Should I purchase a home with a tenant in it? CA

Question

Hi BP,

So I found an amazing property in a sought out area in Southern California (Los Angeles County). The issue is, the listing agent said the tenants aren't paying rent and haven't done so in a few months. Tenants are on a month-to-month lease agreement and have occupied the property for several years.

The owner and agent have attempted a cash for keys option to remove the tenants. When asking the Realtor what the dollar amount was, she said a few thousand dollars (seems low). They have not received a response yet from the tenants.

My question are:

- What options do I have if I purchase the property with tenants in it? This will be my primary residence, would this help me evict them?

- If the tenants didn't loose their job due to COVID can they continue not to pay rent? According to the Realtor, social security is their only means of income.

Any recommedations or ideas would be greatly appreciated. Thank you!

Shiva Bhaskar · Answer

Hi Brandon, I'm an attorney as well as investor locally, so I have a few thoughts:

Yes, you can evict them if this is primary residence. You'll need an attorney (or should hire one), and it can  take some time and cost money. Are you getting a decent discount on the property, in exchange for taking it with these tenants?  If so, it could make sense to proceed.

Cesar Ruiz · Answer

If you are going to occupuying it as your primary you have every right to evict, regardless of covid. We got this straight from Gov Hutchinson which is the general legal counsel for CAR(California association of realtors.) You might have to get an attorney so I would weigh out options if cash for keys is cheaper or a lawyer.

but if it will be your primary your right is to evict.

Congrats !!!!

Greg M. · Answer

California & Los Angeles like to impose rapidly changing rules. Best to consult an attorney.

State law gives you the right to remove them if you are moving into the unit. There may be a relocation fee due to them. You should also be able to non-renew the month-to-month lease and evict them this way. The problem is that you need to get a judge to agree and a sheriff to process the eviction.

Cash for keys worked when there was the threat of eviction. Why would anyone leave for a few thousand dollars when they may be able to stay rent free for another year? If I were a deadbeat I'd drag it out until we had an actual eviction court date and then approach the landlord for cash to leave.

Greg M. · Answer

The Ellis Act allows you to move in to the unit. I don't know the specifics as I've never needed to invoke it, but I'd start there. Most likely filing of paperwork with the city/state and lengthy notice to the tenant. If the tenant doesn't voluntary leave, you will need to file eviction paperwork. This can be an expensive and drawn out process. If the court rules in your favor of the eviction, you need the police to process the eviction. You can't just change the locks or hire someone to move them out.

Relocation fees vary on several factors. I'm not even positive which cities have them. Also, not all units will qualify. I believe in Los Angeles the fees start around $7K and go to around $20K. The longer the tenant is there, the more it is. If they're old or handicapped it is more.

The $500 you're going to spend on an attorney to go over this with you is going to be well worth it.

Brandon Carlson · Answer

@Greg M. another question for you. If my intentions are to move in,  how would I go about removing them from the unit? Would sheriffs or police need to be involved? Lastly, what would a relocation fee consist of?

Thank you

Brandon Carlson · Answer

@Greg M. Thank you for your input, I truly appreciate it.

@Cesar Ruiz thank you for your comment!

Should I purchase a home with a tenant in it? CA

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