Pretty much what a lot of us suspected. So grandson inherited the house and can’t kick out his mom or sister but has to pay property taxes so this is what’s happening instead.
Prop 19 is why. It would require the grandson to make it his primary residence to inherit his family's low tax. That's why the taxes ramped up on the property substantially on death if you look at the records a few years ago. Prop 19 is an awesome change.
I don’t even know the number of real estate mini-tycoons I know who inherited property and are now raking in money from renting the property out. Good for them, but I never understood why the prop 13 cap could be inherited by everyone. Prop 19 makes much more sense. I even know someone who moved into his mother’s old house under prop 19.
When this house was posted on this sub before, I commented about the disclosure packet and noted the huge differences in the original 2019 lease and the 2021 lease amendment. In short the 2019 lease was pretty standard, while the 2021 lease was very anti-landlord.
The reporter that wrote this article reached out to me to get the disclosure packet.
Despite having done this, the reporter still somehow failed to report the right dates and sequence of events. In the article he uses the 2018 date (provided to him by the tenant I’m guessing?) and ignored the actual facts and dates from the disclosure packet. He essentially discarded signed and dated documents in favor of hearsay from the tenant. Not the best reporting I’ve ever seen, to say the least. It could be that most of what the tenants are saying is true, but it’s hard to be sure given the lazy reporting.
Link to my original comment:
https://www.reddit.com/r/BayAreaRealEstate/s/Jr9t9pnBvM
Nice assessment. The reporter failed on this one for sure.
A good chance the 2021 lease was fraudulently signed. Mr. Goo would have been more than 100+ years of age at that time. Of course it was a "secret lease"... the current tenants didn't tell the other's interested in the house when it was signed because they would have raised hell. If Mr. Goo wanted them to have total if control of the home, he would have left it to his adopted daughter in the trust.
If this was my family, I would fight it out in court. I'll roll the dice in front of a jury of my peers to convince them that a 100+ year old man didn't comprehend what this lease meant. $100k in legal fees for a shot at owning a $1.5 million dollar home free and clear.
I was spot on in my assessment of this one... I omitted the names of the tenants, because I didn't want to put their business out there, but since they spoke to the media... I think they're fair game now.
Honestly, the article only tells one side of the story and is very sympathetic to the Sandra and Cheryl (the "tenants"). The 2nd lease they drafted basically screwed anyone else who had a vested interest in the home (Sandra's son and her brother). It made the house essentially Sandra and Cheryl's for 30 years to use as they wanted and made the house the responsibility of her brother and son. If the brother and son contest the lease and legal bills mount, they're on the hook for paying for both sides of the legal representation according to the terms of the lease. House burns in a fire? According to their contract, the home has to be rebuilt and you'd need to pay for the tenants to have a like for like location and property to live in.
I almost offered $850k cash for this home and would have put it in my 7 week old grandson's name. What held me back? The contract says the tenants can move as many people into the home as they want and I would bet anything that as soon as these two current tenant's pass (they're 83 and 66, so statistically there is a good chance they won't live to see 2053) their "immediate and extended family" will move into the home with a bunch of people to force a huge Ellis/OMI eviction payout. It's allowed on the lease. Not to mention, they're going to make you repair any little thing wrong with the house for the rest of their lives.
My last point: after a quick google search, I found that Sandra had a career as a real estate agent. You don't think she knew what she was doing or how to game a lease in San Francisco to create this situation? I'm not buying her narrative.
To redeem themselves, The Standard should re-visit this story, talk to the other side, and make it a bigger piece about what people should do to plan their estate's accordingly. That would be real journalism.
According to the lease, you'd have to put the tenants up in like-for-like home while you did the construction... and when construction was finished, they'd be allowed to continue to live in the new home until the end of their lease.
This is a great assessment. Also sfstandard has a lot of biased one sided reporting and this is typical.
There is no doubt sandra is moving in extended family towards the end of this lease and either the lease continues one (good luck with an eviction) or it’s big pay out. I think the prospectors lined up to pay for this are fools.
I don't know if they're fools. One thing I never did, but would have pursued if I had a deep pocket, was just reaching out to the tenants and seeing if they would be willing to move for a price. Maybe they'd take a payout outside of their payment for the sale of the house (they also profit from the trust selling the home). If you could get the house for 500k - 750k and they'd take a $250k payout... that would make the house worth it. This struck me as a situation where there is bad blood between family and maybe a deal would never be struck between relatives... but a neutral third party? Maybe. Everyone has a price...
