When does a tenant establish rights in Los Angeles?

[Lucas Allmon]

I’m possibly buying a house where the one owner might stay on as a tenant one of the units. I want to offer first right of refusal on a lease, but I also want to make sure that they would not be able to establish residency.

He mentioned something like needing 30 (maybe 45) days after close of escrow to “find a new place”, but it comes across as a way to establish tenants rights in my view.

I thought I might suggest offering a lease, with the first month free, that way if he breaks it, I can file formal eviction that isn’t a “no fault” level eviction.

What are your suggestions/input?

[Kyle J.]

If he's already living in the house then he's already "established residency", and a tenancy is formed if he retains possession after closing with your consent.  If you later decide you want him out, you're going to have to go through a formal eviction (unlawful detainer) process. 

If you do allow him to stay, I certainly wouldn't offer him "the first month free".  You're doing him a favor.  Why shouldn't he pay for living there?  If the idea was to let him live there for free thinking that you would be able to avoid the eviction process if he later refused to leave, that's not going to work.  So you might as well charge him.

It's not that uncommon that a seller will want to rent back from the new buyer until they can find a new place, but you'll want to make sure everything is spelled out in some sort of occupancy agreement. 

For example, a Seller in Possession Addendum (if possession will be less than 30 days) or a Residential Lease After Sale (if possession is intended for more than 30 days).  Your Realtor should be able to help you with the appropriate form.

Here's some more reading that might be helpful:

https://www.thebalance.com/how-are-seller-rent-backs-after-closing-handled-1798821

http://journal.firsttuesday.us/brokerage-reminder-buyer-protection-for-a-sellers-holdover-tenancy/30567/

http://journal.firsttuesday.us/the-holdover-occupancy-agreement-a-sellers-lease-back-after-close-of-escrow/30573/