Los Angeles RSO Evictions in Multi Family
Residential Real Estate Agent · Los Angeles, CA · Member since 2014 · 32 posts · 6 votes
I am interested in buying a 4 unit Multi Family Property in Los Angeles. I would be purchasing this property with a partner. I own no other units and would be occupying the property. I would like to take possession of two of the units, one in my possession and one in my partners possession.
I see in the RSO documents that you an evict one of the units for the owner to occupy. What at the rules for evicting two units? Can I evict? Is the cost the standard rates on the RSO documents?
Rent Stabilization Ordinance Documents
Relocation Assistance Payable By Mom & Pop Landlords
Eligible Tenant - $7,350
Qualified Tenant - $14,750
thanks!
@Eric Zunkley @Josh Prince is right. Demanding vacant units may not have much traction but there might be simple work arounds and/or solutions.
From what I've seen so far and have been told by my realtor who owns over five multi units himself, multi units are generally harder to move than SFRs so…. at least - ASK - your seller if she/he is willing to look into vacating that unit in question.
Two weeks ago, I made in inquiry into a 4 plex building (1/1 x 4) just south of downtown Los Angeles that is fully occupied. The seller was definitely open to delivering the building with at least one unit for me to occupy and possibly two units vacant so asking won't hurt.
Asking the seller to vacate unit has to be taken on a case by case basis.
I agree that you should also attempt to turn the illegal unit on the property into a negotiation advantage for you.
I too dealt with illegal unit issue (accessory dwelling unit) when I first started hunting for multi units to buy. Bear in mind I was looking to do the reverse of what you're doing. I wanted to see if I could legalize the units. It was too much work but nevertheless, see if you can get some insight.
Check out this site. http://buildingpermitslosangeles.com
Email JOHN who runs it with what you're looking to do. He can offer valuable insight. He's super busy so if you haven't heard from him in 24 hours after you send your email, PM me and I can email his assistant to help you.
Here is another one. She works with building to navigate the building permits maze and is is also an architect. I'm sure a phone call won't hurt with regards to the recourse you need to take.
Jamilah A Haygood Architect | Tel: 310.801.0330 | www.buildingpermitexpeditor.com
One more thing. If the 4 plex you're attempting to buy has the tenants on month to month (you should definitely know that information), don't forget that you can solve this problem when you notify them that you'll be signing them up to new leases with new stipulations and regulations (IE: Newly non smoking allowed units, Each adult over 18 needs to sign a lease in order to live in the units, No parties after 9pm [which can be huge in Los Angeles] etc etc).
Good luck!
Would it be possible to save yourself the hassle and have the building delivered with 2 units vacant by seller?
Would it be possible to save yourself the hassle and have the building delivered with 2 units vacant by seller?
I guess you can put anything in an offer. From what I understand a buyer has more control when planning to occupy that the seller who doesn't occupy the property.
@Eric Zunkley - I doubt an offer demanding vacant units would have much traction. Most sellers don't want to have to deal with a bunch of hassle before they sell, and I am sure there are buyers out there who would take the hassle on themselves. That being said, if you get into escrow, it may be something to try to bring up if you sense that the seller is desperate to close with you.
If you are attempting to owner occupy after the purchase, you and your partner would need to take as tenants in common or something similar (i.e, both of you on title), and then each of you could seek to occupy a unit as owners - that would be 2 units total.
If you owned it in an LLC I don't think you can owner occupy, but you should check the housing dept regulations to be sure. All things being equal you would need to evict the most recently rented units - exceptions would be if some units are different size or composition.
You would need to pay the relocation fees that you show, above, and there are some circumstances in which you would not be able to evict tenants for owner occupancy at all - for example, if they were old or disabled and have lived in the property for a certain number of years. I would confirm your plan with your agent and the housing department before you buy. I have known people who expected to evict tenants for owner occupancy only to learn after purchase that it was not a possibility. Good luck!
@Eric Zunkley @Josh Prince is right. Demanding vacant units may not have much traction but there might be simple work arounds and/or solutions.