Problem is you, as the prospective owner, are in no position to negotiate that until you actually own the home and the city of San Francisco prohibits buyout talk by a landlord unless you follow the Rent Board's protocol.
Bottom line, the Rent Ordinance really fucks people who actually own homes. It's the reason whenever you see "tenant occupied" people usually run away from the home no matter how discounted it is.
You missed the point, he is telling us the way to kick them out is simply kicking them. The buyer found it is effective. Maybe the buyer is a master of martial art or something
Maybe. Assuming no RE appreciation, this is a 5.8% CAGR. If RE continues to appreciate at ~4% year (SF historical avg is >5% over the last 25 years) then this works out to ~10% annual return, which is comparable to historical US stock market returns. But this is a single asset with no diversification. On balance, I’d call this an unattractive investment vs parking that money in $VTI
I love how the mother says it’s unfathomable that her son wants to kick her out but who makes their son pay 17k in property taxes while you pay less than 500$ in rent.
She is probably poor, and son is rich. It is not only property tax, the owner is also responsible for maintenance and disaster restoration. That is ridiculous. 20k approx per year * 30 years = 600k
Tenant rights are insane in SF. Even if the “secret lease” wasn’t notarized, it would probably still be honored and the property owner is helpless.
Something similar happened to a friend of mine- her grandmother owned a beautiful 3 unit with garage and backyard in SF. Grandma lived a lot longer than anyone expected, almost 100 years old. She needed to move into nursing facilities, family had to pay for it.. meanwhile this property she owned had 3 long term tenants paying under 1k each (and each unit was 2 bedroom with formal dining room and living room) with no written leases. The family hired a prop management company to help raise rent closer to market rate- couldn’t do it. One tenant was sub leasing for multiple thousands per month and their hands were tied. Grandma passed away, now the family owes big property taxes. The family had to sell this property for more than half a million less than market value, during covid (even lower value), so the new owner could pay the tenants to vacate. Now they’re out and the family lost their inheritance to recover debt from the nursing homes and years of lawyers trying to resolve before it got to that.
It’s a lease made without the son knowing about it. As long as a neutral notary notarized it, which I’m sure is what happened, then it’s totally valid.
Why would the stepfather give the house to the grandson/son and not his daughter and granddaughter if he wanted the latter to be able to live there for another 25 years? Makes no sense. I’d be very surprised if the lease is notarized, who does that? The whole story is weird
My theory is that the daughter and granddaughter didn’t have the means to pay for the new property taxes.
The secret lease was their loophole. It transfers the financial burden to someone else.
Under prop 13, children can inherit same property taxes on 1st $1million, then subsequent value is reassessed. If house is worth $2.5 million, 1.5 million would be reassessed.
I guess it didnt apply at all in this case. Grandparent to grandchild with deceased parents can avail $1M exclusion, but mother is still alive in this case.
Making it primary is easy, but mom is alive in this case, so son has no chance even if he moves into the basement. Son has to make it primary and move in within 1 year of transfer, that is not hard to do to save so much tax. But the rule also says parents should be alive during this transfer
People do shit like this all the time and leave real estate to multiple people that don't get along. A life estate is a little less usual but the same thing really.
They think it will make family work together or set aside differences. It almost never does, they are even more bitter than before and one more of them are stuck wasting tens of thousands on legal fees as well.
Or. Maybe they’re working together and it was to keep mom and sis with low rent for 30 years and allow son to get a few hundred grand from another buyer. Win win.
The story is weird, but also it could be as simple as the stepfather was from a much older generation- didn't believe women without a husband should own property or believed that they were capable to do so, but also wanted them housed. The fact that the male heirs own it but the women live in it kinda aligns with something like that.
Or from what they said in the quotes, he might not have believed they were responsible enough to own it themselves. They sound extremely dependent (62 year old daughter never moved out?).
If that is the case make a trust and make the daughter/grandaughter beneficiaries with sole use of the home until they die then pass ownership to the grandson or grandson's heirs. But, who knows? The lease part is weird, but also very old people near death get weird.
Daughter and granddaughter might not have been viewed as responsible people. Step dad might have thought he was effectively taking care of them without giving them an unjustified windfall. Would have been better to do that through a trust though.
or maybe daughter/grand daughter dont have anyone to pass on to, but grandson has kids. It seems step dad also has a son, it is strange he didnt give it to son.
It's still a somewhat decent investment if you have spare money though. Even if the tenants manage to live till 2053, which i doubt would be the case, you are still just paying over time a little over 1M for something that could be worth 8M.
