First Impressions Matter With Tenant Buyouts

The trend of local jurisdictions adopting rent control and just cause eviction restrictions has brought with it the trend of adopting Cash for Keys/ Tenant Buyout regulations. Not surprising, many of the newer jurisdictions have near identical ordinances, but are slightly different between themselves.

The jurisdictions in Los Angeles County that have tenant buyout regulations are:

• Los Angeles City

• Los Angeles County (Unincorporated)

• Bell Gardens

• Cudahy

• Maywood

• Pasadena

• Culver City

• Santa Monica

• West Hollywood

• Inglewood

The regulations vary and may include specific disclosure notices, minimum offer amounts, cancellation periods, bilingual agreement drafting, and filing requirements. I don’t find the regulations intimidating or anything that a landlord should seek to avoid or work around (doing so has dire consequences). However, before reaching out to rental boards, departments, or the tenants themselves, landlords interested in doing buyouts need to read up on the regulations for two reasons: (1) not all rental board advisors give out correct information, and (2) tenants often get the wrong information and both landlords and tenants rely on it. Let me explain:

Rental Board Advisors are Not Infallible

On several recent consultations I have had clients tell me a housing department or board gave them information that was flat out wrong. One example, a client wanted to do a buyout with a tenant in a single family residence in Los Angeles City. On the consultation they told me they called the Los Angeles Housing Department and were told single family residences are not included in the tenant buyout regulations, but that they would have to adhere to the Los Angeles County Unincorporated tenant buyout regulations. I knew the first part was right, but the second part regarding the County was wrong, so I called County to confirm. And not only was the County program not applicable in Los Angeles City, I was told the Los Angeles Housing Department consistently sent property owners and tenants to the County with the wrong information or with false hope, setting up the landlord and tenant to fail.

That is just one of the many times I have encountered a government representative giving misinformation because they either truly believed it, had a personal motive, or they had no idea of the answer.

Tenants Should Get Educated on Their Rights, but it Does Not Mean They Always Get Correctly Educated

As you read above, both landlords and tenants get the wrong information from the very departments tasked with having answers. Another example, a landlord started a very loose and casual conversation with a tenant about moving out so the landlord could sell. The tenant then came back to the landlord with wrong relocation figures applicable to the property, to which the landlord at first agreed and a tentative deal was struck. Upon getting further informed, the landlord then disagreed with the deal. By then the tenant already made progress on trying to move. When the landlord tried to change the informal agreement guess what? Too late! The tenant, was very committed to the wrong information she got from housing and my client did not bother to get educated soon enough before initially committing to that number.

Both the landlord and tenant are incredibly annoyed with one another, neither knows what the other plans to do, and there is not only no agreement, it will likely go to court. I tried to salvage the deal, but the tenant did not want to hear it. Had my client spoken to an attorney first about what rights the tenant had under the Just Cause Ordinance and what relocation amounts apply then he would have had a fighting chance with reaching a deal that made sense to both. Once you commit to a deal or fail to object to proposed terms by a tenant, you have very little chance to steer the ship again.

Simply, the regulations speak for themselves. However, it is important that landlords know the laws or talk to an attorney before setting out on their own with tenant buyouts. The reason being- you have one good first impression with tenants if you want a truly amicable and successful agreement that gets you keys in hand. Remember, there is no equity in a soured landlord-tenant relationship.

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.