serving a termination notice in hopes of avoiding service of the notice and the associated constraints.  Before doing so, owners must provide the tenant with mandatory Pre-Buyout Disclosures and file the associated Landlord Declaration with the Rent Board.  Once done, owners and tenants are free to discuss the voluntary surrendering of possession in exchange for consideration.  Contrary to what people may believe, there are no requirements or regulations that limit how much or how little a tenant can be, or must be, paid to agree to move out.  Same for the agreed upon date surrender date.  It can be a soon or as late as the parties agree.  However, the further out the surrender date, the more important it becomes an owner have means to enforce the agreement in the event of breach. 

Unlike the service of certain no-fault eviction notices, there are no constraints for merely serving the buyout disclosures alone.  Where occupancy and rental constraints will be imposed on property after service of certain no-fault eviction notices – regardless of how or under what circumstances tenants ultimately vacate – no such constraints apply where buyout disclosures are served and declarations are filed.  So, short of the time and effort, there are no practical drawbacks of serving tenants with disclosures and testing the waters.  Buyout disclosures, declarations, and the buyout agreements themselves are regulated by law.  Any failure in compliance would render the agreement unenforceable which could force an owner to permit a tenant to return to the property long after having been paid and vacated if that tenant wanted to rescind the agreement.

The rules and regulations regarding buyouts and rent controls in San Francisco are complex and always subject to challenge by both tenants and owners.  If you are curious about learning more about buying out tenants in a property you own or are looking to purchase, or want to learn more about recovering possession of tenant-occupied units, it is advised that you contact an experienced San Francisco Real Estate lawyer with experience in handling evictions in San Francisco. 

San Francisco Real Estate Attorney Mark B. Chernev, Zacks & Freedman, PC, 601 Montgomery Street, Suite 400San Francisco, CA  94111 : telephone 415 –956-8100