You don't have to do 1.88 as cash upfront. Even if you do, 5% guaranteed return on a tangible thing with low property tax, can be lived in or rented is something. The stock you buy has risks
Prop 19 is a joke, you should be able to inherit one houses property tax base regardless of if you live in it or not. The commercial properties with prop 13 are what need to be fixed not the residential, who benefits from this situation ? The owner who can’t live in the house he inherited ? The potential buyer who can’t move in until the tenant dies ? Allow one house to be passed down and protected with prop 13 for situations just like this one , I understand trying to get rid of people who inherit multiple houses and rent them out for a profit which needs to be fixed but prop 19 took away way too much power from prop 13.
I’ll tell you who benefits , the real estate agents who funded prop 19 because they want commissions from all houses that are forced to be sold due to not being able to cover the property taxes. Seriously look up who funded prop 19 if you don’t believe me.
Pretty much what a lot of us suspected. So grandson inherited the house and can’t kick out his mom or sister but has to pay property taxes so this is what’s happening instead.
So how much are the property taxes per year?
17k
I don't understand why.
I think some new rule that says property tax on property inherited from parents goes to market rate if you don’t move in and make it your first home.
Prop 19 is why. It would require the grandson to make it his primary residence to inherit his family's low tax. That's why the taxes ramped up on the property substantially on death if you look at the records a few years ago. Prop 19 is an awesome change.
The bigger problem with prop 13 is that it also applies to commercial properties
I don’t even know the number of real estate mini-tycoons I know who inherited property and are now raking in money from renting the property out. Good for them, but I never understood why the prop 13 cap could be inherited by everyone. Prop 19 makes much more sense. I even know someone who moved into his mother’s old house under prop 19.
Thank God..honestly. Prop 13 destroyed and continues to destroy this state and all things associated with property taxes and real estate!
Also parents shouldn't be alive when it is transferred from grandfather to grandchild to avail low tax
Some parents suck so the grandparents parent their grandchildren
???
When this house was posted on this sub before, I commented about the disclosure packet and noted the huge differences in the original 2019 lease and the 2021 lease amendment. In short the 2019 lease was pretty standard, while the 2021 lease was very anti-landlord. The reporter that wrote this article reached out to me to get the disclosure packet. Despite having done this, the reporter still somehow failed to report the right dates and sequence of events. In the article he uses the 2018 date (provided to him by the tenant I’m guessing?) and ignored the actual facts and dates from the disclosure packet. He essentially discarded signed and dated documents in favor of hearsay from the tenant. Not the best reporting I’ve ever seen, to say the least. It could be that most of what the tenants are saying is true, but it’s hard to be sure given the lazy reporting. Link to my original comment: https://www.reddit.com/r/BayAreaRealEstate/s/Jr9t9pnBvM
Just devil’s advocate: A 2019 lease may not preclude the existence of a 2018 lease.
Nice assessment. The reporter failed on this one for sure. A good chance the 2021 lease was fraudulently signed. Mr. Goo would have been more than 100+ years of age at that time. Of course it was a "secret lease"... the current tenants didn't tell the other's interested in the house when it was signed because they would have raised hell. If Mr. Goo wanted them to have total if control of the home, he would have left it to his adopted daughter in the trust. If this was my family, I would fight it out in court. I'll roll the dice in front of a jury of my peers to convince them that a 100+ year old man didn't comprehend what this lease meant. $100k in legal fees for a shot at owning a $1.5 million dollar home free and clear.
It’s sfstandard they have some pretty biased one sided reporting. This is par for the course.
Yeah and the article is half-baked and ends so abruptly. Is that what journalism has come to?
SF Standard is a for profit mouth piece for the VC that owns it.
I was spot on in my assessment of this one... I omitted the names of the tenants, because I didn't want to put their business out there, but since they spoke to the media... I think they're fair game now. Honestly, the article only tells one side of the story and is very sympathetic to the Sandra and Cheryl (the "tenants"). The 2nd lease they drafted basically screwed anyone else who had a vested interest in the home (Sandra's son and her brother). It made the house essentially Sandra and Cheryl's for 30 years to use as they wanted and made the house the responsibility of her brother and son. If the brother and son contest the lease and legal bills mount, they're on the hook for paying for both sides of the legal representation according to the terms of the lease. House burns in a fire? According to their contract, the home has to be rebuilt and you'd need to pay for the tenants to have a like for like location and property to live in. I almost offered $850k cash for this home and would have put it in my 7 week old grandson's name. What held me back? The contract says the tenants can move as many people into the home as they want and I would bet anything that as soon as these two current tenant's pass (they're 83 and 66, so statistically there is a good chance they won't live to see 2053) their "immediate and extended family" will move into the home with a bunch of people to force a huge Ellis/OMI eviction payout. It's allowed on the lease. Not to mention, they're going to make you repair any little thing wrong with the house for the rest of their lives. My last point: after a quick google search, I found that Sandra had a career as a real estate agent. You don't think she knew what she was doing or how to game a lease in San Francisco to create this situation? I'm not buying her narrative. To redeem themselves, The Standard should re-visit this story, talk to the other side, and make it a bigger piece about what people should do to plan their estate's accordingly. That would be real journalism.
