Long-Time SF Tenants Receive $475,000 Buyout to Move from Apartment
Despite San Francisco real estate being an anomaly compared to several other real estate markets, it never seizes to surprise locals.
When one couple was offered a $475,000 buyout to move out of the apartment they have lived in for three decades, it certainly got plenty of attention on social media and from residents.
As reported on KPIX5 CBS, the voluntary buyout is the largest in the city’s history and reflects the apartment’s high value.
The tenants, who are a couple in their 60s with teenage children, were recently paying $12,500 a month for a seven-bed, eight-bath apartment. Taking up most of a floor in a century-old building, it features extensive views of the bay, Golden Gate Bridge and Presidio park.
Having one of the strongest tenant protections in the nation, tenants who live in San Francisco tend to stay in their apartments for a long time as market prices rise. The state recently adopted rent control and other tenant protections, but San Francisco approved its rent control ordinance in 1979 to alleviate the city’s housing crisis.
Therefore, landlords can only raise rent on some properties a certain amount annually, with the current increase at under 1%. Owners who want to move into their own single-family home have to pay tenants to vacate. The maximum amount tenants in one unit can receive to relocate is $22,000, with an extra $5,000 for households with minor children or seniors 60 and up.
In this particular case, relocation costs did not apply. Instead, the landlord and renters reached a voluntary agreement for them to vacate.
Steven Adair MacDonald, the couple’s attorney, said reaction has been divided to a six-figure buyout that is enough to buy a home in most parts of the country.
“Landlord attorneys think it’s an outrage, and on the tenant side, everybody’s excited, they think it’s great,” he said.
But MacDonald believes the landlord is the winner since he will be able to rent the apartment for $25,000 a month and get the buyout amount in just over three years.
“After that, it will be gravy, so it’s a great investment,” said MacDonald.
MacDonald is also suing Friedman Properties on behalf of “fairly well-heeled” tenants in several other units who have moved out since March due to the ongoing noise and dust from ongoing renovations in the building.
KPIX requested the landlord’s attorney David Wasserman for comment on the buyout.
He said that constructive eviction was never the landlord’s intent, citing that the landlord scheduled much-needed renovations and maintenance projects before the pandemic.
Over 300 tenant buyouts were filed with the San Francisco Rent Board in 2020. MacDonald said average buyouts are $50,000, and they are growing taking into account the difference between market rent and length of tenant residency.
While San Francisco rents went down during the pandemic, they are still among the highest in the country. The average rent for a one-bedroom unit is $2,750, according to Zumper, a rental platform. The median sales price for a house is $1.5 million, according to Redfin.
Tenants groups say that working class residents would need to move out of San Francisco if rent control was no longer in place.
“Paying a half-million dollars to a wealthy person who’s been keeping a rent-controlled apartment in a city with a housing shortage and an affordability crisis kind of speaks to the way in which our local rent control distorts the market,” said Charlie Gross, who handles government affairs for the San Francisco Apartment Association.
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