Signature Litigation Agreement Made Easy

Signature litigation agreement

hello this is daniel bornstein good afternoon uh welcome to a seminar or webinar i'm happy to be here i hope everybody is holding up well in light of of course the covid19 pandemic my hope is that you find this webinar helpful i'm going to be going through a lot of thoughts strategies about buyout agreements throughout the bay area as well as get into the particular nuances of some of the different buyouts that we have to be familiar with most importantly i think that uh this information will be helpful in how you look at your rental properties especially during this very very difficult time in our society where we have many units that may or may not be paying the rent may have difficulty paying the rent and offering tenant buyout agreements as a solution so let's begin uh it's now one o'clock and i'm ready to jump in so introduction i'm daniel bornstein of bornstein law i've been practicing law for 25 years many of you know me well as former clients many of you have asked me questions and i am always committed and privileged to be able to educate you about the law in a way that provides guidance that isn't too complex but gives you a working knowledge of what i do every day and some of the thoughts i have as it relates to negotiating voluntary move outs of tenants so with that i'm going to start with the first slide and the agenda for today so i'm going to give a brief introduction about buyout agreements talk about the benefits and detriments of the agreements go through local requirements because they are pretty uh significant and create liability for you if you don't follow them then give you a strategic assessment of how i would position a discussion and negotiation for best maximizing the likelihood of success and then i'll give some brief concluding remarks and in this webinar format i don't take questions what instead i do is in the event you do have questions after the event if you want you're welcome to email me and i will get around to answering the questions if they require a little bit more involvement i'll be happy to let you know but generally i think this will be a nice treatment of the buyout agreements and how we handle them at bornstein law and how i think real estate investors property owners brokers real estate agents should come to understand uh the buyout agreement so let's turn the next page introduction what is a buyout agreement a bio agreement is a negotiated contract between an owner and a tenant to voluntarily move out of a property in exchange for some sort of compensation but i want to emphasize the following it's not just cash for keys so during the foreclosure crisis many people would say hey i've got to deal with the cash for keys agreement well what you're forgetting to understanding is that a tenant surrender a possession agreement not only includes some sort of compensation for a tenant vacating a premises it could be money it could be rent waiver it could be a number of things but it also comes with the expectation that there is a complete release of all claims arising out of the tenancy so when we talk about a buyout agreement we're not just talking about by buying someone out and getting their keys they're also giving up all claims they may have regarding the tenancy they're surrendering it and they're agreeing that they're not going to sue you and they give up those claims they may know about and also those claims that they don't even know about but that they learn after they vacated for example a tenant signs a bornstein law buyout agreement they agree to vacate for five thousand dollars three months after they vacate they realize that they have a respiratory illness because of a mold infestation inside the unit because they signed the buyout agreement that i prepared they have given up the claims they may have as a result of the respiratory illness because we have a properly prepared buyout agreement so there are some really type a charismatic owners who say i gave a tenant a thousand dollars and they moved out of the premises we're all done and they don't realize that they haven't gotten that release of claims the important part is you want to get a complete release of claims and also a release of claims that includes those claims the tenant may not even know about and that's a little bit tricky to draft up but that's why you have an attorney help you with the buyout agreement why do we use buyout agreements why not well we use buyout agreements because if i negotiate a voluntary move out of a unit from a tenant i haven't done a no fault eviction i haven't done an owner move in eviction requiring me to do certain things as part of my obligations i haven't done an ellis act eviction which means i have to go out of the rental business it gives me maximum flexibility so for instance if you're an owner who wants to sell a three unit building in san francisco and you want to sell the units vacant because we understand that a vacant triplex will sell for more money than a tenant occupied triplex an owner doesn't have the right in san francisco to simply serve a termination notice on a month-to-month basis because the owner is subject to the san francisco just cause eviction ordinance so a seller who's looking to voluntarily accomplish the goal of a vacancy is really left with buyout options so if you are a real estate investor and you're looking to sell a building vacant buyouts in rent control just cause eviction jurisdictions are oftentimes the only solution to accomplishing a transition and a vacancy ethically properly and compliant with law also the optics when we do a buyout agreement it's a mutual agreement between a landlord or an owner and usually a tenant because it's a mutual agreement the optics of our of it as a contract it's good faith fair dealing both parties buy into the agreement and transition out that's different than if you pursue a nuisance eviction where maybe a tenant's perception of your