SF Landlords Miffed Over Tenant Buyout Mandate

OAKLAND, Calif. (CN) - The San Francisco Apartment Association tried to persuade a federal judge Wednesday that a city ordinance makes buying out a tenant's lease more difficult and violates the landlords' constitutional rights.

Under Ordinance No. 255-14, landlords who are considering buying out a tenant's lease must approach the tenant with a disclosure form to certify that the buyout plan was disclosed to them.

The association claims in its complaint that the requirement violates their First Amendment, equal protection and due process rights.

It also claims that the ordinance seeks to restrict tenants and landlords from negotiating voluntary buyout agreements by "(1) making the negotiation process prohibitively burdensome for landlords and (2) further penalizing those landlords who do tolerate the burdensome process, by restricting their property rights even when they have fully complied with the law."

And the process gives the tenants an unfair amount of "veto power," said Chris Skinnell, arguing for the association at the hearing, since tenants who choose not to sign the form may later decide to sue landlords for violating the ordinance.

"I don't understand how you get to veto power from there," U.S. District Judge Phyllis Hamilton said, contending that nothing in the ordinance prevents a landlord from continuing to negotiate a buyout after a tenant refuses to sign a disclosure form.

Skinnell said that San Francisco's response to the issue identified in the complaint is "saying you can take a shot at will and hope you don't get penalized down the road."

Hamilton said it seemed "entirely implausible" that a tenant could bring a successful lawsuit on the matter.

"The lawsuit wouldn't be viable on a tenant's own refusal to sign the form as long as it's proffered," she said. "I don't see how it can flow in a straight line like that."

She suggested a possible solution to the problem would be to have a witness at the landlord-tenant disclosure interaction.

Skinnell said that "it's not just that our speech is being infringed - it's being infringed and being subjected to differential treatment in that respect."

"We have a right not to be arbitrarily penalized for the full exercise of our constitutional rights," he said.

Arguing for the city, Jeremy Goldman said that "there is nothing in the language of the ordinance that says there must be a tenant signature before a landlord can speak."

"The purpose of the ordinance is to make sure that tenants get disclosures," he said.

But the association's primary challenge to the ordinance is its provision requiring landlords to retain a signed form for ten years, Hamilton said - if the tenant does not sign the form and there is no signed form to retain, the association claims it could be liable.

Goldman contended that such a claim by a tenant - a claim that a landlord unlawfully "didn't retain a form because I refused to sign it" - would be "laughed out of court."

"Here what we have is a private communication," he said. "If a landlord is planning a buyout, how do we know that disclosure to tenants happened? One of the things the ordinance does is to make sure it happens."

Skinnell is with Nielsen Merksamer in San Rafael, Calif. Goldman is with the San Francisco City Attorney's Office.

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