The trend of local jurisdictions adopting rent control and just-cause eviction tenant protections has brought with it a trend of adopting Cash-for-Keys (a/k/a, Tenant Buyout) agreement regulations. Not surprisingly, many of the newer jurisdictions have near identical ordinances, but are slightly different among themselves. The jurisdictions in Los Angeles County that have imposed tenant buyout regulations are:

• Los Angeles City
• Los Angeles County (Unincorporated)
• Bell Gardens
• Cudahy
• Maywood
• Pasadena
• Culver City
• Santa Monica
• West Hollywood
• Inglewood

[Editor’s Note: No such regulations have yet been imposed in Ventura or San Bernardino Counties]

The regulations vary by jurisdiction and may include specific disclosure notices, minimum offer requirements, permitted cancellation periods, translation requirements, and filing requirements. I do not find the regulations intimidating or anything that a landlord should seek to avoid or work around (doing so would have dire consequences). However, before reaching out to rental control boards, housing departments, or your tenants themselves, landlords interested in undertaking a tenant buyout need to read up on the regulations for two reasons: (i) not all rent control boards, housing departments, or other governmental entities give out the correct information, and (ii) tenants often obtain the wrong information and both landlords and tenants then may rely on it. Let me explain:

Rent Control Board Advisors are Not Infallible

On several recent consultations I have had clients tell me a housing department or rent control board gave them information that was “flat out” wrong. In one example, a client wanted to do a buyout with a tenant in a single-family residence in the City of Los Angeles. Upon consultation, my client told me they had 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 correct, but the second part regarding unincorporated Los Angeles County was wrong, so I called the County to confirm. And not only was the County’s program not applicable for properties within the City of Los Angeles, I was told the Los Angeles Housing Department consistently directed property owners and tenants to the County of Los Angeles 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 to be correct, had a personal motive to falsely inform a landlord, or merely they had no idea of the correct answer.

Tenants Should be Educated About Their Rights, But That Does Not Mean Tenants are Ever Properly Educated or Completely Understand

As you read above, both landlords and tenants get the wrong information from the very departments tasked with having the right answers. In another example, a landlord started a very “loose and casual” conversation with a tenant about moving out so the landlord could sell the property. The tenant then came back to the landlord with wrong relocation amounts applicable to the property, to which the landlord at first agreed and a tentative deal was struck.

Upon getting further educated about the applicable relocation amounts, the landlord then disagreed with the deal. By then, the tenant had already made progress on trying to move. When the landlord tried to change the informal agreement, guess what? Too late! The tenant was already committed to the wrong information she got from the housing department, and my client did not bother to investigate and become educated soon enough before initially committing to a higher buyout amount.

Both the landlord and tenant became incredibly annoyed with one another, and neither knows what the other plans to do. At this point, not only is there no agreement, but the matter will also likely go to court if it is ever to get resolved. 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 City of Los Angeles’ Just Cause Ordinance (JCO) and what relocation amounts apply, then he would have had a fighting chance in reaching a deal that made sense to both. Once you make a commitment to a deal or fail to object to proposed terms with 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 experienced attorney before setting out on their own with tenant buyouts. The reason being is you have one good chance at making a 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.

By Sasha Struthers, Esq., Struthers Legal, APC

If you are interested in learning more about tenant buyout agreements and wish to have a one-on-one session to go over your specific situation, you can sign up for a consultation with Sasha. Sasha Struthers is a California licensed Attorney and Real Estate Broker with a law practice that focuses on ‘Cash for Keys’/ tenant buyouts and government agency complaints such as REAP, CRD, and Orders to Comply. Sasha’s experience managing a 15-building real estate portfolio, including five apartments subject to LARSO has allowed her to help landlords strategically reposition their portfolios, maximize income, and reduce management stress. You can check out her law practice at www.struthers.legal.