behavior is heavy-handed or somehow strident and thus the optics of that conduct can create residue for you all things being equal a voluntary agreement where a tenant transitions out with their own involvement in the negotiation looks better is more likely to be free from risk and the optics of it look much better than pursuing an eviction action especially during a time in which we are all potentially at risk due to the covet 19 pandemic in order for to you to understand a biot agreement you need to understand the information that my office would need to have in order to prepare a biot agreement depending upon the jurisdiction the buyout agreement is really about a five to six page contract and then there are disclosure requirements as well but generally speaking in order for my office to prepare a buyout agreement i need about eight pieces of information and mind you the contract is not brain surgery it's a five page contract and the core issues that i need or the information that i need in order to accomplish the buyout is of course the names of the owners the names of the tenants and or the occupants the address of the unit an agreement as to the time the tenant is vacating the unit how much are you paying the tenant to vacate if any most of the time it's some sort of cash payment sometimes it can be as simple as a rent waiver when are you going to pay the tenant are you going to pay the tenant a portion at the time they signed the contract a portion after they vacate or are you only going to pay them after they vacate are the tenants going to continue to pay the rent for the duration of their time in the rental unit or is the rent waived are you returning the security deposit according to law or do you have an agreement that the tenants are forfeiting the security deposit with this eight pieces of information my office is typically able to prepare a code compliant proper buyout agreement the concern we have is how do you get to this agreement and under what circumstances are you able to get to this agreement and are you complying with your legal obligations in following whichever jurisdictions rules are in place to ensure that what you have done is compliant with the law fundamentally for the last 10 years this chart has not changed or this list of items these items once you've got this agreed to verbally with the tenant you can bring to my attention and i can draft up a proper agreement relatively quickly 48 hours is typically the type of time we want to have in order to prepare this and the essential understanding is strike while the deal is hot however we will talk about that let's move on the benefits of a buyout one you secure a voluntary vacancy and a voluntary vacancy is huge because when there's a voluntary vacancy traditionally you're going to be able to set the rent at market rate if you have a tenant who is paying a thousand dollars a month for a two-bedroom apartment that in san francisco would rent for four thousand dollars a month if you offered the tenant ten thousand to vacate and waive two months rent and you were able to create a code compliant agreement and the tenant moved out the tenant moved out voluntarily pursuant to a buyout agreement you are now able in most circumstances to reset the rent at market rate rent that is huge generally for a little bit of real estate knowledge every thousand dollars of increased rent that you are able to secure on a rental unit is equivalent to approximately a hundred thousand dollars of increased value in your building and that's why one benefit is a voluntary vacancy allows you to reset the rent two it's a mutual agreement and i talked to you about that earlier a mutual agreement where there's a meeting of the minds between a tenant and a landlord and oftentimes the buyout if done efficiently can be less expensive than pursuing litigation so for instance you have a tenant in a 10-unit building the tenant intermittently has parties at the building that are causing other tenants to complain because it interferes with the other tenants quiet enjoyment of the premises the behavior is intermittent it is a nuisance the tenant's rent is at market rates you're getting a lot of frustration from other tenants and you're contemplating pursuing an eviction of the tenant for nuisance before commencing the nuisance you could conceivably reach out to the tenant and say look you're disturbing everybody i need you to understand that i'm considering pursuing an unlawful detainer action however before i do that i would consider waiving two months rent and having you move out in exchange for the return of your security deposit and two thousand dollars the tenant agrees you've lost some rent money you've lost two thousand dollars you've hired an attorney to draft up the agreement but the alternative is if you're pursuing a nuisance eviction my retainer is at minimum five thousand dollars and i don't know how much it's going to cost to accomplish the goal because at the biggest variable in a nuisance unlawful detainer action is which attorney the tenant gets and how hard they fight so sometimes a buyout agreement with which is within reason can be more cost effective than getting involved in litigation and that's where we segue into the next benefit is when you reduce the risk of litigation you create better upside for yourself so for instance you have a multi-unit building with an in-law unit that's not permitted it's not an accessory dwelling unit it's an in-law unit or you have a single-family home with an in-law unit you've been renting the in-law unit for 10 years you've collected over a hundred thousand dollars in rent the tenant complains to you about conditions inside the unit it's an in-law unit renting an in-law unit that is not permissible creates liability for yourself instead of getting into a battle with the tenant about habitability issues if you were to negotiate a voluntary move out of a tenant in an in-law unit where they give up possession in exchange for compensation