What You Need to Know about Tenant Buyouts in Los Angeles
by Ben Nicolas
on Thursday, February 16th, 2017 at 7:32am.
The Rent Stabilization Ordinance (RSO) has brought about a lot of changes for 2017. Among the most important of these are the Tenant Buyout Notification Program, or "Cash for Keys". Many of us have probably heard of, if not experienced firsthand, a landlord looking to strike a deal with a tenant to get them to move out of their unit. This tends to happen a lot in developing neighborhoods, where someone is looking to renovate an entire building and reopen at a higher pricing tier.
As this trend has grown, the city has taken notice. Through the Cash for Keys program, tenants in RSO covered housing will be better protected as tenant buyouts become more regulated and streamlined.
Knowledge is Power
One of the main ideas behind RSO changes for 2017 are making sure tenants are well informed. It's no different with tenant buyouts. As of January 25th 2017, owners must provide tenants with two documents.
The first is a disclosure notice. This notice ensures that the tenants know all their rights in the buyout process. This notice needs to be signed before the buyout agreement can be signed, and must be filed within 60 days of the agreement being reached.
After the disclosure is taken care of, the buyout agreement can be given. While this is not a downloadable form like the disclosure, it does require two very specific instructions in order for it to be recognized by the city of Los Angeles. It must be written in the tenant's primary language, and it must have the following statement in bold 12pt font:
'You, (tenant name), may cancel this Buyout Agreement any time up to 30 days after all parties have signed this Agreement without any obligation or penalty."
Beyond that, it is up to the owner to come up with terms of the buyout agreement. However, the terms will need to be something that the tenant would agree to given that the tenant is within their rights to simply refuse.
Know Your Rights
If a property owner or management company is trying to buyout a tenant, it's important that they know where they stand. Rights that RSO protected tenants have in a buyout include all of the following:
•right not to accept
•right to consult an attorney or HCIDLA
•right to rescind the agreement within 30 days of signing it
•right to rescind at any time if RSO either the disclosure notice or buyout agreement do notcomply with RSO guidelines
•right to private civil action
A tenant who is aware of these rights will be in a much better position to get what they want from a buyout offer.
Are You In With RSO?
While Los Angeles owners have a few new rules to learn and tenants have some rights to keep in mind, it's important for everyone to remember that these only apply to RSO protected rental units.
Here's a quick list of things to consider if you're unsure of whether your home is covered by RSO.
•Only rental units within the city of Los Angeles that has a certificate of occupancy from before Oct 1st 1978 is covered
•A rental condo with occupancy after 1996 is fully covered, while those with earlier occupancy are only covered by some policies, such as eviction control
•The unit must be in Los Angeles City, not just within Los Angeles County
That last point in particular is important, because there are patches of land that are not considered part of Los Angeles City, such as Santa Monica, Culver City and Beverly Hills. Also, when you look south of Downtown, the city's boundaries follow a thin strip just along the 110 freeway. If you're just a few blocks from the freeway, you might not be covered.
The easiest way to check is to look at your water and power bills. If they're paid to the Los Angeles Department of Water and Power, then your in. If they're paid to Edison, you're not within LA City, and not covered by RSO.
The last thing to note is that a building has to have residential occupancy before 1978 to qualify, so that luxury loft in a renovated warehouse doesnít count.
How Landlords Can Work With Tenant Buyouts
While tenant buyouts have become very regulated, there is still flexibility in the terms that can be specified. For instance, an owner who is worried about a tenant flippantly rescinding the agreement without giving proper notification can specify the terms by which notice of their rescinding must be given.
There can also be other uses for the buyout. For instance, if a tenant hasnít been paying their rent, the landlord could offer them a buyout agreement rather than evict them. This would keep the process friendly, save the tenant from having an eviction on their record, and possibly even allow the owner to recoup some of the unpaid rent in the agreement.