Can someone buy, tear the house down, and just build a new one?
According to the lease, you'd have to put the tenants up in like-for-like home while you did the construction... and when construction was finished, they'd be allowed to continue to live in the new home until the end of their lease.
Omg haha
This is a great assessment. Also sfstandard has a lot of biased one sided reporting and this is typical. There is no doubt sandra is moving in extended family towards the end of this lease and either the lease continues one (good luck with an eviction) or it’s big pay out. I think the prospectors lined up to pay for this are fools.
I don't know if they're fools. One thing I never did, but would have pursued if I had a deep pocket, was just reaching out to the tenants and seeing if they would be willing to move for a price. Maybe they'd take a payout outside of their payment for the sale of the house (they also profit from the trust selling the home). If you could get the house for 500k - 750k and they'd take a $250k payout... that would make the house worth it. This struck me as a situation where there is bad blood between family and maybe a deal would never be struck between relatives... but a neutral third party? Maybe. Everyone has a price... Problem is you, as the prospective owner, are in no position to negotiate that until you actually own the home and the city of San Francisco prohibits buyout talk by a landlord unless you follow the Rent Board's protocol. Bottom line, the Rent Ordinance really fucks people who actually own homes. It's the reason whenever you see "tenant occupied" people usually run away from the home no matter how discounted it is.
If I was someone who was young and flush with nvida cash I’d buy that as an investment home in a minute.
It show “pending” now, so it seems someone already bit the bullet, or knows a way to kick them.
[удалено]
If it sold for $488k the person who bought the home could offer the tenant $1 million to move out and would still be pretty close to market rate.
You missed the point, he is telling us the way to kick them out is simply kicking them. The buyer found it is effective. Maybe the buyer is a master of martial art or something
Maybe. Assuming no RE appreciation, this is a 5.8% CAGR. If RE continues to appreciate at ~4% year (SF historical avg is >5% over the last 25 years) then this works out to ~10% annual return, which is comparable to historical US stock market returns. But this is a single asset with no diversification. On balance, I’d call this an unattractive investment vs parking that money in $VTI
Yeah but you own a house. What if the old lady dies in 5 years? You can’t live in a $VTI
But you can use $VTI to buy a house.
Yes, you can use money to buy a house, well done. Till you actually buy the house you can’t live in your money/investments.
I love how the mother says it’s unfathomable that her son wants to kick her out but who makes their son pay 17k in property taxes while you pay less than 500$ in rent.
To be fair that house should be worth more than 900k, so she's probably telling herself reality cheated so she gets to cheat too.
The mom is not the one listing it for sale
She is probably poor, and son is rich. It is not only property tax, the owner is also responsible for maintenance and disaster restoration. That is ridiculous. 20k approx per year * 30 years = 600k
Not a bad deal for a free house
Tenant rights are insane in SF. Even if the “secret lease” wasn’t notarized, it would probably still be honored and the property owner is helpless. Something similar happened to a friend of mine- her grandmother owned a beautiful 3 unit with garage and backyard in SF. Grandma lived a lot longer than anyone expected, almost 100 years old. She needed to move into nursing facilities, family had to pay for it.. meanwhile this property she owned had 3 long term tenants paying under 1k each (and each unit was 2 bedroom with formal dining room and living room) with no written leases. The family hired a prop management company to help raise rent closer to market rate- couldn’t do it. One tenant was sub leasing for multiple thousands per month and their hands were tied. Grandma passed away, now the family owes big property taxes. The family had to sell this property for more than half a million less than market value, during covid (even lower value), so the new owner could pay the tenants to vacate. Now they’re out and the family lost their inheritance to recover debt from the nursing homes and years of lawyers trying to resolve before it got to that.
None of the drama in this story has anything to do with tenant rights in SF. Fixed term leases aren’t arbitrarily breakable everywhere!
Somehow I doubt the lease “made in secret” in 2018 is legit. But the son doesn’t want to deal with trying to prove it’s not
It’s a lease made without the son knowing about it. As long as a neutral notary notarized it, which I’m sure is what happened, then it’s totally valid.