maybe it's eight thousand dollars maybe it's ten thousand dollars maybe it's twenty thousand dollars one when they move out as i talked about before they sign a code compliant buyout agreement and they also agree to give up claims arising out of their tenancy which means you don't have to worry about after they moving out them suing you for having rented them an illegal unit so for in-law units i always recommend if you need a transition pursue a voluntary move out so you can get a complete release of claims owner move-in terminations so i have clients who may want to move into a property in many jurisdictions there are strict requirements in order to do an owner move in termination you have to live there three years after three years in san francisco the following two years if you're going to re-rent it you have to rent it at the old rent amount so instead of pursuing an owner moving eviction it may be more prudent to in fact negotiate a voluntary move out provide relocate provide some sort of payment and upon providing a payment you're in a much better position to get a complete release and you have no further statutory obligations of effectuating and owner moving so any time you can get a biota agreement that's within reason financially and it allows you to avoid litigation i do it let me give you an example you have a tenant right now in a unit and the tenant because of covet 19 has told you they can't pay rent they lost their job they haven't paid you rent for april may june july now august the rent you've lost is ten thousand dollars there's no end in sight the courts are seemingly closed to non-payment or rent evictions right now san francisco and alameda county have stated that you're not going to be allowed to evict a tenant for debt arising during a coveted pandemic so you can pursue a breach of contract lawsuit against the tenant but you're not going to be able to evict if the tenant comes to you and says look i don't have the money and you say well you're going to owe me the money but i'd be willing to allow you to transition out in exchange for the waiver of those funds and i'd give you back your security deposit and i give you back two thousand dollars that may be prudent because one you have a non-paying tenant inside your unit you don't know when you're going to be able to recover possession of the unit you're going to potentially have to do some type of eviction in the future for a future debt after shelter in place is lifted and you're going to have to pay an attorney to do an eviction so to avoid that i segue into a buyout discussion and if i get a buyout that's reasonable i grab it is it painful emotionally to waive rent hire an attorney to do a buyout and then give a tenant who's not paying you rent money to transition out possibly but it's still smart and my office is committed to being smart for you and focusing on your real estate investment as opposed to the emotions behind this it can be frustrating but you always want to be smart buyouts allow you to reduce the risk of litigation avoid evictions and get to a deal that accomplishes the goal of the vacancy and again as i mentioned right now due to the covet 19 pandemic the courts are closed or seemingly very very inefficient and interestingly the one thing that the courts are open for is restraining orders i was there this morning on a restraining order and boy was it strange talking through a mask to a judge who has a mask and the judge is constantly asking me to speak louder into the microphone because we're all fumbling with issues of hearing because we're all trying to shelter in place at least kind of in the court and simultaneously trying to practice law with a muffle over our face this is the new reality i don't know when it's going to be over i will tell you this non-payment or rent evictions are going to be delayed for many many months and i do believe that you're going to have a difficult time recovering possession through the courts and so if you can segue into a negotiated voluntary move out that's what i would do let's talk about the detriments the detriments they cost money what do i mean by that well you reach out to a tenant in the proper way and let's give you example of in berkeley you serve the disclosure document and you start negotiating and you say thank you for signing the disclosure document i wanted to let you know i'm prepared to offer you uh money in exchange for you transitioning from the premises what would you need and i often like to ask an open-ended question like that to a tenant and the reason being is what they need may be less than what you were willing to provide and so sometimes the deal comes in better than you hoped for because of the information you learned from that first question of what would you need well this tenant who is a savvy tenant who has learned all their rights under the law because they have access to the computer and they get smart says you know what jane doe i very much appreciate that you are interested in having me transition from the premises i love my studio apartment looking over people's park i've been here six years i'm happy to transition out in exchange for ninety five thousand dollars and waive three months rent and that's what we're faced with which is the detriment is a tenant can have a price point that simply is outrageous and i have that situation often arise which means the detriment is you're either gonna not do a deal because you can't get to a deal or you're going to pay to accomplish the goal and you know i have by people ask me all the time mr borstein what's the uh market value for a buyout i say it's all over the place and one buyout doesn't necessarily inform another buyout sometimes tenants have extra uh extra expectations that are out of whack with reality and you just can't do a deal sometimes you're able to do so but as i mentioned before every thousand dollars of increased rent is equivalent typically to an extra hundred thousand dollars of equity in the building