Update June 13, 2013: I just received a copy of the legislation as amended at the June 11 meeting. I’ll be reading it and making some more posts to flesh out my thoughts in the coming day or two. Thanks for your patience, everyone!
The San Francisco Board of Supervisors voted to approve condo lottery bypass legislation, and you’d think that would be a wonderful thing for TIC owners. But the devil is in the details, and the details – while still murky – appear to screw anyone with aspirations of home ownership in San Francisco that doesn’t have a big pile of Google, Facebook, or Apple stock to help them with their first purchase.
If you are a TIC owner that qualifies for the lottery today, you’re kinda-sorta right to be happy. In exchange for a $20,000 extortion fee per unit, the city will gently shield its eyes with your big fat check and look away while you submit all your paperwork to the city so your building can become a condominium. The congratulations comes with a big fat asterisk, though: tenant’s rights activists just did a pretty good job of screwing almost every TIC owner going forward.
I have nothing against tenants – I’ve been one myself, and I assure you I could share some crazy *** landlord stories with you. But what happened tonight is pretty much a nightmare for owners of TIC units. Why?
- The Board of Supervisors did not create any “new” lottery spaces for TIC conversion. Instead, they just destroyed the already awful lottery system and replaced it with requirements that appear to double occupancy requirements and make it almost impossible to convert five and six unit buildings to condominiums in the future. If you just bought a TIC in a 3 unit building, I hope you didn’t want to convert it to condo. Because three snowballs in hell have a better chance of becoming a snow-person than you now have of converting your TIC to a condo.
- The Board of Supervisors also destroyed an owner’s guaranteed right of conversion because under the new law anyone – yes anyone – can now challenge a condo conversion for any reason at all. As I understand it, there are absolutely no guidelines or criteria that DPW must use when deciding to disallow a condo conversion. Does your building meet all of the requirements? Doesn’t matter anymore – regardless of whether or not the building satisfies all of the “requirements” – one bitter person with some spare time on their hands can end your conversion dreams.
This, my dear readers, is why we have steered our buyers as far away from almost all tenancies-in-common for as long as we’ve been in real estate. The odds have always been stacked against TIC owners, and legislation like this is what passes as “progress” in San Francisco.