S.F. Admin. Code ch. 37 § 37.9E

(a) Findings and Purpose. San Francisco is in the midst of a housing crisis. As the

disparity between rent-controlled and market rate rents continues to grow, landlords have

greater incentives to induce tenants in rent-controlled units to move out. Similarly, with the real

estate market skyrocketing, many landlords are selling their property with the knowledge that an

unoccupied unit can command a significantly higher sale price than an occupied one.

     Instead of evicting tenants, some landlords offer cash buyouts to tenants in exchange for

the tenants vacating rental units. These are sometimes called buyout agreements. Even buyouts

worth tens of thousands of dollars can be recouped by a landlord retaining ownership and re-

renting at market rates or selling the unit. Unlike no-fault evictions, these buyouts are

unregulated, and can enable landlords to circumvent many of the restrictions that apply when a

landlord executes a no-fault eviction. For example, a landlord who executes some types of no-

fault evictions must give tenants a certain amount of time to move out, provide funds to tenants

to cover relocation costs, and allow tenants to move back into the unit under specified

circumstances. Two types of these no fault evictions – the Ellis Act and owner move-in evictions

– contain restrictions on how much rent a landlord can charge if the units are re-rented following

eviction. Analogous regulations do not exist for tenant buyouts.

     Anecdotal evidence indicates that many buyout negotiations are not conducted at arms-

length, and landlords sometimes employ high-pressure tactics and intimidation to induce tenants

to sign the agreements. Some landlords threaten tenants with eviction if they do not accept the

terms of the buyout. The frequency of these buyout offers increased significantly following

passage of a San Francisco law in 1996 which restricted, and in many cases prohibited,

condominium conversions following no fault evictions. By threatening a specific no fault eviction

and then convincing a tenant to vacate rather than receiving the eviction notice, a landlord will

avoid restrictions on condominium conversion as well as restrictions on renovations, mergers, or

demolitions.

     These tactics sometimes result in tenants entering into buyout agreements without a full

understanding of their rights and without consulting a tenants’ rights counselor. These buyouts

vary widely in amounts and, in some cases, are even below minimum relocation benefits which

are required to be paid for all no fault evictions. Disabled, senior, and catastrophically ill tenants

can be particularly vulnerable, and can face greater hurdles in securing new housing.

     The main purpose of this Section 37.9E is to increase the fairness of buyout negotiations

and agreements by requiring landlords to provide tenants with a statement of their rights and

allowing tenants to rescind a buyout agreement for up to 45 days after signing the agreement,

thus reducing the likelihood of landlords pressuring tenants into signing buyout agreements

without allowing the tenants sufficient time to consult with a tenants’ rights specialist. Another

goal of this ordinance is to help the City collect data about buyout agreements. The City lacks

comprehensive information about the number, location, and terms of buyout agreements. This

dearth of information precludes the City from understanding the true level of tenant displacement

in San Francisco.

     (b) Applicability of Section. Notwithstanding Section 37.3 or any other provision in City

law, this Section 37.9E shall apply to all landlords and tenants of rental units as defined in

Section 37.2(r).

     (c) Definitions. For purposes of this Section 37.9E, the following definitions shall apply:

     “Buyout Agreement” means an agreement wherein the landlord pays the tenant money or

other consideration to vacate the rental unit. An agreement to settle a pending unlawful detainer

action shall not be a “Buyout Agreement.”

     “Buyout Negotiations” means any discussion or bargaining, whether oral or written,

between a landlord and tenant regarding the possibility of entering into a Buyout Agreement.

