Action/Alerts
Partial victory in lawsuit against Buyout Ordinance
While the entire ordinance was not overturned, the onerous waiting periods were eliminated.
SPOSFI, SFAA, Coalition for better Housing, and the San Francisco Association of Realtors were partially successful with their legal action to oppose the Buyout Ordinance, 036-20 (File 191281). The Ordinance was enacted by the Board of Supervisors on March 6, 2020. The Superior Court invalidated subsections (c) and (i), which related to extending the scope of the buyout ordinance to pending unlawful detainer actions, but the Superior Court let stand provisions like a 30-day hold on being able to execute an agreement, the tenant's ability to unilaterally rewrite the agreement to eliminate releases if the landlord misses the filing deadline by even a day, and the purported application of the buyout ordinance to the settlement of civil litigation other than unlawful detainers (e.g., an ejectment action or the settlement of a tenant lawsuit that has the tenant vacating). The judgment was affirmed by the Court of Appeal on May 2, 2023. While the result is bittersweet, this legal victory gives property owners more freedom to litigate unlawful detainer actions, unburdened by meddling local interference.
Some background
In 2014, San Francisco enacted the original Buyout Ordinance to regulate the payment of consideration to a tenant in exchange for their voluntarily vacating. It expressly excluded the settlement of pending unlawful detainer actions. In 2020, the "Amended Buyout Ordinance" added the above-mentioned requirements, interfering with all civil litigation (including unlawful detainers) if a settlement required a tenant to vacate. (It has long been the case that, while the Rent Ordinance does not allow a tenant to waive their rights, the settlement of litigation supersedes this rule.)
The 2020 legislation required the Rent Board to revise the Landlord Declaration of Regarding Buyout Disclosure Form for the landlord to indicate the date the Pre-Buyout Disclosure Form was served on the tenant(s), the method of service used (e.g., hand delivery, email, regular mail), and the Assessor's parcel number (lot and block) of the building where the unit is located.
The new legislation requires the landlord and tenant to wait at least 30 days before executing the final Buyout Agreement. Additional statements include a disclosure regarding the tenant's right to cancel the agreement and the address of the unit and the assessor's parcel number (lot and block) of the building where the unit is located.
If the landlord does not file a copy of the Buyout Agreement with the Rent Board within 59 days after the agreement is executed, the tenant may now file a copy of the Agreement and any provision of the Agreement in which the tenant waived their rights or released claims is then voidable at the option of the tenant (but the tenant's remedies would not include displacement of a subsequent tenant in the unit).
Subsections (c) and (i) of the Ordinance (which were invalidated) made the following changes to the requirements for buyout negotiations that precede the filing of an unlawful detainer (eviction) lawsuit: The term "Buyout Agreement" is broadened to include agreements to settle unlawful detainer actions, but only if the unlawful detainer action was filed within 120 days after buyout negotiations started.
The party who files the Buyout Agreement is required to inform the Rent Board if the Buyout Agreement concerns an unlawful detainer action. If so, the Rent Board is required to redact from the posted Buyout Agreement any information concerning the unlawful detainer action that may be confidential under State law.
While the entire ordinance was not overturned, the onerous waiting periods were eliminated.