Item I-2: Proposed Buyout Agreement
Policy Options
December 19, 2018 | Regular Meeting of the Richmond Rent Board
Item I-2:
Statement
of the Issue
2 On September 19, 2018, Boardmembers directed
Rent Program staff to develop policy options that
provide a varying degree of regulatory oversight of
Buyout interactions, ranging from low-level
oversight to high-level oversight.
Based on research and case studies, staff members
have prepared 3 policy options for the Board’s
consideration:
Option 1: Low Level of Oversight
Option 2: Moderate Level of Oversight
Option 3: High Level of Oversight
Staff members are seeking direction from the
Board regarding the proposed policy options.
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Item I-2:
Background
3 Buyout Agreements, also known as “Cash for Keys” Agreements, may be offered by a Landlord to a Tenant to encourage the Tenant to voluntarily vacate the Rental Unit in lieu of the Landlord terminating the tenancy for Just Cause.
Unlike no-fault evictions, Buyout Agreements in Richmond are currently unregulated, and can enable Landlords to circumvent many of the restrictions that apply when a Landlord executes a no-fault eviction.
A seemingly large sum of money may be enticing to a Tenant, which may cause a tenant to give up rights they were not aware of having under just cause for eviction protections and make a decision on an offer without having knowledge about all of the options available.
Anecdotal evidence from other Bay Area cities suggests Landlords may employ high-pressure tactics and intimidation to induce Tenants to sign a buyout agreement, including
threatening the Tenant with eviction if they do not accept the terms of the Buyout Agreement.
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Item I-2:
Purpose
A Buyout Agreement Policy could establish
certain requirements for Buyout Agreements,
such as:
1. Require landlords to provide information to
tenants on the rights tenants have prior to
negotiating a Buyout Agreement
2. Require landlords to submit a copy with the Rent
Program of the Notice of Tenants Rights given to
the tenant
3. Establish minimum monetary amounts that may
be offered in exchange for the Tenant’s voluntary
vacancy
4. Require Landlords to file Buyout Agreements with
the Rent Board for monitoring and data collection
purposes
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Item I-2:
Research
Case Study Matrix (Att. 2)
contains information on:
The language in disclosures provided
to the Tenant prior to the Landlord
offering a Buyout Agreement;
Amount of days the Tenant has to
rescind an offer;
Requirements for filing Buyout
Agreements with the City;
Whether or not there is a minimum
amount of money that must be
offered in the Buyout Agreement;
Penalties for noncompliance; and,
The degree of administrative
requirements associated with filing
of Buyout Agreements and analysis
of the agreement (e.g. the
neighborhood of the Rental Unit and
amount of compensation offered).
Criteria Matrix (Att.1)
Criteria 1: Is there a requirement
for the Landlord to give a Notice of
Buyout Rights to the Tenant?
Criteria 2: Is there a requirement
for the Landlord to submit a copy
of Notice of Buyout Rights to the
Rent Board?
Criteria 3: How many days does the
Tenant have to rescind once the
Buyout Agreement is executed?
Criteria 4: Is there a minimum
payout for a Buyout Agreement?
Criteria 5: Is there a requirement
for the Landlord to submit a
Buyout Agreement with the Rent
Board?
Criteria 6: Degree of Administrative
Enforcement and Duties
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Based on the direction of the Rent Board, Rent
Program staff used the previously presented Case
Study Matrix and conducted additional research.