     (d) Disclosure required prior to Buyout Negotiations. Prior to commencing Buyout

Negotiations for a rental unit, the landlord shall provide each tenant in that rental unit a written

disclosure, on a form developed and authorized by the Rent Board, that shall include the

following:

                (1) A statement that the tenant has a right not to enter into a Buyout Agreement or

Buyout Negotiations;

(2) A statement that the tenant may choose to consult with an attorney before

entering into a Buyout Agreement or Buyout Negotiations;

                (3) A statement that the tenant may rescind the Buyout Agreement for up to 45

days after the Buyout Agreement is fully executed;

                (4) A statement that the tenant may visit the Rent Board for information about

other Buyout Agreements in the tenant’s neighborhood;

                (5) A list of tenants’ rights organizations and their contact information;

                (6) A statement that information about tenants’ rights is available at the Rent

Board’s office, through its counseling telephone number, and on its website;

                (7) A statement explaining the legal implications under Section 1396(e)(4) of the

Subdivision Code for a landlord who enters into one or more Buyout Agreements;

                (8) If the landlord is an entity, the names of all people within that entity who will be

conducting the Buyout Negotiations, as well as the names of all people within that entity who will

have decision-making authority over the terms of the Buyout Agreement;

                (9) Any other information required by the Rent Board consistent with the purposes

and provisions of this Section 37.9E; and

                (10) A space for each tenant to sign and write the date the landlord provided the

tenant with the disclosure.

     The landlord shall retain a copy of each signed disclosure form for five years, along with

a record of the date the landlord provided the disclosure to each tenant.

     (e) Notification of the Rent Board. Prior to commencing Buyout Negotiations, the landlord

shall provide the following information to the Rent Board, on a form developed and authorized by

the Rent Board:

                (1) The landlord’s name, business address, business email address, and

business telephone number;

                (2) The name of each tenant with whom the landlord intends to enter into Buyout

Negotiations;

                (3) The address of the rental unit that may be the subject of Buyout Negotiations;

and

                (4) A statement signed under penalty of perjury that the landlord provided each

tenant with the disclosure required by subsection (d) prior to commencing Buyout Negotiations.

     The Rent Board shall make the information included on this form publically available,

except that the Rent Board shall redact all information regarding the identity of the tenants.

     (f) Requirements for Buyout Agreements. Every Buyout Agreement shall:

                (1) Be in writing. The landlord shall give each tenant a copy of the Buyout

Agreement at the time the tenant executes the Agreement.

                (2) Include the following statement in bold letters in a size equal to at least 14-

point type in close proximity to the space reserved for the signature of the tenant(s). “You, the

tenant, may cancel this agreement at any time before the 45th day after all parties have signed

this agreement. To cancel this agreement, mail or deliver a signed and dated notice stating that

you, the tenant, are cancelling this agreement, or words of similar effect. The notice shall be sent

to:                (Name of landlord) at                              (Address of landlord).” Immediately after this

statement, there shall be a line for each tenant to affix his or her initials.

                (3) Include the following statements in a size equal to at least 14-point type: “You,

the tenant, have a right not to enter into a buyout agreement”; You, the tenant, may choose to

consult with an attorney and/or a tenants’ rights organization before signing this agreement. You

can find a list of tenants’ rights organizations on the Rent Board’s website – www.sfrb.org”; and

“The Rent Board has created a publically available, searchable database that may include

information about other buyout agreements in your neighborhood. You can search this database

at the Rent Board’s office at 25 Van Ness Avenue, Suite 320.” Immediately after each statement,

there shall be a line for each tenant to affix his or her initials.

                (4) Include the following statements in a size equal to at least 14-point type:

“Under Section 1396(e)(4) of San Francisco’s Subdivision Code, a property owner may not

convert a building into a condominium where: (A) a senior, disabled, or catastrophically ill tenant

has vacated a unit under a buyout agreement after October 31, 2014, or (B) two or more tenants

who are not senior, disabled, or catastrophically ill have vacated units under buyout agreements,

if the agreements were entered after October 31, 2014 and within the ten years prior to the

condominium conversion application. A ‘senior’ is a person who is 60 years or older and has

been residing in the unit for ten years or more at the time of Buyout Agreement; a ‘disabled’

tenant is a person who is disabled under the Americans with Disabilities Act (Title 42 United

States Code Section 12102) and has been residing in the unit for ten years or more at the time

of Buyout Agreement; and a ‘catastrophically ill’ tenant is a person who is disabled under the

Americans with Disabilities Act (Title 42 United States Code Section 12102) and who is suffering

from a life threatening illness and has been residing in the unit for five years or more at the time

of Buyout Agreement. Do you believe that you are senior, disabled, or catastrophically ill as

those terms are defined above? Yes                       No           I don’t know            I prefer not to say              .”