From what I've seen so far and have been told by my realtor who owns over five multi units himself, multi units are generally harder to move than SFRs so…. at least - ASK - your seller if she/he is willing to look into vacating that unit in question.
Two weeks ago, I made in inquiry into a 4 plex building (1/1 x 4) just south of downtown Los Angeles that is fully occupied. The seller was definitely open to delivering the building with at least one unit for me to occupy and possibly two units vacant so asking won't hurt.
Asking the seller to vacate unit has to be taken on a case by case basis.
I agree that you should also attempt to turn the illegal unit on the property into a negotiation advantage for you.
I too dealt with illegal unit issue (accessory dwelling unit) when I first started hunting for multi units to buy. Bear in mind I was looking to do the reverse of what you're doing. I wanted to see if I could legalize the units. It was too much work but nevertheless, see if you can get some insight.
Check out this site. http://buildingpermitslosangeles.com
Email JOHN who runs it with what you're looking to do. He can offer valuable insight. He's super busy so if you haven't heard from him in 24 hours after you send your email, PM me and I can email his assistant to help you.
Here is another one. She works with building to navigate the building permits maze and is is also an architect. I'm sure a phone call won't hurt with regards to the recourse you need to take.
Jamilah A Haygood Architect | Tel: 310.801.0330 | www.buildingpermitexpeditor.com
One more thing. If the 4 plex you're attempting to buy has the tenants on month to month (you should definitely know that information), don't forget that you can solve this problem when you notify them that you'll be signing them up to new leases with new stipulations and regulations (IE: Newly non smoking allowed units, Each adult over 18 needs to sign a lease in order to live in the units, No parties after 9pm [which can be huge in Los Angeles] etc etc).
Good luck!
@Eric Zunkley I forgot to add that in more cases than not, issuing a new long term lease (1 year ) with new stipulations won't be met with enthusiasm. Truth be told the new stipulations are (9 times out of 10) instituted to help YOU improve and protect your new investment - while taking care not to be a "tenant unfriendly" landlord. Most old tenants would rather opt to vacate the unit (within a reasonable time frame) than sign up to your "new and improved" lease.
Here is NYTimes article that provides another view to your problem.
I don't believe you can evict your tenant for the owner to occupy if you're LLC. If you put your personal names on tittle as join tenancy or tenants in common, you can evict old tenant but only from one unit.
As LLC you can still evict but for the reason to have a "building manager".
Try "cash for keys". Maybe even make it a contingency in your purchase contract. It's not very attractive for a seller to get an offer like that, but may be the only reasonable offer they'll get if they are "blessed" with tenants paying well below market value.
I don't believe you can evict your tenant for the owner to occupy if you're LLC. If you put your personal names on tittle as join tenancy or tenants in common, you can evict old tenant but only from one unit.
As LLC you can still evict but for the reason to have a "building manager".
Try "cash for keys". Maybe even make it a contingency in your purchase contract. It's not very attractive for a seller to get an offer like that, but may be the only reasonable offer they'll get if they are "blessed" with tenants paying well below market value.
Can you legally pay a tenant less than the eviction price quoted on the RSO if they agree to it?
@Eric Zunkley Well, you can, but the moment they realize this and take you to court, you'll be paying that back. Every time.
@Eric Zunkley It is also stipulated in RSO that if you exercise your right to take over one of the units as an owner occupier by going through the city (filing the paperwork with city, pay the relocation per schedule, etc.), and then you occupy the unit, if you then rent it out again, the rent goes back to the original rent + 3% a year. You are not free to adjust it to market rent after occupying it. So that really sucks.
Cash for keys is in most cases the better way to go, in which case the tenant leaves voluntarily, and you're free to adjust the rent to market. There are some buildings that are so screwed up in LA, that it's worth it to pay them 30 grand or more for relocation.
Also, I believe you can technically evict two through the city -- one for the owner occupier and one for the manager. But I wouldn't suggest doing it this way because they might trash the place.
I don't think you're right @Lee L. Another reason to relocate a tenant can be for immediate family member. So now you think you can evict 3 tenants? For yourself, for the manager and for your mom??? I don't think so.
