THREE BUYOUT TRAPS FOR LANDLORDS OAKLAND

Three Buyout (“Cash for Keys”) Traps for Landlords in Oakland

In Oakland, most residential properties with a certificate of occupancy dated before January 1, 1983 are subject to the Just Cause for Eviction Ordinance. This means that a Landlord cannot simply issue a notice to vacate when a tenancy goes month-to-month, but must have a so-called “Just Cause” to terminate the tenancy. There are situations in which a Landlord needs to recover a rental unit covered by the Ordinance, but either does not have a Just Cause or does not want to utilize the eviction process. Another option is to proceed by a Buyout – sometimes called “cash for keys”. This is a voluntary process where a tenant and Landlord agree upon some compensation (such as rent credit or relocation payment) and the tenant voluntarily vacates the residential unit. Oakland responded negatively to this efficient and effective process by enacting a complex regulatory system that creates many traps for Landlords, the apparent goal of which is to make the buyout process harder for Landlords. Of all the traps that Oakland created for the unrepresented Landlord, there are three that are the most concerning.

Trap #1 – Prebuyout 
The first trap for Landlords occurs even before the process begins. In Oakland, before a Landlord can even start to discuss a buyout with a tenant, the Landlord first must properly provide the tenant with a required disclosure signed by the Landlord. Then, the Landlord must make a declaration under penalty of perjury and file the declaration with the Oakland Rent Board. This requirement applies even if the tenant initiates the buyout conversation. Thus, if a tenant approaches a Landlord about a buyout, a great response is “let me take care of a few things and get right back to you.” This way you do not refuse to discuss what could be a great opportunity, but merely delay the conversation until after you obtain counsel to assist with the prebuyout requirements.

Trap #2 – Buyout Terms 
Previously, buyout was wholly a product of negotiations. In some situations, the compensation requested was modest and all parties were satisfied with the result. Now, in a restraint of freedom of contract, Oakland has set minimum payment amounts required in a buyout. After properly completing the pre-buyout process, a Landlord must keep the minimum required payment in mind when negotiations begin. Typically, our office conducts the actual negotiation with tenants in order to get the best possible terms and at the same time staying in compliance with the artificial minimum payment requirement.

Trap #3 – Offering Too Often
Oakland sets a subtle trap for Landlords in a situation where a tenant initially is uninterested in a buyout. If a tenant tells a Landlord in writing that they are not interested in a buyout, then the Landlord must wait at least six-months before making another buyout offer. The claimed rationale behind this restriction is that without it, a Landlord will badger a tenant to accept a buyout. In reality, this creates a situation in which even if a Landlord wants to offer more compensation to a tenant, compensation that a tenant may really need, they cannot and instead must remain silent for an arbitrary amount of time. The unrepresented Landlord may fall into this trap inadvertently if they only wait four months before making a new (and possibly better offer). The three traps examined above are only a few of the requirements that Landlords must comply with to complete a buyout in Oakland. The penalties for a failure to follow each provision can be harsh – from avoiding of a buyout agreement, administrative citation and even civil liability with attorney’s fees for the prevailing tenant. There are even enhanced damages for elderly/catastrophically ill tenants. Thus, a Landlord who undertakes a buyout without experienced representation proceeds at extreme risk. At McLaughlin Sanchez, we successfully negotiate buyouts in the most difficult situations and jurisdictions. We can help assure that you get the best possible terms of agreement while staying in compliance with the rigorous regulatory structure. We can make recovering possession of your rental property a win-win rather than a walk through a minefield.
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