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Tenant Buyout Agreements in San Francisco

Tenant Buyout Agreements in San Francisco

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What is a Tenant buyout?

            The San Francisco Rent Ordinance, section 37.9E, permits landlords to offer money to a Tenant in exchange for the Tenant’s agreement to vacate a rental unit.  Tenant buyout agreements can benefit both the Landlord and the Tenant if properly negotiated and executed. 

Who is eligible?

            All Landlords and Tenants in rental units covered by the San Francisco Rent Ordinance can utilize a Tenant buyout agreement. 

What is the value of a buyout?

            The amount of compensation negotiated for Tenant buyout agreements varies widely depending on the current rental rate a Tenant is paying compared to the market rental rate a Landlord could expect if the rental unit was placed on the market.  The San Francisco Rent Board maintains a searchable index of buyout agreements at the Rent Board’s office. 

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What procedure is required?

            Prior to commencing negotiations for a Tenant buyout, a Landlord must give each Tenant a written disclosure advising the Tenants of their rights and providing information on Tenants’ rights organizations.  Tenants have the right to consult an attorney prior to engaging in negotiation with the Landlord or executing a buyout agreement.  Information regarding other buyout agreements in particular neighborhoods is available through the San Francisco Rent Board.  The Landlord must also provide notification to the Rent Board prior to commencing negotiations with any Tenants. 

What will a Tenant Buyout Agreement look like?

            Tenant buyout agreements must be in writing and signed by all parties.  It is a legal contract.  Section 37.9E(f) requires numerous legal disclosures to be contained in the written agreement.  Failure to include these disclosures makes the agreement inoperative and able to be rescinded by the Tenant at any time.  Properly drafted and executed agreements become effective 45 days after execution.  The Landlord must then file the executed agreement with the Rent Board no sooner than the 46th day after execution and no later than the 59th day after execution. 

Are there Consequences for Non-Compliance?

            A Tenant who has vacated a rental unit pursuant to a Tenant buyout agreement may bring a civil suit against a Landlord who fails to comply with sections (d), notice requirements and/or (f), legal disclosures in the buyout agreement.  A Tenant has 4 years from the date of the alleged violation by the Landlord to bring a lawsuit.