@Francis A. Excellent info!
Can you elaborate on your point below? I didn't realize you could do this You're allowed to change the lease? How often? What other additional rules are you allowed to impose? You've been successful doing this? It sounds like you'd end up with a bunch of really disgruntled tenants.
One more thing. If the 4 plex you're attempting to buy has the tenants on month to month (you should definitely know that information), don't forget that you can solve this problem when you notify them that you'll be signing them up to new leases with new stipulations and regulations (IE: Newly non smoking allowed units, Each adult over 18 needs to sign a lease in order to live in the units, No parties after 9pm [which can be huge in Los Angeles] etc etc).
Disgruntled tenant? Nooo. You're too nice for that! :-)
You would have consulted with your Real Estate attorney to draft up your new lease before doing anything. This is a non negotiable check list item for you.
We both know that every tenant signs a lease in order to get the keys to an apartment. You did too when you were a renter I'm sure (unless you have never been a tenant before). If so lucky lucky you!! ;-)
I don't think you will just hand any old body the keys without doing due diligence. And you certainly want to make sure that the very nice tenants who remain in the building you just bought will want to commit to at least another year.
When you walk into your multi building situation there are most like likely going to be 1 of 2 things going on.
The existing tenants will either be living there "month to month" (meaning their existing leases have expired and the seller (your seller) hasn't re-signed them to new leases, or…the remaining tenants will be still signed to (your seller's) leases, however, those leases will be running out (IE: 6 months remaining on a 1 year lease).
AFTER you purchase the buildings, you certainly will NOT be using the now former owner's leases to re-sign the tenants to what now should be YOUR lease.
Don't forget, a lease is basically a document that says "I the landlord promises to provide you with a hospitable place to live and you the tenant promises to treat is as such. You won't trash the place or turn it into a hostile environment to your neighbors who happen to be tenants also and upstanding tenants at that".
And btw, you will have consulted with a Real Estate attorney (not just any attorney) to go through your new lease that reflects the terms and conditions that you, the new owners needs (to operate what I'm sure will be a nice apartment building).
The bullet points I listed will be bullet points that reflect how you would like the building to be in order for YOU to provide a (like I said) hospitable environment for all.
Some folks prefer non smoking apartments. You have the right to provide non smoking apartments. Without going overboard, you know that in places like Los Angeles, that's actually good business sense and "good health sense" so too speak.
The existing tenants may not want to stop having parties that go on way past 12 mid night on a tuesday. In that case, you and said tenant will have to mutually decide what's best for each of you and the rest of the upstanding tenants who suffer from all the party noise.
Now that's where "disgruntled" coming in to play when the music comes blaring into the next door neighbors walls when he/she is trying to get some sleep before waking up and going to work at LAX at 5am.. ;-)
I hope this made sense.
I don't think you're right @Lee L. Another reason to relocate a tenant can be for immediate family member. So now you think you can evict 3 tenants? For yourself, for the manager and for your mom??? I don't think so.
@Ewa Reza, I stand corrected then. My comment was based on what my friend had planned to do so he could get two units vacant. I'm not sure if he was able to pull it off. I'm not an attorney, so I don't think I should comment further.
Either way, it's not a very easy process through LARSO, and many things can go wrong. My advice is to keep things chummy with the tenant as much as possible. If things go to court, there are attorneys who know every trick in the book to delay or hinder the process.
In Los Angeles, you can evict a tenant with a rental agreement for failing to sign a new agreement that is similar to the old agreement.
Does this let you force a tenant on MTM into a 1-year lease? Yes.
However, I do not believe you are within your rights to threaten eviction because the tenant will not sign a lease that imposes new obligations or restrictions on the tenant, such as late fees, curfews, non-smoking (when the tenant was allowed to smoke before), etc.
I think if you proposed that a tenant sign a lease like this or leave, and they went to the housing department it would be viewed as coercion or an illegal eviction.
@Francis A. - Have you had experiences that indicate otherwise?
