2 ms·

All of my leases had buy-out provisions, usually one or two months of rent. I've never lived in SF, but I'm going to guess that tenant-friendly laws in Califor

All of my leases had buy-out provisions, usually one or two months of rent. I've never lived in SF, but I'm going to guess that tenant-friendly laws in California combined with historically good price growth provided landlords with an incentive to make it easy for tenants to break leases. I know more than a few people from SF who were paid to break their leases. More churn means more "market adjustments" for rent prices, and market adjustment historically favored landlords.

whimsicalism 6y ago
You're confusing a few things. Because SF (until recently) has disproportionately been a sellers market, leases are written such that they benefit the landlord. Buyout clauses are not symmetric and are uncommon in SF. In the context you described, both the tenant and the landlord have incentives: the landlord wants to pay you to break the lease so they can charge higher prices, the tenant might want to accept the money. The landlord doesn't have to have any clause in the lease whatsoever to make this offer because you aren't obligated to accept it. On the other hand, in the current market the landlord has no incentive to accept an offer that is less than what they feel like they will lose by you leaving. Since the market has collapsed, they'll lose quite a bit. I don't see the math adding up to making money by breaking out of the lease in SF - unless the prices fall considerably more.
- mywittyname 6y ago
  > You're confusing a few things. Because SF (until recently) has disproportionately been a sellers market, leases are written such that they benefit the landlord. Right, which is why it makes sense that landlords would allow tenants to break leases for a fee. The landlord gets two/three months of rent from the current tenant, plus they have a waiting list of people and will have the unit moved into within a few days paying higher rent. So the benefits to the landlord is more money. They get to legally double-charge for rent and raise rent prices on an accelerated schedule at the cost of one or two days of lost occupancy. The only time this doesn't benefit the landlords is when rent prices collapse. But considering SF rent prices have been inflating at a double digit annual clip for a decade or more now, I doubt any landlord considered a drop in rent prices to be possible.
  - whimsicalism 6y ago
    > So the benefits to the landlord is more money. Here's the difference: the landlord can already choose release you from your lease if you pay a fee, there doesn't have to be a clause about that. Adding a clause to the lease forces the landlord to let you leave if you pay the money, which in situations like this can hurt the landlord quite a bit. So there's really no upside and only a downside. The only time you'd need to include a clause like that is to make the lease more attractive, which in SF until recently has not been necessary.

whimsicalism 6y ago

You're confusing a few things. Because SF (until recently) has disproportionately been a sellers market, leases are written such that they benefit the landlord. Buyout clauses are not symmetric and are uncommon in SF. In the context you described, both the tenant and the landlord have incentives: the landlord wants to pay you to break the lease so they can charge higher prices, the tenant might want to accept the money. The landlord doesn't have to have any clause in the lease whatsoever to make this offer because you aren't obligated to accept it. On the other hand, in the current market the landlord has no incentive to accept an offer that is less than what they feel like they will lose by you leaving. Since the market has collapsed, they'll lose quite a bit. I don't see the math adding up to making money by breaking out of the lease in SF - unless the prices fall considerably more.

mywittyname 6y ago
> You're confusing a few things. Because SF (until recently) has disproportionately been a sellers market, leases are written such that they benefit the landlord. Right, which is why it makes sense that landlords would allow tenants to break leases for a fee. The landlord gets two/three months of rent from the current tenant, plus they have a waiting list of people and will have the unit moved into within a few days paying higher rent. So the benefits to the landlord is more money. They get to legally double-charge for rent and raise rent prices on an accelerated schedule at the cost of one or two days of lost occupancy. The only time this doesn't benefit the landlords is when rent prices collapse. But considering SF rent prices have been inflating at a double digit annual clip for a decade or more now, I doubt any landlord considered a drop in rent prices to be possible.
- whimsicalism 6y ago
  > So the benefits to the landlord is more money. Here's the difference: the landlord can already choose release you from your lease if you pay a fee, there doesn't have to be a clause about that. Adding a clause to the lease forces the landlord to let you leave if you pay the money, which in situations like this can hurt the landlord quite a bit. So there's really no upside and only a downside. The only time you'd need to include a clause like that is to make the lease more attractive, which in SF until recently has not been necessary.