Law making it easier for tenants to buyout their landlords is defeated

Antonio Lopez, East Palo Alto City Councilman

BY EMILY MIBACH
Daily Post Staff Writer

A proposed law that would make it easier for tenants, nonprofits and even the city to buy homes put up for sale was defeated by the East Palo Alto city council last night (Dec. 5).

Council passed the Opportunity to Purchase Act or OPA on Nov. 7 by a 3-2 vote. But each ordinance or new law that goes before council at two separate meetings.

Councilman Antonio Lopez, who was on the “yes” side at the Nov. 7 meeting, flipped last night to the “no” side, giving it three votes. OPA failed 3-2. Lopez is one of several candidates running for the San Mateo County Board of Supervisors to replace Warren Slocum, who is retiring.

OPA would have required the owner of a single-family home or condominium to tell their tenants, if they have any, that they plan to put the home on the market. When offers roll in for the house, the tenant would have an opportunity to match the offer, though the owner wouldn’t have to a take the offer. A nonprofit or the city could also make offers.

For more details, pick up tomorrow’s Daily Post.

5 Comments

  1. This isn’t inconsistent. Lopez is Islamic and Islamic law has strict prohibitions on home sale ambiguities that could be exploited by either party.

  2. What’s the point of a “right of first refusal” if the landlord doesn’t have to accept it? A tenant currently can make an offer on the house. Although supposedly the landlord isn’t obligated to accept it, there will be litigation alleging that the landlord is acting in “bad faith” etc. if they don’t accept the tenant’s supposedly higher offer, which is likely to require zero or minimal down payment, and seller financing, and other onerous conditions like requiring the seller to make improvements the tenant wants.

  3. The reality is this is just a mislabeling of what the ordinance does. It purports to give tenants an opportunity to purchase, but tenants already have that opportunity. They have an opportunity every day to purchase any home that comes on the market. With respect to notice, landlords are already required under state law to provide tenants notice that their lease will come to an end.

    So what is really going on then? Well, what’s going on is that the city musters up support for an ordinance that doesn’t do what it says it does. It labels it (the ordinance) something that makes it look like tenants stand to get a leg up, and they (the tenants) then all show up to support it. But instead, what it does is it places a ton of restrictions on the landlord’s ability to sell, with the most likely outcome being that a non-profit purchases the property, through this onerous city process. This city process has the effect of reducing the market price of the sale and labeling the depressed price as a “market price”. Anyone that’s taken an Econ 1 class can understand this is not true market pricing and why property owners want nothing to do with this. But since the city has this magic label for the depressed price and this magic label is “market price”, the city is able to argue that property owners aren’t being damaged because they’re getting market price — which is total nonsense.

    The ordinance also includes a right to nullify the sale up to 3 years after the close of escrow. As a property owner, how exactly are you supposed to rebuy the house, in what condition, and with a loan at what interest rate when you’ve likely already spent that money on another property (possibly across the country) if you’ve moved? The city conveniently sidesteps this issue, or says something along the lines of this is all an experiment — how about that, an experiment with someone else’s property value, something that takes you 30 years or more to pay off (a lifetime of earnings) and the city wants to experiment.

    So, yeah, property owners want nothing to do with this. And if tenants believe all it is is hey let me know if you’re selling (which is what the city tells them and what the papers lead them to believe), they’re irritated at what they perceive is just another ugly unjust landlord unwilling to give them the slightest edge up.

  4. December Baby, you’re either hopelessly confused or a poor communicator.

    OPA, in its final form, gave tenants, qualified nonprofits and the city a chance to look over an offer a seller was going to take, and match it. The seller could ignore the offer from the tenant, nonprofit or city, but this ordinance would have given those entities the ability to match the offer.

    Here’s how this would play out. The seller lists the home, provides the appropriate notice to the tenant, city, etc.

    The seller hopefully gets multiple offers and chooses the best one.

    But instead of signing the offer, the offer goes to the city for review.

    Then the city inspects the offer ( they could never do that before) and decides whether to match it. The city has an endless supply of money, so they can not only match the offer but offer the seller more.

    The seller just wants the most money, so they take the city’s inflated offer.

    The city is able to grab houses without eminent domain. Buyers stop looking at houses in EPA because they know the city will outbid them every time. So the real estate market collapses and the city buys the remaining houses at fire sale prices.

    They almost got away with it. I’m glad the Daily Post stayed on this story. A disaster almost happened here.

  5. I’ve been *actively* involved with this issue for over 2 years and December Baby’s comments are insightful and an excellent synthesis of the situation. OPA’s labeling/marketing is disingenuous and leads people to think it’s a magic bullet to home ownership or offers more opportunity over the numerous tenant protections in place, but the devil is in the details as they say.

    The City claims that OPA doesn’t restrict who an absentee owner can sell to or dictate a price, which is technically true, but that’s because the ordinance does the dirty work by *regulating* home sales via an arduous and punitive process. Anyone who’s taken Econ 101 and understands how markets work knows the principle of supply and demand. OPA’s manipulation and regulation of the real estate market will negatively affect prices because it drives buyers away for all property, regardless of whether it is exempt.

    As a point of clarification, Antonio’s decision was not a flip as it’s being mischaracterized in this article. Refer to this thoughtful and balanced Op Ed piece he wrote almost 2 years ago that describes his deep concerns with OPA.

    [Portion removed for Terms of Use violation. Please do not post links in your comments.]

    Therefore, his final vote should not have been a surprise to anyone as it was consistent with his original position. If there was any surprise, it was that he voted to advance OPA at the first reading, which was a strategic move in order to buy time for additional assessment of the updated version before rendering a decision. Is this not why there are 2 readings? To me, this was indicative of a generous attempt to give OPA another chance.

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