Item I-2:
Findings
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1. Access to the Buyout Agreement in the Tenant’s primary language
2. Coverage of all properties under “Just Cause”
3. Policy containing Anti-Harassment language
4. Right to rescind at any time, for non-compliance with the Buyout Agreement Policy
5. Notice of Buyout Rights to the Tenant
6. Requirement to submit a copy of Notice of Buyout Rights to the Rent Board
7. Days to rescind once the Buyout Agreement is executed
8. Minimum payout for a Buyout Agreement
9. Requirement to submit a Buyout Agreement with the Rent Board
10. Administrative Enforcement and Duties to Ensure Compliance
11. Penalties for not complying with the Buyout Agreement Policy
In their analysis of Buyout policies in other California cities, staff narrowed components of a Buyout Agreement Policy down to eleven integral factors that determine the degree of oversight for Buyout Agreement Policy Options. The eleven components are:
Item I-2:
Components
of the
Proposed
Policy Options
Proposed 4
Necessary
Components
Criteria 1
through 7
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Vary in degree of oversight
and will be determined by
the level of oversight and
enforcement the Rent board
wishes to accomplish
These 4 components create a
foundation for an effective
Buyout Agreement Policy and
represent the needs of
Richmond Tenants and
Landlords
Buyout Agreement Policy
Item I-2:
Methodology
– Proposed 4
Necessary
Components
Rent Program staff identified four components that
are recommended to be incorporated into any policy
aimed at regulating Buyout Agreements. These
components are as follows:
1. The Buyout Agreement must be written in the Tenant’s primary language
2. The Buyout Agreement policy will cover all properties under “Just Cause”
3. The Buyout Agreement policy must contain Anti-Harassment language
4. The Tenant will have the right to rescind at any time, without penalty, if the Buyout Agreement does not comply with the requirements of the regulation.
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Item I-2:
Methodology
– Criteria 1
through 6
1. Notice of Buyout Rights to the
Tenant for buyout Agreements
(All cities researched)
2. A copy of the Notice of Buyout
Rights given to the Tenant
must be maintained by the
Landlord for five years
(Berkeley and Santa Monica)
3. 25 days to rescind (Oakland)
4. No minimum payout (All cities
researched, except Oakland)
5. The Landlord must file a copy
of an executed Buyout
Agreement with the Rent
Program within 60 days (Los
Angeles)
6. The Rent Program will
maintain a copy of all executed
Buyout Agreements (all cities
researched)
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1. Notice of Buyout Rights to the
Tenant for buyout Agreements (all
cities researched )
2. The Notice of Buyout Rights must
be filed with the Rent Program prior
to engaging in Buyout negotiations
(San Francisco)
3. 45 days to rescind (Santa Monica,
San Francisco, and San Jose)
4. Establishes a minimum payout
(Oakland)
5. The Landlord must file a copy of an
executed Buyout Agreement with
the Rent Program within 60 days
(Los Angeles)
6. The Rent Program will (a) maintain
submitted Buyout Agreements and
copies of Notice of Buyout Rights;
(b) contact the Tenant identified on
a submitted copy of a Notice of
Buyout Rights; and (c) maintain a
database, showing data on the
compensation amount and
neighborhood of Buyout
Agreements (mix from San
Francisco, Berkeley, Santa Monica)
Example for Low Oversight Example for High Oversight
Item I-2:
Methodology
– Criteria 7:
Penalties for
Non-
Compliance
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Low Oversight Option:
This option does not include penalties for Landlords
that fail to conform with the Buyout Agreement
Ordinance (San Jose)
Moderate Oversight Option:
The Tenant has the right to bring a civil action against the Landlord for actual damages and statutory
damages not to exceed $500 dollars per violation
(Oakland and San Francisco)
High Level Oversight Option:
The Tenant has the right to bring a civil action against the Landlord for actual damages and statutory
damages not to exceed $ 1,000 dollars per violation
(Oakland and San Francisco)
Item I-2:
Policy
Questions
determining
Criteria 1
through 7
The remaining seven components are more discretionary
and impact the degree of regulation. Staff members are
seeking specific direction from the Board on the following seven policy questions:
1. Should the Landlord be required to give a Notice of Buyout Rights to the Tenant?
2. Should the Landlord be required to submit a copy of Notice of Buyout Rights to the Rent Board and if so when?
3. How many days should the Tenant be given to rescind once the Buyout Agreement is executed?
4. Should there be a minimum payout for a Buyout
Agreement?
