New SF 2015 Ordinance aiming at buyout agreements

Effective March 7, 2015, San Francisco Landlords are required to provide tenants with a disclosure before negotiating buyout agreements with Tenants. The new law (Section 37.9E) also requires Landlords to file the disclosure form with the Rent Board, and it will be part of the public record (except the tenant's information). 

Part of the disclosure under the new requires Landlord to inform the Tenant of the right to rescind the agreement within 45 days of execution. The Landlord must file a copy of the buyout agreement with the Rent Board within 46-59 days, presumably after the 45 day rescind period has expired.

The new law covers all prospective buyout negotiations after the effective date. But, if the landlord began the buyout negotiations before March 7, 2015, and those negotiations resulted in a buyout agreement that was entered into after March 7, 2015, the Landlord is not required to provide the tenant with the disclosures. But, the Landlord must still file a copy of the buyout agreement with the Rent Board. But, this new law does not apply to settlements as part of a court case.

Prior to this new law being enacted, buyout agreements between Landlord and Tenants were private contracts that were negotiated between the parties.  But, this new law effectively made what was once a private matter into a public issue. While this new law will help Tenants by providing them with more information, it certainly is detrimental to Landlords' negotiating tactics and strategies.  This new law may actually push Landlords to file more lawsuits against the Tenant, and then negotiate during settlement conferences in order to keep the settlement agreement private and confidential as part of the deal. This will certainly increase the risk to Tenants, but it will also increase the cost to Landlords. Either way, expect litigation over Landlord's first amendment rights and/or right to contract (privately).