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SF Landlords Lose Challenge to Tenant Buyout Law

By George Khoury, Esq. on February 13, 2018 | Last updated on March 21, 2019

San Francisco, known for its steep hills, foggy cold weather, high hippies, and high rent, has successfully defended a challenge to its landlord buyout law. It's no secret: Because of the critical lack of housing in San Francisco, as well as the high demand from high income earners, the rent and housing prices are simply out of control.

Complicating matters for landlords, San Francisco has some of the strongest renters' protections in the country, including such strong eviction restrictions that landlords often will pay tenants to move out rather than go through an eviction. And, as you may have guessed, San Francisco even has protections for renters negotiating a buyout with their landlords.

Helping Renters Out in a Buyout

To ensure that landlords do not take advantage of tenants, the city's buyout law requires a landlord to show certain legal disclosures were made before opening buyout negotiations with a tenant. These disclosures involve a tenant's rights form, as well as the contact information for tenant's rights organizations. Landlords are required to get a signed acknowledgement that these disclosures have been received before beginning negotiations to buyout a tenant.

Bye Bye Buyout?

A group of the city's landlords came together to sue over the buyout law, asserting that it violated their First Amendment right. Unfortunately for the landlords, the district court and Ninth Circuit both found that the speech allegedly being restricted was commercial speech, and thus not entitled to First Amendment protection.

Additionally, the courts agreed that the city has a substantial interest in protecting tenant's rights, and that the ordinance was sufficiently narrow in that it only restricted speech until the disclosure requirement was met.

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