Before you do an Owner Occupancy Eviction consider Cash for Keys.

One of the largest areas of buyouts I deal with are owners that want to move in themselves or family into a rental house or apartment unit, but they are uncertain about how long they or their family will be living in the unit. Alternatively, in this category of buyouts I get buyers looking to purchase tenant occupied properties that are either rent controlled, or have some type of eviction restriction, and they want to move family in. Here are a few questions I get asked in these scenarios.

How many units can the landlord Owner-Occupy?

This question varies by jurisdiction. Los Angeles City, being the largest buyout pool, does not have a limit as to how many units can be owner-occupied. However, there are certain protections that tenants in RSO units have if they are a qualified tenant and have occupied their unit for ten (10) or more years, in which case you may no the able to occupy their unit. As for other jurisdictions that have some form of rent control or evictions restrictions you can always consult the code (which is a lot of reading) or call/ email the applicable agency and they will provide you some insight. They will not give you any legal advice, but they should readily know what limitations exist to owner-occupy. Additionally, you can consult with an attorney familiar with landlord-tenant law.

If you are a current owner, or a potential buyer with the goal of owner occupying, you want to determine the limitations of owner-occupancy applicable to that building and the information about the tenants that may satisfy some restrictions, commonly age and disability.

If a landlord can Owner-Occupy why would they try to do a buyout?

The advantage of a buyout is that there are fewer strings attached for the landlord. Many jurisdictions have filing requirements in which the landlord needs to submit paperwork to the the applicable agency with personal information about the landlord or the family member moving in. The owner or family member usually needs to move in within a certain time frame. Then you may have to file annual declarations that you or your family member are still occupying the unit. Next, there are minimums for how long you must owner occupy, otherwise you risk having to give the tenant the right of first refusal to come back or civil liability alleging that your owner occupancy was actually an illegal eviction. Not to mention, even if you do all the paperwork right (application, paying filing fees, escrow instructions, putting funds into escrow, etc.) the tenant may not move out and you will need to file an eviction. Lastly, your owner-occupancy could be denied because it was procedurally defective or because the tenant was protected and you cannot owner occupy their unit.

The buyout approach may cost you a little more as the incentive to the tenant is that they get more money and/ or more time, but it helps that it is a voluntary agreement with the tenant, rather than the result of a 60 Day Notice. With the buyout you also have the ability to rent the unit out at market rent without having to give tenants a right of first refusal or having to owner occupy the unit for the minimum required time.

If the flexibility of a buyout is not needed and you have a sense the tenant would not engage with a buyout, then going the owner occupancy route may be more suitable.

Can I do the Owner-Occupancy process by myself?

In theory, yes. However, each jurisdiction has their own process. Los Angeles City you can submit the declaration and pay the filing fees directly with housing, but you are required to open an escrow account with either an escrow company or an attorney, draft up escrow instructions, and deposit the relocation funds, all within specific deadlines. You cannot yourself be the escrow in that instance. Further, your 60 Day Notice needs to be legally compliant with the local jurisdiction requirements or you risk the notice being defective and you are unable to enforce it. It would behoove any landlord to seek appropriate legal advice before and during the process of applying for owner-occupancy.

While on the surface it may seem that any landlord should just be able to move into their property, the laws and trends state otherwise. A landlord or buyer should get educated on what restrictions exist for the jurisdiction in which the property is located. It is good form at the beginning of any tenancy to make sure you get driver licenses from your tenants so that you know their birthdate. Having a good rapport with your tenants can also help as you are more likely to not only get information more readily from them, but they are more likely to understand and cooperate with an owner occupancy. It is always stressed to have a good relationship with your tenants because why would you not want that! And of course, if you are looking to do an owner occupancy you should consult with an attorney to avoid potential pitfalls.

The information in this post is for general information purposes only. Nothing on this post should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.