|The Effect of Eviction History on San Francisco Condominium Conversion Eligibility
Articles on related subjects...
Under San Francisco’s restrictive condominium conversion laws, a building’s eviction history can disqualify or delay the building’s eligibility to convert to condominiums. This means that a building that might otherwise be allowed to convert to condominiums, or to enter the condo conversion lottery, might be prevented from doing so because one or more rental tenants was evicted from the building in the past. The effect of past evictions is the same regardless of whether or not the owners wishing to convert to condominium owned the building when the evictions occurred. Unfortunately, several laws enacted at different times restrict condominium conversion based on past evictions. In practice, this makes the rules relating to conversion and eviction history very confusing. Although this article attempts to collect the various laws and relate them to each other, the required analysis remains complex.
PROTECTED TENANTS AND NO-FAULT EVICTIONS
To apply these rules, it is helpful to understand two concepts. The first is the concept of the “Protected Tenant”, a term that is used frequently in various San Francisco laws, but actually means different things depending on context. In the world of condominium conversion eligibility, a Protected Tenant is someone who is either: (i) catastrophically ill; (ii) disabled; or (iii) has lived in the property for 10 years, and is 60 years old or older. As explained below, eviction of a Protected Tenant has more serious condominium conversion consequences than eviction of a tenant who is not “Protected”.
The second important concept is the “No-Fault Eviction”. In each of the condo conversion eligibility rules, an eviction is a No-Fault Eviction if the grounds for the eviction stated in the eviction notice was: (i) The owner wanted to move in; (ii) The owner wanted a relative to move in; (iii) The owner wanted to demolish the unit; (iii) The owner wanted the tenant to relocate temporarily so the owner could fix up the unit; (iv) The owner wanted to substantially rehabilitate the unit; or (v) The owner wanted to take the unit off the rental market (an “Ellis Act Eviction”). In certain condo conversion eligibility rules, an eviction for substantial rehabilitation or for lead remediation is also deemed a No-Fault Eviction. As explained below, only No-Fault Evictions affect condo conversion eligibility.
TWO-UNIT NON-LOTTERY CONVERSIONS
In general, a building with no more than two residential units can be converted to condominiums after each of the units has been occupied by a separate owner for one year. Buildings that satisfy these conditions bypass the condominium conversion lottery. To determine whether a past eviction might hinder or delay a two-unit bypass conversion, ask the following questions in the following order.
QUESTION 1: Was there a No-Fault Eviction of a Protected Tenant on or after November 16, 2004?
If so, the building cannot use the lottery bypass system to convert unless the Protected Tenant re-occupied the unit from which he/she was evicted.
QUESTION 2: Were there No-Fault Evictions in both units on or after May 1, 2005, where none of those evicted was a “Protected Tenant?
If so, the building cannot use the lottery bypass until each of the units has been occupied by a separate owner for ten years. However, there are two exceptions to this rule: (i) Both units were owner occupied on April 4, 2006; or (ii) The eviction notice was withdrawn before the date when the tenant was required to vacate, and the tenant continued to live in the unit for at least 120 days afterward. If either of these exception situations exist, the building can use the lottery bypass after the normal one-year occupancy.
The following chart illustrates these general rules, but does not include the exceptions.
|CANNOT BYPASS LOTTERY10-YR OCCUPANCY TO BYPASS||NORMAL BYPASS|
|No-Fault Eviction of Protected Tenant on or after 11/16/04||two No-Fault Evictions No Protected Tenants on or after 5/1/05||all other situations|
In general, a building with 2-4 residential units may enter the condominium conversion lottery if it has one “Qualified Owner-Occupied Unit” (a unit that has been occupied by the owner for three years as of the lottery entry deadline). A building with 5-6 residential units may enter the lottery if it has three Qualified Owner-Occupied Units. (Buildings containing more than six residential units are not eligible for conversion in San Francisco.)
The condo lottery is divided into two parts called “Pool A” and “Pool B”, each of which selects buildings containing 100 residential units. Pool A selection is based primarily on the number of times a building has entered and lost and, theoretically, a building that continues to participate in Pool A year after year is guaranteed eventual success. Pool B selection is based purely on chance, although buildings accumulate multiple tickets which slightly increase their odds of winning.
To determine whether past evictions might hinder or delay a lottery conversion, ask the following questions in the following order.
QUESTION 1: Was there a No-Fault Eviction of a Protected Tenant on or after May 1, 2005?
If so, the building can never be converted to condominiums. However, there are two exceptions to this rule: (i) The eviction notice was withdrawn before the date when the Protected Tenant was required to vacate, and the tenant continued to live in the unit for at least 120 days afterward; or (ii) The building has only two residential units and both were owner occupied on April 4, 2006 (but note that the rules described under Questions 3 and 4 may still apply).
QUESTION 2: Were there No-Fault Evictions in two (or more) units on or after May 1, 2005, where none of those evicted was a “Protected Tenant?
If so, the occupancy duration for a Qualified Owner-Occupied Unit is lengthened from three years to ten years. Again, there are two exceptions: (i) The eviction notice was withdrawn before the date when the Protected Tenant was required to vacate, and the tenant continued to live in the unit for at least 120 days afterward; or (ii) The building has only two residential units and both were owner occupied on April 4, 2006.
QUESTION 3: Was there a No-Fault Eviction of a Protected Tenant between January 1, 2000 and April 30, 2005?
