Legislation to ban condo conversions for at least the next decade and to then prohibit conversions of 5+ unit buildings was passed by the Board of Supervisors Tuesday, June 11,by an 8-3 majority. Only Sups. Scott Wiener, Mark Farrell & Katy Tang voted against the measure.
The Wiener-Farrell legislation to convert apartments into condos was turned from one of biggest threats to tenants into legislation which will save thousands of apartments from conversions and thousands of tenants from evictions. Under amendments crafted by Sups. Chiu, Kim & Yee, all condo conversions will be stopped for at least the next decade and, if and when they resume, conversions will no longer be allowed for 5+ unit buildings. In addition, future conversions will need a higher level of owner-occupancy, which will prevent condo conversions from being used solely for rent control repeal. These gains were significant enough to allow Existing TICs an expedited condo conversion process over the next several years, but amendments were made here as well. The lifetime leases were made enforceable and other loopholes were plugged up.
For Tenants Living In These Bypass Buildings:
Condo Conversion Basics
--A condo conversion is a “subdivision,” the dividing of a multiple unit buildings into separate “lots” and each unit becomes the virtual equivalent of a single family home. Condos are generally exempt from rent control but do have just cause eviction protections (if they were built before 1979).
--A TIC (Tenancy In Common) is joint ownership of a multiunit building where each owner has the “exclusive right of occupancy” to a particular unit. They are covered by rent control and just cause eviction protections.
--Condo conversions are done through the Department of Public Works (DPW); the condo conversion law is in the Subdivision Code.
--A condo conversion typically takes between 1-2 years; buildings must be brought up to code requirements (as of date of building construction).
--Condos are exempt from rent control, unless the unit is still owned by the subdivider (those who converted); units in the bypass will stay under rent control until their unit is sold.
Condo Conversion Moratorium
The annual lottery will be suspended until at least January, 2024 and will resume when either of the below occurs --When the number of affordable rental units built from January 1, 2014, above existing projections, equals or exceeds the number of TIC units which took advantage of the bypass, or
--When the number of TIC units which took advantage of the bypass, divided by 200 (annual lottery) exceeds 10 (e.g. if 2400 units bypass, 2400/200=12 so the lottery would resume in 12 years.
Not affected by the moratorium are 100% owner occupied 2 unit buildings which do not have to go through the lottery.
Condo Conversion Limitations When Lottery Resumes
When the lottery resumes in 2024 or later
--Only 2, 3, and 4 unit buildings will be eligible.
--Owner occupancy requirements increase from 1 owner occupant (residing continuously for at least three years) in 2-4 units buildings to:
-3 owner occupants (residing continually for at least three years) in 4 unit buildings
-2 owner occupants (residing continually for at least three years) in 3 unit buildings
-1 owner occupant (residing continually for at least three years) in 2 units buildings
--In addition to the existing eviction limits & prohibitions (permanent ban for evicting senior or disabled/10 year ban for multiple evictions) If a unit(s) is vacated by a tenant in the 7 years prior to application for conversion, then the applicant must certify that the tenant did so voluntarily or if an eviction or eviction notice occurred it was not pursuant to Administrative Code Sections 37.9(a)(8)-(14). If an eviction was for capital improvements or lead abatement then the applicant(s) shall certify that the original tenant reoccupied the unit after the temporary eviction; if the eviction was for demolition, then the applicant must certify the demolition was done pursuant to city order (i.e. illegal unit); if it was for OMI then they must certify there has been just one in the building.
Issues Tenants Living in Bypass Buildings Are Likely To Face
Landlords Who Falsely Try To Take Advantage of Bypass
A common problem over the years has been landlords who falsely claim owner occupancy in order to condo convert. This can be relatively easy to fake and DPW relies on documentary proof provided by the applicants. Usually tenants in these buildings will see mail coming to the landlord at the building.
Landlords Failing To Offer Lifetime Lease
There will be landlords who simply do not offer the tenants a lifetime, yet will tell DPW they did and even record that offer. If tenants don’t know they are supposed to get a lifetime lease then the landlords can get away with this as, again, DPW does not verify the landlord’s word or documents.
Landlords Forcing Tenants Out Before Lifetime Lease Has To Be Offered
This certainly will be a big issue, especially for long term tenants with low rents. Landlords will want to replace them with either someone paying market rent or will want to sell the condo unit. Harassment, buyouts and pretext evictions will likely be the common tools used.