The question listed in this subsection (f)(4) shall appear in the Buyout Agreement once for each

tenant who is a party to the Buyout Agreement. Next to each question shall be a line for the

tenant to affix his or her initials.

     A Buyout Agreement that does not satisfy all the requirements of this subsection (f) shall

not be effective and may be rescinded by the tenant at any time. A Buyout Agreement that does

not include the initials of each tenant next to each of the statements described in subsection

(f)(2) and (f)(3) shall not be effective and may be rescinded by the tenant at any time. A Buyout

Agreement that does not contain an answer from each tenant to the question listed in subsection

(f)(4), as well as the initials of each tenant next to his or her answer to the question listed in

subsection (f)(4), shall not be effective and may be rescinded by the tenant at any time.

     (g) Rescission of Buyout Agreements. A tenant shall have the right to rescind a Buyout

Agreement for up to and including 45 days after its execution by all parties. In order to rescind a

Buyout Agreement, the tenant must, on or before the 45th day following the execution of the

Buyout Agreement by all parties, hand deliver, email, or place in the mail a statement to the

landlord indicating that the tenant has rescinded the Buyout Agreement.

     (h) Filing of Buyout Agreements. The landlord shall file a copy of the Buyout Agreement

with the Rent Board no sooner than the 46th day after the Buyout Agreement is executed by all

parties, and no more than 59 days after the agreement is executed by all parties. Buyout

agreements rescinded under subsection (g) need not be filed with the Rent Board.

     (i) Posting of Buyout Agreements. The Rent Board shall create a searchable database

with information received from filings under subsection (h). The database shall be accessible to

the public at the Rent Board’s office and shall include a copy of all filings received under

subsection (h). Before posting a copy of any filing received under subsection (h) on its database,

the Rent Board shall redact all information regarding the identity of the tenants.

     (j) Annual report. The Rent Board shall provide an annual report to the Board of

Supervisors regarding the implementation of this Section 37.9E. The first report shall be

completed by January 31, 2016, and subsequent reports shall be completed by January 31 in

subsequent years. The report shall include, but not be limited to, a list of all units that have been

the subject of Buyout Agreements that have been reported to the Rent Board under subsection

(h). The Rent Board shall post each of these annual reports on its website.

     (k) Penalties and Enforcement.

                (1) A tenant who has vacated a unit based on a Buyout Agreement may bring a

civil action against the landlord in San Francisco Superior Court for failure to comply with the

requirements set forth in subsections (d) and (f). The landlord shall be liable for the tenant’s

damages. In addition, the penalty for violation of subsection (d) shall be up to $500. The penalty

for a violation of subsection (f) shall be up to 50% of the tenant’s damages. The court shall

award reasonable attorneys’ fees to any tenant who is the prevailing party in a civil action

brought under this subsection (k)(1).

                (2) The City Attorney or any organization with tax exempt status under 26 United

States Code Section 501(c)(3) or 501(c)(4) and with a primary mission of protecting the rights of

tenants in San Francisco may bring a civil action against a landlord in San Francisco Superior

Court for failure to comply with subsection (h). A landlord who has violated subsection (h) shall

pay to the City an administrative penalty of up to $100 per day for each document the landlord

failed to file, but in no event shall the landlord’s total administrative penalty in a single civil action

exceed $20,000. Any administrative penalties collected under this subsection (k)(2) shall be

deposited in the General Fund of the City and County of San Francisco. The court shall award

reasonable attorney’s fees and costs to the City Attorney or a nonprofit organization that is the

prevailing party in a civil action brought under this subsection (k)(2).

                (3) A tenant may not bring a civil action under subsection (k)(1) and the City

Attorney or a nonprofit organization may not bring a civil action under subsection (k)(2) more

than four years after the date of the alleged violation.