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SCOTUS Upholds Challenge to San Francisco Ordinance Forcing Landlords to Accept Lifelong Tenants

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For most renters, the usual lease agreement lasts between six and 12 months. But in San Francisco, top-down city ordinances require landlords to offer lifetime leases under certain circumstances.

The requirement kicks in when a rental property is converted into a condominium. In order to obtain a conversion permit from the city, the property owner is required to offer a lifetime lease to any renter.

On Monday, the Supreme Court vacated lower court rulings and allowed a lawsuit challenging the ordinances to proceed.

Midwestern Couple Looking to Retire on Their Own Property

Peyman Pakdel was living and working in Ohio in 2009 when he purchased an interest in a six-unit apartment building in San Francisco, according to the Pacific Legal Foundation.

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“Mr. Pakdel is an engineer who is a partial owner of a small manufacturing company in Northeast Ohio and spent a large part of his retirement savings toward purchasing this property with a hope that he could live there,” the PLF noted.

In 2015, Pakdel and the other owners pursued plans to convert the building into individual condominiums.

But the Supreme Court ruling noted that the city had “adopted a new program that allowed owners to seek conversion subject to a filing fee and several conditions.

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“One of these was that nonoccupant owners who rented out their units had to offer their tenants a lifetime lease.”

Essentially, a tenant could outlive Pakdel in the condominium where he hoped to retire.

Peyman Pakdel and Sima Chegini sued the city of San Francisco in 2017, “claiming the lifetime lease requirement amounts to an unconstitutional taking of their private property,” Courthouse News Service reported.

Surrender Your Property or Face the Government’s Wrath

After the city rejected their complaint and they lost at the 9th Circuit Court of Appeals, the Pakdels appealed to the U.S. Supreme Court, which unanimously backed the couple.

The court pointedly summarized the city’s overreach: “In this case, there is no question about the city’s position: Petitioners must ‘execute the lifetime lease’ or face an ‘enforcement action.’”

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“And there is no question,” the ruling continued, “that the government’s ‘definitive position on the issue [has] inflict[ed] an actual, concrete injury’ of requiring petitioners to choose between surrendering possession of their property or facing the wrath of the government.”

Attorney Jeffrey McCoy of the Pacific Legal Foundation said the ruling will enable other converted condo owners in San Francisco to challenge the lifetime lease requirement.

“It should allow those cases to move forward as well and not be dismissed,” he said.

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Eric Nanneman is a business and technology writer with more than 20 years of investment and banking experience, including stints at Bank of America, Charles Schwab, and Goldwater Bank. He was previously securities registered, holding the Series 7, 63, 9 and 10 FINRA licenses.
Eric Nanneman is a business and technology writer with more than 20 years of investment and banking experience, including stints at Bank of America, Charles Schwab, and Goldwater Bank. He was previously securities registered, holding the Series 7, 63, 9 and 10 FINRA licenses.

He graduated from Arizona State and the Pontifical College Josephinum with degrees in English and philosophy. He has one adult son and resides in Phoenix.




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