so if a tenant who's lived there six years says i would like to move out for twenty thousand dollars you've gotta make a decision it's painful you can as the chart says you can wait until they voluntarily vacate but we know in rent control jurisdictions every year a tenant remains in the unit the value of that tenancy becomes even more better for the tenant because the market ends up becoming more cheap for them because their rent is regulated so in some respects the detriment is it's going to cost you money to do the deal you could wait for a voluntary move out but that may never happen another detriment is it's voluntary if a tenant is not willing to negotiate you're done and that happens quite a bit i would say at least uh 20 percent of the times in which uh a client reaches out to a tenant in that proper ethical manner the tenant simply says not interested or i'll call you if i'm interested but at this point i'm very happy in my rental unit that means you're done you can't do anything about it and i often speak with clients and they get frustrated with the situation because they can't even commence buyout discussions because the tenant has refused to sign the disclosure doc or the tenant has instead said i'm very happy here and i look forward to living here for the rest of my life and in fact they're entitled to do so unless you have a just cause under the ordinance to terminate the tenancy so a detriment is it opens up a negotiation but it can be closed down very quickly another detriment is this because of perceptions that buyout agreements involve heavy-handed tactics by owners they have become highly regulated in different jurisdictions it's highly regulated in san francisco it's highly regulated in oakland it's regulated in berkeley in places where it's not highly regulated there are no disclosure obligations you answer the eight questions that you've uh i've asked you to answer in that prior chart you send it to me and i can prepare a buyout agreement and so for those jurisdictions that don't have a local ordinance there's nothing in the state just cause eviction rules or the state rent control that prohibits buyouts so if you're in a county that doesn't have a local jurisdiction it makes it that much easier and so i am going to go through right now for the audience that is here the regulations in the three different jurisdictions i've mentioned just to give you a window on what you have to do in order to be compliant so let's move on to those jurisdictions that have particular requirements that you have to follow and remember if you don't follow them you face liability for failure to comply with the statutory requirements of that ordinance san francisco so the first thing you need to know is before you can open your mouth and ask a tenant to negotiate a voluntary move out from the premises you must prepare a disclosure doc it must be signed by the tenants and then you have to file a declaration with the rent board stating that you provided the disclosure and the disclosure is a seven page document if it's not served properly you have violated the rules and regulations of san francisco if you haven't filed the declaration you haven't complied with the agreement once you have the declaration served and signed and then you i'm sorry the disclosure served and signed and then the declaration filed at the rent board you're free to start negotiating i tend to like having verbal negotiations and i tend not to like to call up a person unannounced and say hey i'm going to send you over disclosure let's talk i'm willing to uh negotiate a deal with you i like to structure it and generally pre-covet 19 i'd like to have a face-to-face meeting with the tenant i like to have an organized stable structured environment where i speak with someone i give them the disclosures i have the declaration signed and filed i then have a meeting and i say look my plans for the property have changed i'm considering selling the property and before i do so i want to create a win-win situation i don't know what the future holds for a new buyer in relation to you but i'm willing to offer you a transition with dignity in a manner that you participate in the negotiations something like that then you negotiate the terms of the agreement when are they vacating how much you paying them when are you paying them what about the security deposit what about the rent once you have that figured out here's the kicker as of april 2020 the agreement that i prepare in san francisco can only be signed 30 days after the declaration is uh signed and the disclosure served so this is weird but this is because san francisco changed the buyout rules to give people even more breathing room between the time of the declaration and the disclosure and the time a tenant can sign the agreement so if i gave a disclosure on august 1st i fouled the declaration with the court with the rent board on august 1st i can negotiate on august 2nd i can have a deal on august 2nd verbally mr bornstein's office can prepare the buyout agreement on august 3rd but the law says we can only sign the agreement 30 days after september 1st and then once the agreement is signed in the body of the agreement it's signed september 1st the body of the agreement it says that tenant has an absolute right to rescind the agreement 40 45 days from the time assigning the agreement so if the tenant signed the disclosure and declaration was filed on august 1st the agreement is signed on september 1st they're agreeing to move out october 30th the tenant in that situation has until october 15th to rescind the agreement even though they signed the agreement on september 1st and then in order to be compliant with the law an owner must file the settlement agreement within 59 days of the signature of the agreement so i've got to file that by the end of october that is san francisco it's crazy however we have to follow it and we're prepared to follow it and the big change that i think is particularly onerous that