If so, the building can never qualify to enter “Pool A” of the condominium conversion lottery. Under current law, this means that the odds of the building winning the condo conversion lottery will never be more than about 2% no matter how many times the building enters the lottery. These odds are diminishing with each successive lottery. Note that this rule does not apply if the Protected Tenant re-occupied the unit from which he/she was evicted.
QUESTION 4: Was there a No-Fault Eviction of a Protected Tenant between November 16, 2004 and April 30, 2005?
If so, the building will only be eligible to participate in the condominium lottery after the first 175 units have been selected. In practice, this will keep its odds of winning the lottery well below 1%. Again, this rule does not apply if the Protected Tenant re-occupied the unit from which he/she was evicted.
The following chart illustrates these general rules, but does not include the exceptions.
|CANNOT CONVERT||10-YR OCCUPANCY||NO POOL A||LAST 25 IN POOL B|
|No-Fault Eviction of Protected Tenant on or after 5/1/05||two No-Fault Evictions No Protected Tenants on or after 5/1/05||No-Fault Eviction of Protected Tenant 1/1/00-4/30/05||No-Fault Eviction of Protected Tenant 11/16/04-4/3/05|
DETERMINING THE DATE OF AN EVICTION
In applying the rules relating to eviction history and condominium conversion, it is necessary to determine the date of each eviction that might affect conversion eligibility. Unfortunately, answering this seemingly straightforward question is complicated by wording variations among the three different laws that apply. When determining whether an eviction happened on or after January 1, 2000, the key date is the date when the eviction notice requires the tenant to vacate. So, for example, if the eviction notice required the tenant to vacate on January 15, 2000, the eviction occurred on or after January 1, 2000 even though the eviction notice might have been created and given to the tenant in December of 1999. This same rule applies when determining whether an eviction happened on or after November 16, 2004.
But when determining whether an eviction occurred on or after May 1, 2005, a different rule applies. Here, the question becomes when the eviction notice was issued rather than when the tenant was required to vacate. So, for example, if the eviction notice was given to the tenant on April 15, 2005, and the tenant was required to leave on May 15, the eviction is deemed to have occurred before May 1, 2005.
RESEARCHING EVICTION HISTORY
Keep in mind that it is the eviction history of the building, rather than of the owners wishing to convert, that affects condominium conversion eligibility. In other words, the owner’s conversion might be prevented or delayed by evictions that were done by prior owners many years earlier. Moreover, relying on the prior owner to disclose a problematic eviction history is risky because he/she may not have been an owner when the eviction took place, and may not have knowledge of it. Eviction history can be obtained at the Rent Board.
If you need more information about the effect of eviction history on condominium conversion, please call Sirkin & Associates at 415-738-8545. We would be happy to help you apply these complex rules to your particular situation. If you have more general questions about San Francisco’s condominium conversion rules, pleased consult our comprehensive article entitled “Condominium Conversion In San Francisco” which you can find at www.andysirkin.com, or by calling our office. Our website also contains a variety of other specialized articles on condominium conversion, as well as the full original texts of the applicable laws and many helpful links.
ABOUT THE AUTHOR
Sirkin & Associates has been guiding clients through San Francisco condominium conversions and subdivisions for almost 20 years, and have completed more SF conversions than any other firm. Over the years, we have been involved in drafting many of the laws that govern SF condominium conversions, and have helped develop many of the procedures used by the San Francisco Department of Public Works (“DPW”) Bureau of Street Use and Mapping (“BSM”). Our breadth of experience makes it likely that if a glitch appears in the condominium conversion process, we will have seen something similar before and know exactly what to do. And for those rare occasions when a completely new issue arises, we are the recognized masters at developing creative solutions that save our clients time and money.
Experience has taught us that the most important things to our clients are the immediate availability of staff to answer client questions and diligence in following the process of governmental approval. To ensure we achieve these goals, we have a full-time paralegal, Cam Perridge, devoted to client contact, preparation of subdivision applications, and monitoring subdivision approvals. Cam maintains a direct-access telephone line and can be reached easily any weekday to discuss the status of a conversion or subdivision process. And for those occasions when you need to speak with an attorney, Andy Sirkin is committed to being available to you when you call or within the next 24 hours. Andy is known for his diligence in calling clients back quickly, and is more committed than ever to being easily reached.
But while processing the condominium conversion or subdivision quickly and efficiently may be our client’s most immediate priority, the governing documents (the Declaration of Covenants, Conditions and Restrictions, or “CC&Rs” supplemented in some cases by Bylaws and/or Articles) will have much greater long-term impact. The quality of the governing documents will directly affect the quality of life of the owners, as well as their ability to refinance and sell. Andy Sirkin has been co-author of the past 10 editions of The Condominium Bluebook, and his expertise in preparing condominium governing documents is recognized throughout California. Sirkin & Associates governing documents continue to be the ones other firms emulate, and Realtors, lenders and buyers strongly prefer. This leadership results from constant improvement and innovation that makes our documents easier to read and understand, as well as more efficient and less expensive to enforce.
Before you choose a lawyer to handle your condo conversion or new construction subdivision, take a moment to speak with Cam, Andy, or attorney Rosemarie MacGuinness, at Sirkin & Associates. Our practice includes all required City and State applications and filings, as well as preparation of any governing documents you may need. We offer these services on a flat-fee basis, and our rates are generally lower than those of other firms.