When a landlord cannot evict tenants, or does not want to risk losing an eviction attempt, a landlord may offer tenant buyouts. In a buyout, the tenant agrees to vacate the unit in exchange for a lump sum payment. Buyouts are always voluntary.
In San Francisco, tenant buyouts are regulated by Section 37.9E of the Rent Ordinance. There are penalties for a landlord if the landlord enters into a buyout agreement without complying with the new regulations.
Prior to initiating buyout discussions, a landlord must file with the Rent Board a notice of intent to negotiate a buyout and must provide the tenant with a notice detailing the tenant’s rights relating to the buyout. The landlord must file the buyout agreement with the Rent Board and must redact the tenant’s name. A tenant has the right to rescind a buyout agreement within 45 days after it is executed.
The buyout agreement will be recorded at the Rent Board and may restrict the landlord’s ability to convert the building to condominiums. These restrictions would apply to subsequent owners as well.
There are penalties if a landlord fails to comply with the new buyout regulations, including civil fines. Additionally, a tenant may sue a landlord if she is damaged by the landlord’s failure to comply with the buyout regulations.
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