occurred in april is this 30-day waiting period so the 45-day red recision was always there but now we have to wait 30 days from the time of serving the disclosure and getting it signed from the time the agreement is signed so there's a cooling off period which may mean that you just have to wait and wait i'm happy to prepare the agreement people can look at the agreement but the signature is supposed to be 30 days from the time of the signing of those disclosures and then regardless the tenant has 45 days to change their mind after signing the agreement the agreement must be filed at the rent board it's a public record and unfortunately there's not much we can do about that the rent board wants to keep track of biot agreements and people can go to the rent board and actually look up buyout agreements and how much has been paid for which units and every year now they're providing data about buyout agreements but again one tenant can again be in the unit one year enter into negotiations legally with you and say you know what i want a hundred thousand dollars to move out and as long as they stick to their guns you can decide to pay it or you can decide not to and i have in my practice had buyout agreements as small as a rent waiver and as large as over two hundred thousand dollars the declaration that must be signed by a landlord in san francisco is this document all the documents that are necessary for buyout agreements in san francisco are available at the san francisco rent board they're also available if you reach out to me and i can email to them to you as a pdf but generally as we just went through the chronology is send over the disclosures get them signed file the declaration with the court negotiate the agreement sign the agreement 30 days after the disclosures are signed and then tenant has 45 days to change their mind and you have 59 days to get that settlement agreement filed with the court oakland oakland is in some respects following san francisco and opens first iteration of the buyout agreement remains you have a pre-buyout disclosure requirement similar to san francisco you have to inform the tenants of their right to counsel and their right to um a lawyer you also in oakland provide them notification of what they would be entitled to if they were subject to a no-fault eviction so you're giving them information about relocation payments in the event they don't do a deal in oakland there's a 25-day rescission period that can be negotiated down to 15 days within the body of the agreement you have to file the contract at the oakland rent board and if you fail to comply with your obligations there are penalties that can be assessed against you for violation of these statutory obligations san francisco and oakland have the most onerous requirements and the big issue is this you've got to comply or you're out of compliance i am not aware at this point in time of anybody being sued for failing to comply with the statutory requirements of these buyouts however i believe it's forthcoming more importantly in san francisco particularly when you go to sell a multi-unit property or a home there's always a question of how did a vacancy arise and then you have to list on your information under the association of realtors sales docs how a vacancy arose and if a vacancy or rose through a buyout agreement a buyer is going to want to learn more about it to make sure you did it code compliant because they don't want to have a risk of buying a property that may have a tenant who feels aggrieved because you did not comply with your obligations so if you're doing a deal my suggestion is to comply with the law because it will come back to you maybe not by the tenant but in another capacity so being code compliant is something that i strongly recommend and it isn't that cumbersome as long as you understand the rules and if we look at oakland we have this disclosure form the date of move-out negotiations that you've provided the disclosure and here is the pre-move out disclosure form and you'll see in the middle of the document they provide the information the second page of what individuals would be entitled to if there was a no-fault eviction such as an owner movement or an ellis act or other type of relocation payments what does this mean it means before you start negotiating in oakland for a voluntary move out you've got to get the disclosure delivered signed and the tenant has already put on notice that look if you're going to negotiate a move out of a three-bedroom unit voluntarily through a buyout agreement the tenant sees man i cannot do the deal wait for a new buyer to move in through an owner moving eviction and i'm guaranteed ten thousand dollars so with that education a prudent tenant if you're a seller trying to vacate a unit before you market for sale the tenant can simply say you know mr bornstein i appreciate you wanting to negotiate and i thank you very much for it but i'm entitled to ten thousand eight hundred dollars if a buyer comes in and does an owner move an eviction i'll take forty thousand dollars if you give me it and i'll move out before you market the place for sale and that's where information is crucial and in oakland that information is provided san francisco they don't provide it in the documentation but they do provide quite a bit of other disclosure information berkeley in berkeley your notification informs the tenant that they don't have to enter into a buyout agreement that they have a right to counsel and that in berkeley it's a 30-day right to rescind and remember in each of oakland san francisco and berkeley within the body of the contract you must inform the tenant of their right to rescind so they will be informed of it in the body of the contract that they sign the tenant of course has the right to contact the rent board and you are to serve the rent board the completed agreement between 31 and 60 days from the date the agreement is executed berkeley interestingly is usually considered one of the