When San Francisco tenants refuse to sign pre-tenant buyout disclosure forms

You don't have to be a lawyer to understand the limitations of free speech. We all know of the famous quote that you can't yell fire in a crowded movie theater. Free speech has recently become a barnburner topic, of course, with the upheaval of Twitter.

But what about talking with a tenant about voluntarily moving out of the rental unit in exchange for some sort of quid pro quo?

Normally, there's nothing preventing two parties from entering into a contract. If you want to sell a lawnmower or a car, for example, you do not need to seek government permission to talk with an interested buyer. You certainly don't have to provide a statement of rights before you open your mouth. Yet in some jurisdictions, tenant buyout agreements are highly regulated.

Take San Francisco, for instance, with a number of requirements imposed upon landlords before commencing buyout negotiations. This includes providing each tenant with a written disclosure as well as furnishing to the Rent Board a signed statement that these disclosure forms have been provided to the tenants.

In San Francisco Apartment Association v. City and County of San Francisco, the United States Court of Appeals for the Ninth Circuit affirmed an earlier ruling that limitations on the rights of landlords to commence and conduct buyout negotiations do not run afoul of either the federal or state constitution.

The courts agreed that although the Pre-Buyout Negotiation Disclosure Form states that each tenant must sign the disclosure, along with a notation of the date they received this document, the Ordinance makes it clear that landlords need not obtain the tenant's signature prior to the commencement of buyout negotiations and hence, landlords are not muffled.

 

Although a signature is not required, the concern we have at Bornstein Law is why the tenant would refuse to sign the disclosure form.

This is clearly a bad omen; if the tenant is adamant about not signing anything, it indicates an ambivalence in having any future discussions. Perhaps the tenant has totally ruled out the possibility of being bought out of the apartment they love and plan on staying there the rest of their lives. If so, they are right. They can remain in the rental unit for as long as they like unless the landlord finds a "just cause" reason for eviction.

However, "better to open a door and shut it than never to have had it opened," in the words of Daniel Bornstein. The tenant may be hesitant at first but come around later on. With their curiosity piqued, the tenant may want to hear an offer and come to the negotiating table.

During this process, we advise clients to proceed gently. A tenant buyout is really a gentlemen's agreement or a gentlewoman's agreement, a meeting of the minds, where the tenant is emotionally locked into the deal without coercion.

Some landlords have used heavy-handed tactics, even threatening eviction, in order to get a tenant to sign a buyout agreement. These antics have given the vast majority of responsible property owners a black eye and needless to say, we admonish landlords not to use them or it will be at their peril.