S.F. landlords offer tenants tempting offers to move out

Jacqueline Reyes (left) and mother Blanca Reyes are considering leaving the Mission District apartment they've called home for years. Jacqueline Reyes (left) and mother Blanca Reyes are considering leaving the Mission District apartment they've called home for years. Photo: Lacy Atkins, SFC Photo: Lacy Atkins, SFC Image 1 of / 8 Caption Close S.F. landlords offer tenants tempting offers to move out 1 / 8 Back to Gallery

There's $50,000 on the table if the Reyes family is willing to leave the Mission District apartment that has been home for 24 years.

"It seems like a lot of money, it does, but when you think about it, when you think about your future, it doesn't go as far as you think it does," said Jacqueline Reyes, 19, who has lived in the studio with her parents all of her life.

The rent-controlled space costs the family $549 a month - a nearly impossible price to match in today's scorching real estate market.

As an influx of wealth reshapes the city, housing advocates allege that the main way for landlords to replace longtime tenants with those willing to pay more has become rather simple: offer a pile of cash.

San Francisco landlords have made use of buyouts for years, but the practice "seems to be becoming the preferred method" of ousting tenants in the current economic boom, said Ted Gullicksen, executive director of the San Francisco Tenants Union, which has tracked nearly 900 buyouts reported to the group since 2006.

For years, only one or two renters a year would report receiving buyouts to the Tenants Union. Now, Gullicksen's organization logs between 25 and 30 a month. Advocates contend that for every renter who has contacted the group about receiving cash to vacate, there may be three or four more who haven't reported it.

Unlike Ellis Act evictions, which are often used when a landlord wants to oust tenants in order to sell the unit, buyouts happen off the books. They allow landlords to skirt most regulatory protections for tenants - and allow them to rent the units at market rates when the former tenants leave.

Ellis Act payments

Tenants booted by Ellis Act evictions do receive some compensation: Each tenant is required to be paid $5,200. But the Board of Supervisors is considering legislation that could substantially increase that payment by creating a new formula that would take into consideration factors like how long the tenant had lived there, where the apartment is, and the difference between their current rent and what they would have to pay for a similar place for two years.

There is no such scale, however, for buyouts. According to the Tenants Union tally of buyouts, some have been for as little as a few thousand dollars and some for more than $40,000.

According to a November report by the city's budget and legislative analyst, Ellis Act evictions jumped 170 percent from the year that ended in February 2010 to the year ending in February 2013. During the same period, there was a 38 percent spike in all evictions. Rents rose 10.6 percent in December over the previous year - compared with a 3 percent increase nationally, according to real estate website Trulia.

Beyond the Tenants Union's admittedly incomplete data, buyouts aren't tracked. Nobody knows definitely how many are offered, accepted, or for how much. But San Francisco Supervisor David Campos, who represents the Mission District, considers them a factor that's changing the face of the city.

"You can't just ignore what's going on with buyouts," said Campos, who is working on legislation that would address buyouts. "It's another form of displacement."

While entirely legal, advocates say that allowing a landlord to buy out a tenant renders eviction regulations and rent-control rules largely meaningless.

"The fact is that they're using the buyouts to circumvent tenant protections that city government put into place to deal with evictions and the loss of rent-control units," Gullicksen said.

Gullicksen acknowledged that courts have ruled that offering a tenant a buyout is essentially a form of free speech.

However, a landlord would be crossing the line if he were to say, " 'Fat chance if I maintain the building anymore if you don't accept it,' " said Ascanio Piomelli, a professor of law at UC Hastings Law School.

Landlords are also barred from making threats verbally or through actions, such as not fixing a door that needs repair, said Piomelli.

Many provisions in Campos' buyout legislation are still being hammered out, but one would require landlords to file notices with the city's rent board if they offer cash to a tenant - much like evictions are currently recorded.

Campos hopes his legislation will help protect tenants who might struggle in negotiations, perhaps because they don't speak English well.

"We have heard from families who have been bought out for very little money," Campos said. "There's nothing wrong with looking at the issue and trying to figure out if there is a way to regulate the process."

But Janan New, executive director of the San Francisco Apartment Association, said that tenants in less than 1 percent of the city's housing stock received eviction notices in the last year, and she estimates fewer than that have accepted buyouts.

"It's not as big of a deal as our elected officials are making it out to be," New said. "We believe that buyouts have been in existence for the past 10 years for a way for building owners under strict rent regulations to kind of manage their properties."

'Private contracts'

She's dubious about whether any legislation could regulate the practice because "buyouts are privately contracted agreements, and it's very difficult for the government to control private contracts."

New doesn't favor requiring that buyouts be recorded, either.

"It's not a transfer of real estate," she said. "It's a private agreement between two parties. So I don't really think that's feasible. We believe the system works well for both parties now."

New believes it works for the tenant's benefit.

"We're pro-choice here," New said. "If they choose to accept the money, that's what they choose to do. They have a right to do it. They may choose to become homeowners and buy a home and put some money down."

Earlier this year, 68-year-old Sally Goldin accepted a $15,000 buyout to leave the three-bedroom home in the Excelsior neighborhood, where she has lived for 25 years. Prior to the deal, her rent was $1,750.

Leaving wasn't an easy decision. When she learned that her landlord planned to sell the property, Goldin said, she asked for a buyout of $80,000. She said her landlord called that a "blackmail" attempt.

But as time dragged on, Goldin grew worried that she wouldn't be able to find another place in the city by the time the house was sold. She managed to find a much smaller senior-housing apartment for $734 a month and kept $9,000 of the buyout, giving $6,000 to her son, who was living with her before the deal. He moved to the East Bay.

"I think I got taken advantage of because of what I got offered was a drop in the bucket for what that place was worth," she said.

Sweetened offer

In the Mission, Blanca Reyes wonders whether to accept the buyout and leave the only place she has lived in since emigrating from El Salvador more than two decades ago. The nurse's assistant said her landlord even gave her some leads on other apartments - which the landlord owns - but they cost more than $2,000 a month. The landlord recently bumped up the offer by $5,000.

Following the path of other displaced San Francisco tenants to the East Bay isn't an option for her family. Gasoline costs for her and her husband, a mechanic, would soar. Her daughter's transportation time to San Francisco State would more than double, making it difficult to take early morning classes.

"I would rather move back to my home country than move to Oakland," Blanca Reyes, 50, said. "I am a citizen here. And this is the only home I've ever known in this country."