most difficult places of san francisco oakland for rent control but their buyout agreement rules are not as difficult you do have to sign a declaration that you delivered the disclosure form you have to get it signed by the tenants but then you're free to prepare a proper buyout and i found it to be a little bit less cumbersome than san francisco or oakland oakland does notify tenants that relocation payments to the tenants are something that they're entitled to and informs the tenant clearly that a buyout agreement is not the same thing as a owner move-in or some sort of relocation payment entitlement such as a uh no fault eviction for owner move in or ellis act generally speaking berkeley oakland san francisco have the most compelling requirements but if we get out of this jurisdiction let's say we're in walnut creek and you've got a tenant right now in a multi-unit building that's going to be regulated under state just cause or state rent regulation there's nothing during the covet 19 pandemic that prevents you from negotiating a deal there are no disclosure requirements in walnut creek you can segue into the discussion immediately in berkeley san francisco and oakland you've got to get those disclosures signed before you have the right to open your mouth strategies so let's talk about strategies because many people want to ask me daniel how are we going to deal with a transition i would very much like to secure a voluntary move out of a premises from a tenant i want to do it compliant with the law i want to do it ethically and i'm reaching out to you in order to ensure that we do it correctly how can we best maximize the likelihood and chances that i'm going to accomplish the goal well the easy answer is give them a lot of money but that's the painful answer there are some other strategies aside from offering a abundance of money that makes sense the first issue is a leveraged discussion what do i mean by a leveraged discussion let me suggest what is a non-leveraged discussion if you reach out to a tenant who's lived in the property eight years and you have nothing involved in that relationship at this time except for a desire to move out and you just simply say hey john i want to set up a time to meet and talk before we do so i'd like to have you sign some disclosures i need these disclosures signed and then you can get back to me and then the tenant signs it knows that you're interested in a buyout and then all of a sudden when you come to having that discussion the tenant says well i've been here a long time i plan to be here a long time i'll leave for two hundred thousand dollars in six months of a rent waiver i'll leave for 180 000 and a rent waiver you didn't have any leverage in that discussion you just immediately reached out to the tenant and sought a disclosure being signed a leverage discussion may look a little bit differently and it has to be obviously done in good faith but if you have a situation such as currently you have a tenant who's not paying the rent because of covet 19 you certainly have the right to bring up and say i'd like to have a meeting with you i'd like to talk to you about the situation that we face the situation is for four months i haven't received any rent money from you i know it's based upon your claim of the covet 19 pandemic i want to let you know that we don't have an obligation to waive that rent i want to talk to you about the circumstances what you've done is set up a meeting to talk about the unpaid rent and then you can segway into hey i know it's unpaid rent i want to talk to you about transitions before we talk about the transitions i'd like you to sign a buyout disclosure there's no obligation and then after they sign the buyout disclosure you can say look i'm willing to waive five eight months of rent and give you time to transition if you are interested in voluntarily moving out if not i understand and i am going to seek that unpaid rent through court or some other method and if you continue to not have a job there may be the possibility that you're going to have to leave anyways because rent is going to come due after the pandemic and there's going to be a debt so let's talk about a meaningful compromise where you give up possession in exchange for compensation what would you need what works for you in that dialogue in that dynamic you've in fact raised an issue that you're legitimately entitled to raise which is yomi ran and then you can segway it into a discussion another example of a leveraged discussion is if you're planning to sell the property if you're planning to sell the property if it's a multi-unit property in san francisco the tenant has just cause eviction protections you can simply reach out and say hey we're going to be doing an uh an inspection we're planning on a change and the change is i'm making considerations to transition from the property i'm going to be selling the property i want to have a talk with you by talking to a tenant about your plans to sell the property you basically have put the tenant on notice that hey a new buyer may be moving into the property after purchase and that may precipitate a tenant wanting to take money to move out early more than what they would get if there was a relocation payment for an owner moving eviction so when you couple a discussion about your goals that may precipitate a transition with a dialogue about a buyout you've got a better leverage discussion another example a tenant just had a blowout party at your property and it caused the police to come to the property there was graffiti on your building and there was windows being damaged you then reach out to the tenant and say hey you know i'm very upset and shocked at misconduct i'm interested in talking to you about it before i commence a nuisance eviction i'd like to talk to you about your options and in that capacity you may be able to get a voluntary move out faster than a nuisance eviction where right now we don't know when that nuisance eviction is going