One other factor, in the landlord's favor, but in my opinion not ethical to take advantage of, is that many tenants are unaware of their rights. I know a number of deals where the new owner just showed up, told the tenants they had to leave and paid them out $1000 each and they went. They didn't know any better. Of course, they could always come back with an attorney or a nonprofit organization and make trouble for the landlord.
To me, in most cases, paying the statutory relocation fee is a bargain when you multiply the additional rent by your cap rate or GRM and see the difference that market rents will make to the worth of the building. I'm generally willing to pay statutory relocation fees to all my legacy tenants in a heartbeat.
I agree with @Josh Prince What @Francis A. is doing is coercion and it's illegal. You can not force a tenant into signing lease with you as a new owner. They are legally obliged to sign a lease ONLY if it doesn't change terms of the original lease, otherwise they don't have to and you can do nothing about it. I'm shocked your real estate attorney didn't tell you about it.
@Francis A. Thanks for the response. I never thought to get an attorney to review the leases. They looked ok when I reviewed them myself. It looked like it was on a standard form, with certain stipulations that could be filled in, kind of like on a purchase agreement on a house. Now I really hope I didn't miss something and it's going to bite me later.
@Josh Prince Great info, Re:
Does this let you force a tenant on MTM into a 1-year lease? Yes.
However, I do not believe you are within your rights to threaten eviction because the tenant will not sign a lease that imposes new obligations or restrictions on the tenant, such as late fees, curfews, non-smoking (when the tenant was allowed to smoke before), etc.
I think if you proposed that a tenant sign a lease like this or leave, and they went to the housing department it would be viewed as coercion or an illegal eviction.
What would be the point of having them sign a new 1-year lease then, if you can't really change things? And say you wanted them to sign a new lease, but the tenant doesn't want to. Then what?
@Lee L. you may change things on lease like the method of paying lease or the requirement of all repair request to be done in writing, etc. But you can impose "curfew hour" at 9pm like Francis suggested or change a smoking apartment into non-smoking.
Glad we got a little discussion going. All input was helpful. Going forward I will definitely make sure I know the terms of the leases and all the information about the tenants.
Thanks@Josh Prince Now that's we're no the topic, are 1-year or 2-year leases with an additional stipulation saying that the lease will not go MTM after it expires, enforceable? I heard no, and that's just what I've always assumed.
@Josh Prince Thanks for your help!
Originally posted by @Josh Prince:
In Los Angeles, you can evict a tenant with a rental agreement for failing to sign a
new agreement that is similar to the old agreement.
Does this let you force a tenant on MTM into a 1-year lease? Yes.
However, I do not believe you are within your rights to threaten eviction because
the tenant will not sign a lease that imposes new obligations or restrictions on
the tenant, such as late fees, curfews, non-smoking (when the tenant was allowed to
smoke before), etc.
I think if you proposed that a tenant sign a lease like this or leave, and they went to
the housing department it would be viewed as coercion or an illegal eviction.
@Francis A. - Have you had experiences that indicate otherwise?
This isn't meant to be a contentious situation. The great thing about Real Estate is that no two situations are exactly alike.
I actually think that having a "rent control" building is a great marketing tool (in Los Angeles at least) if you handle it right. Tenants LOVE rent control buildings. And in LA depending on where you buy, you can have tenant turn over every year due to various factors (graduation, job relocation etc).
I am not advocating kicking out month to month tenants in "good standing". On the contrary they are an asset as you transition into owning your newly purchased building. Now if you had a month to month tenant who "broke all the rules" (excessive noise/unreasonably disturbing the neighbors etc etc), you are within your rights to mutually resolve this with said abusive tenant using some of the pointers I outlined earlier. And of course, consulting a reputable evictions Real Estate attorney would be the first thing on your list before you made ANY move.
Paying tenants to leave (if the situation requires it) is quick and painless. The main thing is not to see a rent control building as a detriment. Anytime you have a tenant move is a great opportunity to upgrade and place that newly vacated unit in the upper 1% of what rent in that particular area allows.
I hope this helps in clarifying my earlier thoughts.