While there is much talk about certain types of eviction, like the Ellis Act, another type of tenant move out has long flown under the radar — the buyout.
A buyout happens when landlords offer tenants money to simply walk away from a unit. The benefits for the landlord are clear: There’s no dark history attached to the property, no lengthy proceedings and no conditions of future property uses that come with certain evictions.
The practice has long raised concerns amid San Francisco’s housing crisis over such things as tenants feeling pressured into taking buyouts or accepting low cash offers. The full scope of tenant buyouts has long been largely speculative and anecdotal. But now that’s changing.
Since March 9, landlords have started to disclose when they begin negotiating buyouts with tenants and the actual buyout agreements reached with the Rent Board under a city law introduced by Supervisor David Campos and adopted by the Board of Supervisors last year.
In 81 days, landlords filed 19 buyout agreements and 100 disclosures of initiating buyout negotiations. A reached agreement must be filed within 60 days. Of the total 19 buyouts, sums ranged from a low of $6,000 to a high of $80,000.
The highest number of both reported buyouts and ongoing negotiations were in neighborhoods undergoing drastic change from economic pressures associated with the flourishing technology industry. The Mission had the most with 23, followed by the South of Market at 13. Nine were reported in the Haight and eight in the Inner Richmond.
Filed buyout agreements redact the tenants’ names and offer sparse, if any, details about the actual reason for the buyouts. The number of tenants is reported, in addition to whether they are minors or seniors. In some cases, buyouts came amid litigation or as part of a home purchase, filings show.
The largest buyout amount, $80,000, went to two tenants who were living at 2447 Franklin St. Before buying the Pacific Heights home for $2.5 million the owners, a couple employed in the technology industry, discussed with the two tenants their “interest to vacate in exchange for funds.”
The owner of a multi-family home at 2740-2744 Harrison Street in the Mission disclosed 12 tenants were bought out in three separate units for a combined $100,000. In the Haight, one tenant was paying $1,550 per month for a unit at 617 Broderick St. and was bought out for $6,000.
There are mixed opinions about buyouts that are not part of the Rent Ordinance, which establishes tenant eviction protections for rent-controlled units. Evictions are on the rise with 2,120 recorded this year, compared to 1,977 last year, a 7 percent uptick. Owner move-in evictions, for example, increased from 273 to 343 and breach of rental agreements from 607 to 738. One key provision of the new buyout law is that it prohibits the condo conversion of units where tenants were bought out.
Tenant rights attorney Joseph Tobener thought the reported numbers were low, noting his firm alone handles on average about four buyouts a month. He argued “the buyouts in and of themselves are not hurting the affordable-housing market” but rather what the landlord decides to do afterwards with the property, such as real estate speculation or short-term rentals. “As long as the tenant is educated and knows about what they are losing, that seems to me a bargain we should honor,” Tobener said of the practice overall.
Buyouts can factor into contentious landlord-tenant disputes, like the ongoing battle at 1049 Market St. The building’s landlord wants to convert rent-control units into commercial space and has disclosed buyout negotiations with tenants in 10 units, even as The City is fighting to prevent the conversion.
Sara Shortt, director of the Housing Rights Committee, said the reporting of buyouts is “going to be very helpful to understand the breadth of the problem so we can possibly come up with fixes.”
“Too often tenants don’t see [buyouts] as a choice or even a negotiated process,” she said.
When San Francisco’s economy booms, evictions rise.