The California Court of Appeals has sided with landlords in a lawsuit brought to challenge a San Francisco ordinance that would have required hefty relocation fees to tenants should the landlord decide to retire a rental property.
That ordinance was the latest in a series of controversial measures passed by the city aimed at discouraging landlords from taking units out of service. It would have required landlords to pay tenants the difference between their stabilized rent and market rent in the city for a period of two years.
As soon as the measure was passed, landlords filed suit arguing these relocation fees were disproportionately high, and that the municipal law was unconstitutional. A lower court agreed, and found for the landlords. The city then appealed that ruling.
Because of previous court decisions, the city had not attempted to enforce the new measure, choosing instead to await the outcome of the lawsuit.
The appellate panel referred to the city’s proposed relocation payments as a “form of ransom which interferes with and places an undue burden on landlords who seek simply to go out of business.”
The landlords also contend that other procedural requirements, including a three-year monitoring process, forcing landlords to educate tenants regarding the fees, and the process for landlords seeking a reduction based on financial hardship were unduly burdensome. However, the appellate court found it unnecessary to review those provisions because it already had determined the ordinance was flawed.
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