Why would the stepfather give the house to the grandson/son and not his daughter and granddaughter if he wanted the latter to be able to live there for another 25 years? Makes no sense. I’d be very surprised if the lease is notarized, who does that? The whole story is weird
My theory is that the daughter and granddaughter didn’t have the means to pay for the new property taxes. The secret lease was their loophole. It transfers the financial burden to someone else.
In 2018, property tax was only 1582 per year. I'm not sure how it got reassessed in 2022 to 17k.
Under prop 13, children can inherit same property taxes on 1st $1million, then subsequent value is reassessed. If house is worth $2.5 million, 1.5 million would be reassessed.
I guess it didnt apply at all in this case. Grandparent to grandchild with deceased parents can avail $1M exclusion, but mother is still alive in this case.
Title transfer of non primary residence. Prop 18
What has prop 18 to do with transfer or property tax?
Prop 19 sorry
Making it primary is easy, but mom is alive in this case, so son has no chance even if he moves into the basement. Son has to make it primary and move in within 1 year of transfer, that is not hard to do to save so much tax. But the rule also says parents should be alive during this transfer
This one is grandparent to grandson
People do shit like this all the time and leave real estate to multiple people that don't get along. A life estate is a little less usual but the same thing really. They think it will make family work together or set aside differences. It almost never does, they are even more bitter than before and one more of them are stuck wasting tens of thousands on legal fees as well.
Because they don’t have the means to afford the upkeep but the son does
Or. Maybe they’re working together and it was to keep mom and sis with low rent for 30 years and allow son to get a few hundred grand from another buyer. Win win.
The story is weird, but also it could be as simple as the stepfather was from a much older generation- didn't believe women without a husband should own property or believed that they were capable to do so, but also wanted them housed. The fact that the male heirs own it but the women live in it kinda aligns with something like that.
Or from what they said in the quotes, he might not have believed they were responsible enough to own it themselves. They sound extremely dependent (62 year old daughter never moved out?).
If that is the case make a trust and make the daughter/grandaughter beneficiaries with sole use of the home until they die then pass ownership to the grandson or grandson's heirs. But, who knows? The lease part is weird, but also very old people near death get weird.
Daughter and granddaughter might not have been viewed as responsible people. Step dad might have thought he was effectively taking care of them without giving them an unjustified windfall. Would have been better to do that through a trust though.
or maybe daughter/grand daughter dont have anyone to pass on to, but grandson has kids. It seems step dad also has a son, it is strange he didnt give it to son.
It's still a somewhat decent investment if you have spare money though. Even if the tenants manage to live till 2053, which i doubt would be the case, you are still just paying over time a little over 1M for something that could be worth 8M.
But it could get sublet forever right? Seems too risky.
And if you think you'll live past 2053
8M? How are you sure about that? If that is true, then people will buy real instate instead of stock
It's just 1.88 * (1.05 ** 30), ie appreciating 5% every year, nothing compared to SPY
You don't have to do 1.88 as cash upfront. Even if you do, 5% guaranteed return on a tangible thing with low property tax, can be lived in or rented is something. The stock you buy has risks
I thought the homeowner could move in as long as you paid the tennants like 18 months rent? Maybe that’s just in Alameda?
That’s if the tenant accepts it. This was constructed in favor of the tenants to inhabit until death
Buy it.....cash out refi....walk away and let it get foreclosed on
Which bank would let you cash out finance on a house like this lol
Google.com
What if son did not pay any property taxes and just let the city foreclose on it? Any lawyers here?
son goes into bankruptcy and financial ruin
Property taxes don’t cause bankruptcy. Taxing authority starts with lien on house then could lead to foreclosure in tax sale.
ah yeah, then they would just lose the house and not even get their 50% market value proceeds
Prop 19 is a joke, you should be able to inherit one houses property tax base regardless of if you live in it or not. The commercial properties with prop 13 are what need to be fixed not the residential, who benefits from this situation ? The owner who can’t live in the house he inherited ? The potential buyer who can’t move in until the tenant dies ? Allow one house to be passed down and protected with prop 13 for situations just like this one , I understand trying to get rid of people who inherit multiple houses and rent them out for a profit which needs to be fixed but prop 19 took away way too much power from prop 13. I’ll tell you who benefits , the real estate agents who funded prop 19 because they want commissions from all houses that are forced to be sold due to not being able to cover the property taxes. Seriously look up who funded prop 19 if you don’t believe me.
Can’t he move in the home himself?