to arise because as many of you know the courts are closed for evictions unless for public safety and health and two the sheriffs of our have announced that they're not doing evictions so for someone who's beaten up your property it may be cheaper and more efficient to have a leveraged discussion about transition then actually pursue an eviction action even if that eviction action is legitimate because remember the cost of an attorney can be very expensive and if you can use that money to get a voluntary move out more power to you i'm always in favor of it i like when my clients accomplish their goals as fast and as cheap as possible another suggestion do the negotiation yourself i don't necessarily want to be the attorney to call up the tenant send over the disclosures and say hi john doe my name is daniel borenstein with bornstein law i've been hired by john smith to negotiate a voluntary transition before we discuss anything i'd like to send over disclosures why because when the tenant calls a when the attorney calls a tenant the tenant then does a google review of me looks at my background decides that i'm a landlord attorney and then immediately contacts an attorney two days later joe tobin or another attorney calls me up and said mr barnstein john is happy to negotiate a voluntary move out he signed the disclosures here they are i'm going to be negotiating with you and john will leave for 350 000 so sometimes i take the hippocratic oath which is do no harm and when i cost the client more money because i get involved in something that ends up precipitating more costs to the client i don't want that and so i like clients to talk with tenants after i coach them in the manner i'm coaching you today about how to handle this negotiation effectively i like pre-covid to have a face-to-face meeting i don't like to call people out of the blue right now if you're going to call people out of the blue or you're going to have a zoom meeting my suggestion is set it up in advance say john i want to talk to you but i'm calling you out of the blue can we arrange 20 minutes to talk does next wednesday at 3 o'clock work that way the tenant is prepared to have a focused discussion with you so the best is the client now there are some people who cannot have a positive communication with their tenant because of the acrimony that has arisen and some clients are a bull in a china shop every time they have an engaged conversation they end up ending up enlarging the conversation it becomes caustic and toxic in those situations i will voluntarily do the buyout however if i'm going to be hired to handle a negotiation it's on an hourly fee basis if i'm only going to be hired to draft up the buyout agreement it's a fixed fee much cheaper so in some respects i like doing the negotiation yourself and also if you have a great relationship with the tenant and you take them out to a coffee house or something post pre uh covet 19 and you just talk with them you may find that they reveal information that may be very helpful for instance you say i'm planning on selling the property i'm going to be transitioning to retirement in petaluma and the tenant says wow that's a coincidence i'm also planning to move to palm springs and i'm planning to do so the end of july and all of a sudden what you thought was going to be a enlarged negotiation and cost you you know six figures to do a buyout ends up costing you the return of the security deposit three thousand dollars and one month's rent waiver so i like doing the negotiations yourself as long as you have the charisma and the communication skills that are not going to create toxicity and as long as you're coached a little bit to make sure you're code compliant with your disclosure obligations the important thing is you retain an attorney to draft the agreement if you don't draft the agreement correctly you're in violation of the law it may not be enforceable and if you don't have the right code provisions if you don't have the right releases you haven't gotten that release of claims that i really want which is the release of claims of not only the claims the tenant knows about but those claims the tenant doesn't know about as well that may arise after they vacate three in san francisco berkeley and oakland a generic biot agreement is not going to be enforceable and so you really want to make sure that you've got a properly drafted bio agreement and one thing i mentioned in many of my webinars is look if you've got a cousin who's an attorney in stockton and he says he's a real estate attorney but he doesn't work in the bay area and doesn't do buyout agreements he's dangerous he's probably more dangerous than you who just took this webinar and know the rules so i want to caution you when you retain an attorney to draft a buyout agreement you want to retain an attorney who's drafting buyout agreements in that jurisdiction and is willing and ready to understand the importance of the compliance with the statutory obligations next when to pay the tenant this one's interesting so strategically some old school people will say well i'm not going to pay a tenant until they give me the keys after they moved out then i'll give them the money well that may be a conservative approach but a buyout agreement is a voluntary agreement and i want you to understand that even though a tenant signs a buyout agreement you know they have 45 days to rescind in san francisco they have 30 days to rescind in berkeley they have 25 or 15 days to rescind in oakland i want to lock the tenant into the agreement emotionally and psychologically so if i'm going to negotiate a buyout agreement where i'm giving a tenant twenty five thousand dollars to vacate i may give them two thousand or 5000 when they sign the agreement because they've taken the money they've eaten from the agreement yes indeed there's a risk that they rescind but by them taking the 20 the 5 000 up front it gives them enough money to start looking for a place they realize they