NEW LAW ALERT: Starting on June 2, 2019 a New Law Requires Sellers of 3+ Residential Units to First Give Non-Profits the Opportunity to Buy
There is another new San Francisco Ordinance impacting sellers. It will:
Apply to 3 or more residential units (and lots on which 3 residential units may be constructed), including mixed use properties;
Give certain non-profit organizations "preemptive" rights to buy such properties from sellers before anyone else via a complicated statutory "right to first offer" and "right of first refusal" process that will cause delay, burden and risk;
Stop sellers of such properties from offering or accepting offers to sell from private buyers until they first notify such non-profits.
Effective Date: June 2, 2019
Sellers violating this new law are subject to claims by such non-profits, including for damages and attorney's fees. Certain fines, penalties and other remedies may also be allowed, including against "a party that has willfully colluded" with a violating seller.
Ø Sellers of such properties wishing to properly avoid this new law should consider entering into purchase and sale agreements before the close of business on June 1, 2019. Such agreements are expressly excluded.
No such list has been posted yet. It may not be ready until the June 2, 2019 Effective Date.
Within 90 days after the Effective Date, the City is supposed to issue rules and regulations informing as to interpretation and implementation of the law.
No such rules and regulations are apparently in the works at this time. Until August 31, 2019, many questions thus may remain unanswered, including whether sellers of individual TIC units in 3+ unit apartment buildings must comply.
For any questions or advice concerning this new law, Sellers should be advised to engage a qualified San Francisco Real Estate attorney.
Updates from the Association will follow, including on this law's detailed notice and preemptive rights process before the Effective Date, along with a SFAR Advisory on topic.
A legal challenge is anticipated. Whether or not implementation of the new law will be delayed depends upon later Court rulings. For now, plan on this law being in force June 2, 2019.