What Buildings Are Eligible for the Bypass
1 – Participants in 2012 or 2013 lottery
--Have met owner occupancy requirements since at least 4/15/08 (May apply in 2013; legislation took effect 7/22/13 but there will be a lag so DPW can prepare various forms and procedures.
--Have met owner occupancy requirements since 4/16/08 (May apply in as of 4/15/14)
(Owner occupancy requirements: At least 1 unit continuously occupied by the same owner in a 2-4 unit building and at least 50% of units continuously occupied by the same owners in 5 and 6 unit buildings.
2—Buildings with a TIC agreement in place as of 4/15/13 and
Have met owner occupancy requirements since 2009 (May apply 4/15/15)
Have met owner occupancy requirement since 2010 (2016)
Have met owner occupancy requirement since 2011 (2017
Have met owner occupancy requirement since 2012 (2018)
Have met owner occupancy requirement since 2013 (2019)
(Owner occupancy requirements: At least 1 unit continuously occupied by the same owner in a 2-4 unit building and at least 50% of units continuously occupied by the same owners in 5 and 6 unit buildings. Buildings which did not participate in 2012 or 2013 lottery may have a single change in ownership in one unit so as long as owner occupancy is maintained.)
Eviction History Exclusion: No building subject to the permanent ban on condo conversions following an eviction of a senior or disabled tenant is eligible, nor is any building subject to the 10 year ban on condo conversions for multiple evictions is eligible if the 10 years is still running, except that 5 & 6 units buildings subject to the 10 year ban will be eligible when the 10 year ban ends for each individual buildings.
Rights Tenants In Bypass Buildings Have
In addition to the existing bans on conversion following evictions, If a unit(s) is vacated by a tenant after 3/31/13, the applicant must certify that the tenant did so voluntarily or if an eviction or eviction notice occurred it was not pursuant to Administrative Code Sections 37.9(a)(8)-(14) (the no fault evictions).
All tenants in buildings must be given a lifetime lease. The applicant for the bypass must include documentation that each tenant was offered a lifetime lease and that offer must be recorded on the deed. The form and content of that lifetime lease will be developed by DPW and the Rent Board. The lifetime lease will expire on the death of the last remaining household member (household at time lease was given) or their spouse, domestic partner or blood relative who is either senior (62), disabled or catastrophically ill (no definitions). The lease provisions must include:
--Rent is what rent was at time of application and any increases tied to residential rent component of Bay Area CPI
--Landlords obligated to maintain same level of services, care and maintenance of property.
If the bypass applicant seeks to sell before the condo conversion is complete, they must record on the deed the restrictions of the lifetime leases, identifying which units are subject to these and what the lease provisions say.
Remedies For Tenants
DPW Hearing To Challenge Building Eligibility
At least 20 days before the issuance of a “tentative map,” DPW must publish the addresses of buildings being considered by approval on its web site and any interested party may submit information contesting the eligibility and request a hearing. Most commonly, tenants will challenge either the owner occupancy or the eviction history. Presumably, tenants will be able to request notification individually by DPW and can track the progress of individual addresses via the DPW web site http://bsm.sfdpw.org/subdivision/tracking/ Interested party is not defined and it seems a challenge to a particular building’s eligibility could be made sooner than the “tentative map” point (which is the end fo the process).
Planning Commission Review & Board of Supervisors Approval for 5 & 6 Units Buildings
All 5 and 6 unit building condo conversions must be reviewed by Planning and the condo map approved by the Board of Supervisors. Under state law, both bodies have limited abilities to stop the condo conversion at this point but can do so on basis that applicants lied on their application, such as lying about owner occupancy or evictions and displacement of tenants.
The Subdivision Code provides current and former tenants with the right to sue for violations of the Subdivision Code and to receive injunctive relief and money damages of not less than three times actual damages (similar to the Rent Ordinance).
Legal Action By City Attorney or District Attorney
Violations of the Subdivision Code are both civil and criminal violations and the City Attorney may sue or the District Attorney may initiate criminal prosecution.
Effect of Legal Challenge to Ordinance
If there is a court challenge to the moratorium, then the bypass will be halted until there is a final judgment; if there is a challenge to the lifetime leases, then the bypass will be halted only for those buildings with tenants. In both cases the moratorium will continue. If the lawsuit(s) are successful then the bypass will permanently end for all buildings or just those with tenants (depending upon whether the challenge is to the moratorium or the lifetime leases).