Proposition B – Eviction Disclosure Ordinance

Voter Guide
May 1, 2006

Proposition B is an ordinance that would amend the Administrative Code to require property owners to disclose to prospective buyers of residential property consisting of two or more units 1) the legal grounds for the termination of a tenancy and 2) whether any units were occupied by elderly and/or disabled tenants at the time of termination of tenancy.

Proposition B was placed on the ballot withthe signatures of five members of the Board of Supervisors. As an ordinance, it does not legally need to go to the ballot, but could become law with a majority vote of the Board of Supervisors and the mayor’s signature. However, in January 2006, the Board of Supervisors passed identical legislation, which the mayor subsequently vetoed. Thus, Proposition B is on the ballot as a result of its failure to pass through the normal legislative process.

 

SPUR'S ANALYSIS

Currently, property owners are required, before entering into a contract for the sale of the property, to disclose in writing the legal grounds for termination of tenancies in units for sale. Under this proposed ordinance, the seller would be required to disclose this information to “any prospective purchaser” — not just the buyer entering into a contract for purchase. In addition, the seller would also be required to disclose to any prospective buyer whether an elderly or disabled tenant occupiedthe unit at the time the tenancy was terminated. No such provision exists under current law.

Proposition B specifies that the new disclosure requirements would be satisfied if they are printed on a flier or another similar document that is available to prospective buyers at any open house or tour of the property. Failure to meet the disclosure requirement would carry a penalty of a $1,000 fine and up to a six-month jail sentence.

The legal reason a tenant was removed from an apartment can in some cases affect the potential uses of a property, and hence its value. Under California’s Ellis Act, a property owner can evict tenants in order to remove the property from the rental market. However, if a tenant is evicted under the Ellis Act, the unit cannot be re-rented for 10 years, unless the evicted tenant is given priority to rent the unit at the price paid at the time of eviction. Since the value of housing is determined in part by the revenue it can generate as rental property, a restriction on a property’s use can potentially affect its value substantially, and therefore this information is financially relevant to a number of potential buyers.

The requirement that owners disclose whether an elderly or disabled tenant was evicted appears to be based more on ethical considerations than on a clear economic or legal justification. A previous eviction of an elderly or disabled tenant is, legally speaking, no different from any other type of eviction. However, the knowledge that such a tenant had been evicted could be ethically important to a prospective buyer, causing him or her to think twice about purchasing the property. Similarly, the provision might make landlords less likely to evict elderly and disabled tenants, since it would be unappealing to have to disclose this information to prospective buyers. Thus, it appears the intent of this provision is to create psychological barriers to the eviction of elderly and disabled tenants.

 

SUPPORTERS CLAIM...

  • Because information on the grounds for previous evictions is legally relevant to the use and economic value of a property, it should be made available up-front. Under current regulations, buyers often find out too late, after they have invested time and money. This ordinance would provide important consumer protection for potential buyers.
  • Many senior and disabled tenants are vulnerable and deserve added consideration in housing decisions. Many prospective buyers feel very strongly about protecting vulnerable renters from eviction and believe landlords who evict these tenants to increase the value of their property should be held accountable for their actions in the marketplace.
  • Providing more information about any product for sale is almost always a good idea—it helps buyers and sellers make better decisions, and leads to a more efficient, fair market.

 

OPPONENTS CLAIM...

  • This measure is an attempt to demonize property owners, who have the right to make individual decisions about what the do with their property.
  • This legislation is unnecessary and will have little practical effect. It is primarily symbolic – just the latest installment in a constant stream of legislative bickering between landlord and tenant advocates.
  • This issue should not be on the ballot. The Board of Supervisors and the mayor should be able to work out these issues through the normal legislative process. In fact, there have been efforts to draft a compromise ordinance with some minor changes, but rather than try to work through the differences, the sponsors chose to go to the voters for political reasons.

 

SPUR'S RECOMMENDATION

SPUR has no position on Proposition B. SPUR requires a 60 percent vote of its Board of Directors to take a position for oragainst any ballot measure. We were unable to reach that threshold on Proposition B.

There is a case to be made that a requirement for greater information disclosure helps buyers make informed decisions and increases the efficiency of the market, and that information about the eviction of elderly or disabled tenants is relevant to many buyers.

However, SPUR has consistently said that the cause of evictions, and the reason that they are such a huge problem for the individuals evicted, is the overheated housing market in San Francisco, driven by a structural imbalance between the number of people who want to live here and the capacity of the city’s housing stock to accommodate them. This imbalance has created tremendous economic pressure on tenants and homebuyers (both existing and prospective first-time homeowners) alike.

Proposition B appears to be the latest in an ongoing conflict between landlord and tenant activists. Our inability to reach a position on this measure reflects our longstanding hesitation to take sides in owner-vs.-tenant debates. Ultimately, the only way to stabilize the housing market, create ownership opportunities, and soften the need for and impact of evictions is to address the fundamental economic issues. Until that happens, there will be no winners in these debates.