When an oral lease agreement becomes a written lease agreement

Question

Hey BP,

I have a question regarding what happens when an oral lease agreement switches to written. Some background: my friend is a tenant who has been living rent-free in a unit for over ten years but is a professional painter and has been painting numerous properties/units for the landlord in lieu of rental payments. This has been their arrangement for almost twenty years (the tenant has lived in three of the landlord's properties, all located in California) and from inception there was never a written agreement for this arrangement.

Now the landlord wants to have them sign a lease and write them checks for the work that is being performed, which apparently is to be cashed and returned right back to the landlord as the rent payment. He states it is for accounting purposes. My friend's concern, however, is that the landlord may be trying to formalize their relations so that he may eventually evict them, as many of the legacy tenants in this apartment building have been evicted or "pressured" to vacate for frivolous reasons so that the landlord can renovate and convert their units to Airbnb in order to receive a higher return for each unit. There are 13 units at the property and ever since the landlord began Airbnb about three years ago, suddenly only three legacy tenants remain and all the others have been pressured to leave for reasons that were not of concern for the many prior years.

What would be the potential drawbacks to the tenant should they choose to sign the written lease? What could happen if they refuse and prefer to maintain their original oral agreement?

Bryan O. · Answer

Account Closed This is a commercial property, so it is valued based on its income, not what other people pay for similar units. Perhaps he wants to refinance it or sell it. Without leases, especially in such a small building, that's a huge drop in price. It is never a good idea to have people living with no terms, so it is about time that he started doing it right.

Wayne Brooks · Answer

The landlord doesn't need any excuses to terminate a month to month lease.  The painter will now be having his income reported, and have to pay taxes,  like the rest of us.

Marcia Maynard · Answer

Your painter friend can be evicted by the landlord whether or not they have a written rental agreement. Your friend is already a tenant and all the landlord-tenant laws already apply. Is the landlord pressuring him to leave? How open and honest is the communication between them?

It is actually a better for your friend to have a signed rental agreement with the landlord, as it clarifies the terms for all parties involved. It would also be a good thing for your friend to have a signed work contract with the landlord too. There are benefits that he is currently leaving on the table by working "under the table". He would do well to formalize both his work agreement and his housing agreement.

Joel F. · Answer

Since they have an oral agreement and the agreement has been executed by service rendered from painting the properties. Then technically there are no more agreement. The oral lease is up and the owner wants to come into another agreement where  "the landlord wants to have them sign a lease and write them checks for the work that is being performed" if your friend refuses to sign the lease then he/she will be evicted for non agreement. "If you are a tenant at will (no lease), your landlord can evict you without giving a reason. However, he must give you 7 or 30 days notice in writing. Best bet if he/she wants to stay they must sign the lease or leave the property.