What do I need to know about selling tenant-occupied properties in the city?

A tenant-occupied home is always more difficult to sell, especially in San Francisco where most properties are subject to rent control and vacancy control laws. Most buyers don’t want to buy tenant occupied homes and those buyers willing to deal with the issue expect a significant discount on the price. Rental properties also rarely show as well as owner-occupied properties and renters often neglect basic upkeep and maintenance.

Many owners don’t understand that while their house or condo probably isn’t subject to rent control, it is probably subject to vacancy control if it was built before June of 1979. This means you can’t simply ask your tenants to leave when you are ready to put the home on the market. In the past two years, I’ve had two listings where the tenant refused to move when the owner was ready to sell. One wound up buying the home themselves. The other was paid to leave.

Some owners pay their tenants to move because they know they can get a lot more for their property when it’s vacant. These ‘tenant buyouts’ are a relatively common practice among investors who wish to sell their individual units off as TIC’s. Many owners hire lawyers to negotiate the buy-outs. These attorneys specialize in the practice of tenant eviction and negotiation and protect their clients from future liability.

More information on Tenant Evictions and Vacancy Control are available through these links:

Tenant Evictions in San Francisco by R. Boyd McSparran and Kavita Sharma Much of this brochure covers evictions for the purposes of owner-occupancy or conversion to TIC’s. There is some discussion of the differences between vacancy control and rent control at the end. McSparran and Sharma are part of G3MH, a law firm that specializes in TIC agreements, condo conversions, and landlord-tenant law. They also negotiate tenant buy-outs.

Tenant Buyouts—Treason or Reason by Jeffrey Woo. Woo is an attorney who specializes in Landlord-Tenant litigation and Tenant Buyouts. This article originally appeared in Apartment Owners Magazine in 2005. Because of its age, not all of the information may be up-to-date, but the article addresses how buyouts are negotiated and what a good buyout agreement should include.

San Francisco Rent Control Ordinance. This is a must-read for anyone considering the purchase of a rental property in San Francisco. We also recommend that anyone considering an investment purchase take an hour with a landlord-tenant attorney to get a general overview of what it’s like to own income property in San Francisco.

Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email cblase@paragon-re.com. www.ceceblase.com

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