Tenant Buyout Agreements in California
Attorneys providing strategic solutions for ending tenancies legally and efficiently without setting foot in court.
Whenever there are no legal or convenient grounds to evict, a tenant surrender of possession agreement can be an effective and legally sound alternative to a formal eviction, and this is the domain of Bornstein Law. We are unaware of any other law firm in the Bay Area so prolific in drafting, negotiating, and executing tenant buyouts in compliance with complex local laws.
Buyouts can be used to:
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Regain possession of a rent-controlled unit
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Prepare a property for renovation or sale
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Avoid contentious legal disputes
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Remove problematic tenants without the costs and aggravation of litigation
A proper tenant buyout agreement is more than “cash for keys.”
The property owner is not merely paying the tenant to vacate in exchange for compensation; they are also releasing claims that may arise from the tenancy, and this includes claims they know about, and those claims they don’t even know about. For example, a tenant who vacates and six months later alleges that they developed a respiratory condition because of mold in the rental unit.
The value of a voluntary vacancy is huge.
When a tenant voluntarily vacates the premises, housing providers can typically raise the rents to market rate. As a general rule of thumb, every $1,000 in additional monthly rent the owner can command will translate to an extra $100,000 the building will sell for.
We’re often asked how much money it takes to entice tenants to move out, but there is no hard and fast answer. We can tell you what is searchable in the pubic domain, but the dollar amounts vary. Our office has been involved in buyout agreements as low as a rent waiver and/or a return of the security deposit, and as high as six figures. Based on records from the San Francisco Rent Board, the average buyout amount hovers around $43,000.
Property owners should know their numbers and the upside potential of the building. Bornstein Law is happy to have a dialogue with owners on whether the economics of buying out a tenant makes sense. If so, our office can prepare requisite disclosures and notices, advise on negotiations with tenants, draft an enforceable, legally compliant agreement, and ensure that filing requirements and unforgiving deadlines are followed to the letter.
DOWNLOAD: Items we need to prepare a tenant surrender of possession agreement »
Tenant buyout agreements are regulated in certain locales.
It’s important to remember that voluntary move-outs are just that - voluntary. Many tenants do not want to engage in buyout discussions because they want to continue to live where they are, and in fact, they are correct and do not even have to entertain a conversation about being bought out.
Lawmakers in jurisdictions like San Francisco, Oakland, and Berkeley have been distrustful of buyouts for fear of tenants being bamboozled by heavy-handed landlords who do not inform renters of their rights or coerce them into accepting an offer without the time to carefully consider it or change their minds later.
For this reason, there are tenant protection laws that impact how buyouts are handled. Rent boards want to be privy to buyout discussions, tenants must be informed of their rights, and there are “cooling off” periods that allow tenants the opportunity to rescind the offer even after it is accepted.
Avoid legal pitfalls. Don’t go it alone.
Not every buyout negotiation is straightforward. Some landlords are a bull in a china shop and cannot have a constructive dialogue with the tenant. Tenants are known to demand excessive amounts of money to move out or seek legal counsel of their own. Others may agree verbally but later claim there was a misunderstanding or they were pressured out of the rental unit. At any rate, there is a host of procedural requirements to follow in certain Bay Area jurisdictions.
Our legal team ensures your interests are protected at every stage, from starting a conversation about the buyout to the first offer and the signed agreement.