5. Should the Landlord be required to submit a Buyout
Agreement with the Rent Board and if so when?
6. What is the degree of Administrative Enforcement and Duties the Rent Board wishes to adopt?
7. Should there be penalties for violating the Buyout
Agreement Policy?
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Proposed Policy
Options
NOTE: The policy options presented are not fixed; the
Rent Board may mix-and-match different
components to create its own policy that is tailored to the needs of Richmond Residents.
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Option 1: Low
Level of
Oversight
1. The Landlord must give a Notice of Buyout Rights to the Tenant before the Buyout negotiation begins.
2. A copy of the Notice of Buyout Rights given to the Tenant must be maintained by the Landlord for five years (and is not required to be filed with the Rent Program).
3. The Tenant has 25 days to rescind an executed Buyout Agreement.
4. This policy option has no minimum payout requirement for a Buyout Agreement.
5. The Landlord must file a copy of an executed Buyout
Agreement with the Rent Program within 60 days.
6. The Rent Program will maintain a copy of all executed Buyout Agreements.
7. This option does not include penalties for Landlords that fail to conform with the Buyout Agreement Ordinance.
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OPTION 1
Option 2:
Moderate
Level of
Oversight
1. Prior to engaging in Buyout negotiations, the Landlord must give a Notice of Buyout Rights to the Tenant.
2. If the parties execute a Buyout Agreement, the Landlord must file a copy of the Notice of Buyout Rights with the Rent Program.
3. The Tenant has 30 days to rescind an executed Buyout Agreement.
4. All Buyout Agreements must offer what the Tenant would have received as a Permanent Relocation Payment due to
termination of tenancy for Owner Move In, for a two plus bedroom unit as a Qualified Tenant Household.
5. The Landlord must file a copy of an executed Buyout Agreement with the Rent Program within 60 days.
6. The Rent Program will maintain a copy of all executed Buyout Agreements and Notice of Buyout Rights.
7. The Tenant has the right to bring a civil action against the Landlord for actual damages and statutory damages not to exceed $500 dollars per violation.
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OPTION 2
Option 3: High
Level of
Oversight
1. Prior to engaging in Buyout negotiations, the Landlord must give a Notice of Buyout Rights to the Tenant.
2. The Landlord must file a copy of the Notice of Buyout Rights with the Rent Program prior to engaging in Buyout negotiations.
3. The Tenant has 45 days to rescind an executed Buyout Agreement.
4. All Buyout Agreements must offer what the Tenant would have received as a Permanent Relocation Payment due to termination of tenancy for Withdrawal from the Rental Market, for a two plus bedroom unit as a Qualified Tenant Household.
5. The Landlord must file a copy of an executed Buyout Agreement with the Rent Program within 60 days.
6. The Rent Program will (a) maintain a copy of all submitted Buyout Agreements and copies of Notice of Buyout Rights; (b) contact the Tenant identified on a submitted copy of a Notice of Buyout Rights; and (c) maintain a database that may be public, showing data on the compensation amount and neighborhood of Buyout Agreements (consistent with State law).
7. The Tenant has the right to bring a civil action against the Landlord for actual damages and statutory damages not to exceed $ 1,000 dollars per violation.
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OPTION 3
Item I-2:
Proposed
Timeline and
Next Steps
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(1) Staff will present the Rent Board’s selected policy option during a study session at a meeting of the
Richmond City Council in December 2018 or January
2019.
(2) Following the study session, it is anticipated Rent Program staff will work with City staff to develop a
Buyout Agreement Ordinance.
(3) Staff will present the Buyout Agreement Ordinance
to the City Council for potential adoption.
Item I-2:
Recommended
Action
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RECEIVE Tenant Buyout Agreement Policy Options and
DIRECT staff to (1) present the Rent Board’s selected
policy option during a study session at a meeting of the City of Richmond City Council and (2) work with City
staff to develop a Buyout Agreement Ordinance – Rent
Program (Nicolas Traylor/Paige Roosa 620-6564).