took some of the benefit of the deal and it's more likely that they will live up to the terms of the agreement and not rescind because they've already taken the money so i like to give a little bit of money up front maybe some more money after the 45 days or 30 days has expired on the recision and the bulk of the money when they give me back the premises another point in san francisco berkeley and oakland if someone signs a biot agreement doesn't rescind the bio buyout agreement and then doesn't move out they're in breach of the buyout agreement they're in breach of contract but it's not a just cause under the just cause eviction ordinance to evict and so even though this is a very rigorous process a tenant who re re violates or breaches a biot agreement you don't get a button and you immediately press a button and they move out of the place and get evicted you can sue them for breach of contract you can seek attorney fees you can seek their removal but it's a long long process and so a biot agreement by definition is really a gentle person's agreement that's enforced but we prefer not to have enforcement our strong preference is to have compliance because if they don't move out you're going to have to sue it for breach of contract you can't just file an eviction lawsuit and so in the end why i like to give a little bit of money up front is because i want them psychologically to be committed to living up to their agreement and people often ask me mr bornstein how many times do tenants rescind how many times have they breached the agreement out of a hundred times i would say maybe one or two do we have a breach or a rescission and a rescission is usually because the tenant woke up and realized they didn't negotiate a good deal a breach is because a tenant didn't find a place to go and it got too close to the time they're moving out so all things being equal i like to give an incentive at the front end because that is more likely to have them transition from the premises and remember a signed agreement is a meeting of the minds the tenants bought into the agreement so it's unlikely that they are going to rescind unless something happens and many people say to me mr boise well you're going to give them money before you know if they're going to rescind what we want to ensure in the agreement that if they rescind they have to give you back the money and the answer is of course they have to give you back the money because they didn't live up to their obligations i don't necessarily like to write in the contract that if you take 5000 and you rescind you have to give me back the 5000 because i'm giving them information on how to rescind i'd rather them lock in an understanding that the full expectation is start looking for a new place to go start on craigslist and live up to the obligations articulated in the body of the agreement so that's a little bit of my soliloquy on how to handle the strategies in this i think it's effective for you of course i don't have a monopoly on judgment and there are times where a tenant will say hey while i'm happy to have you want to meet me at a cafe i want the negotiations in writing and if a tenant asks you to negotiate the terms only in writing do so send them an email after they've sent you the disclosures and in the email you can have me help you construct a quick email offer and in the subject line i always put confidential privileged settlement discussion so i want those writings to be confidential in the event there's a future dispute about the tenancy and the tenant doesn't claim that somehow i'm using an eviction in the future as a pretext because i was unable to get to a buyout agreement so all things vehicle i'd rather have it verbal and i'd rather have only the buyout agreement be the fundamental document between the parties but if a tenant demands something in writing i'll do it by email but i want to sort of draft up the email correctly so i don't have lingering written residue that may come back to bite me in the butt in the event i'm not able to get to a deal so those are the strategies conclusion i want to let you know i'm always thrilled to be able to talk with you invite you to learn about biot agreements our office has been doing biot agreements for over a decade i am very comfortable with biot agreements we have a very efficient method we provide a fixed fee for buyout agreements and i fundamentally believe we're doing more buyout agreements than any other real estate firm throughout the bay area and it's because we're set up for it and we have you do the negotiations we draft up the agreement and we send it back to you and we have found that that is the most efficient way to handle it we are thrilled to be offering this service and we welcome any questions people have by email and i will tell you that we have found that buyouts in san francisco the bay area are the best way often to build wealth in your real estate investments they reduce the risk of litigation they accomplish the goal they're sometimes expensive but you know your numbers you know what you can bear financially and in the end i seldom have a client come back to me say i paid too much i'm disappointed i did a buyout most of the time people are very happy with the decision to proceed with a buyout we are available to handle buyouts we've gotten so busy in our law practice and handling buyouts that i have an individual actually an attorney designated to help prepare these buyout agreements as they come in so with that stated i want to thank you very very much for your attention i know we've got a big group on i think we've had up to a couple hundred 240 people attending and it's my pleasure to continue to educate and most importantly stay safe stay healthy let's all survive this covet 19 pandemic and do so with grace and dignity and i'm always available to help you professionally thank you again for your participation in this web webinar appreciate it if you have questions email me daniel bornstein.law thank you