Bypassing the SF Condo Lottery

I own a duplex in the Richmond that was built in 1980. Can I bypass the city’s condominium lottery and just convert them to condos?

The year the building was built (1980), although significant with regard to local eviction and rent control laws, has no bearing on the lottery and conversion process. All San Francisco buildings must follow the established process to convert to condominiums, and all buildings with more than 2 units must go through the lottery process to convert.

Simply owning a duplex does not mean you bypass the lottery and “auto-convert”. Two-unit buildings in San Francisco only bypass the condo lottery process if: (1) both of the units have been owner occupied for at least one year; and (2) no eviction was done at the premises on an elderly or disabled tenant after November 16, 2004 (Daly Amendment).

The owner occupancy requirement requires that separate owners (who each owned at least 25% of the property during their occupancy) occupy each of the units for at least one year. This is ideal for tenancy in common owners, but can be an obstacle for single family or investor owners. If your duplex has not been owner-occupied for at least one year, and you do not intend to have it be owner-occupied for a year, you must enter the lottery and hope that you one of the lucky few that wins. Only 200 buildings per year are allowed to convert, and your odds are worse the newer you are to the lottery.

The “protected tenant” eviction restriction really only applies to Ellis Evictions that may have been done at the premises. However, if any eviction was done since November 2004, you should consult an attorney before assuming you can simply bypass the lottery. If a protected tenant eviction has been done since November 2004, you will not be permitted to bypass the lottery, and will have to enter the “Protected Eviction” lottery pool (with less than a 5% chance of winning).

Even after you have met the requirements to bypass the lottery or you have won the lottery, to “just convert to condos” as you put it, you must still (among other things) have the building inspected by the Department of Building Inspection, complete all work ordered by DBI and obtain a Certificate of Final Completion and Occupancy. The entire process, aside from the lottery, can take up to 2-3 years to complete. If you are considering conversion, we advise that you contact an attorney who specializes in conversions.

By Sally Morin and James M. Millar of Millar & Associates (415)981-8100.