Evict Tennant from Oakland CA Duplex without "Just Cause"

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Evict Tennant from Oakland CA Duplex without "Just Cause"

DG A.
San Francisco Bay Area · Member since 2015 · 196 posts · 181 votes

Hi Everyone, 

I have read measure EE "Just Cause for Eviction" rules in Oakland. I see that the rules DO NOT apply to a property of 3 units or fewer, where the owner lives in of the units. Here's the language from the document: 

I'm offering on 2 different duplexes right now, and I intend to owner-occupy if I get into contract. In this case, I meet the requirement that excludes me and my property from the "just cause for eviction" requirements. 

One of the duplexes I'm offering on has one empty unit, while the other unit is rented to a tenant paying about $1,000/month below market. The other duplex has both units occupied by tenants, and both units in that duplex are rented below market by ~$1,000/month. Both duplexes are in the Fruitvale area in Oakland's 94601 zip code.

My questions are these:

Is my interpretation correct, that, because I intend to live in the duplex I buy, measure EE -- just cause for eviction does not apply to me?

If just cause for eviction is not applicable to me, I intend to evict the tenant and bring the unit up to market rate rents. How do I go about evicting low paying tenants?  Or is it really as straight forward as contacting a lawyer, and posting notices under their instruction?

For the duplex where both units are occupied, I'll have to first get one of the tenants to agree to move, to open up one of the units for me to live in. And then, I'll need to do an eviction without the requirement of "just cause" as outlined in Measure EE. Let's assume in every instance here that the tenants have been living in the units for ~3 years and are on month to month leases. Is the process really as straight forward as it seems? Or am I blind to a million things that will stop me?

It seems to me, that I have an opportunity to create value for myself by buying properties where the tenants are paying low rents. Often, the low rents are holding down the value of the property from the perspective of investors. As an owner-occupy guy I can buy the property that does not have a high enough return for the investor that lives off-site. Then I can evict the tenant, and rent the property out at market rate. This seems like a path to cash-flow, which is rarely an opportunity here in Oakland for a guy with a 3.5% down payment and an FHA loan.

Am I onto something here?

I'm aware of the 90-day moratorium on evictions and rent increases on rent-controlled properties in Oakland right now (as of April 5th 2016). I have no idea how eviction policy will look on the other end of this 90-day window. 

-Danny

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J. MartinPro Member
Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
10y

@Daniel Gonzalez

Read this first:

http://www2.oaklandnet.com/oakca1/groups/ceda/documents/agenda/oak058135.pdf

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  • Mike Hanneman
    Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    10y

    I don't know about California but I believe that applies if you live in the property already. If you are just buying one I think you have to honor the lease, as it follows the property.

    If the tenants are on month to month just notify them with the correct window, in my state 30 days, and tell them you are not renewing thier lease and they need to move. I am actually closing on a duplex and doing this as we speak.

    As for low rents holding down the value of a property, I would think there would be enough seasoned, experienced Investors in your area to see that. I know I never buy based on current rents, I buy based on what I can get in that particular neighbor hood/area.

    0Reply
  • Mike Hanneman
    Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    10y

    I am amazed that a tenant would still be residing there without a lease, in a unit that is $1000 below market. If I was the tenant I'd be offering to sign a lease the moment it ends at current rates.

    0Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    Daniel,

    I believe your thinking is on the right path. Fruitvale is definitely an up and coming neighborhood so there's a high probability that you will reap the rewards in a couple of decades down the road. With that said, @J. Martin and @Arlen Chou know the Oakland Rent Control laws real well. I hope they will chime in and help you out. 

    Best of luck. 

    2Reply
  • DG A.
    OP
    San Francisco Bay Area · Member since 2015 · 196 posts · 181 votes
    10y

    The laws here are very restrictive.  A landlord really cannot evict a tenant under most circumstances, with a few specific exceptions.

    0Reply
  • Account Closed
    Rental Property Investor · Oakland, CA · Member since 2014 · 730 posts · 1k+ votes
    10y
    Originally posted by @Account Closed:

    Daniel,

    I believe your thinking is on the right path. Fruitvale is definitely an up and coming neighborhood so there's a high probability that you will reap the rewards in a couple of decades down the road. With that said, @J. Martin and @Arlen Chou know the Oakland Rent Control laws real well. I hope they will chime in and help you out. 

    Best of luck. 

    You'll need to purchase the property, live in one unit for 1 year, then give 60 day notice to vacate to the other tenant. You won't be able to do this on both properties at the same time. Live there for 1 year, then come to an agreement with one of the tenants at the fully occupied building. Then move into that unit, live there for a year, then give notice to the other tenant. 

    0Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    10y

    @Daniel Gonzalez

    Read this first:

    http://www2.oaklandnet.com/oakca1/groups/ceda/documents/agenda/oak058135.pdf

    3Reply
  • Arlen Chou
    Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
    10y

    @J. Martin its sad that so many city governments are legislating the creation/retention of giant slums... 

    0Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y

    @DG A. - You need to talk to a lawyer local to Oakland. You're going to spend about $4,000 in appraisal, title, escrow, lender, due diligence inspection for yourself, bla bla bla, fees, that you will never get back, as well as the big fat giant $7.50 per $1000 purchase price transfer tax.

    With that in mind, go spend a few hundred to talk to a lawyer that knows this stuff well. Just like a home inspection for your due diligence that discovers a crumbling foundation, if you find some big giant deal-breaker when you due your legal due diligence, that few hundred dollars could be the best few hundred dollars you ever spend.

    I'd love to be the local guy that has the answer for you on this one, but this is pretty clearly a lawyer question. So that's all I got -- go spend the best few hundred bucks you will ever spend and talk to an Oakland lawyer.

    2Reply
  • DG A.
    OP
    San Francisco Bay Area · Member since 2015 · 196 posts · 181 votes
    10y

    Thanks Chris!  And thank you too J. Martin.

    One last question for all, who is a good lawyer to talk to about this in oakland, ca? 

    1Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    10y
    Originally posted by @DG A.:

    Thanks Chris!  And thank you too J. Martin.

    One last question for all, who is a good lawyer to talk to about this in oakland, ca? 

    Some people on this site have used Bornstein and Bornstein for these types of questions, including eviction services and technical rent control questions in Oakland. They fight for landlords/owners. I have no affiliation with them and do your own due diligence..

    Generally, the lawyers with lots of articles about local rent control are pretty knowledgeable. Although don't waste your time with Tobener. Although informative, he only plays on the other side of the tenant fence..

    I'm sure you've checked out the rest of the Oakland Landlord Resources on Oakland's website, so you can be as informed as possible before speaking with him, to understand what's going on, and minimize unnecessary billed time..

    http://www2.oaklandnet.com/Government/o/hcd/s/LandlordResources/index.htm

    Good luck Daniel!!
    Oakland rocks!!!! ;)

    @Arlen Chou,

    I think it will get worse before/if it gets better. So hold onto your *** and watch your back! It's like when I hear SF investors complain about new landlord-unfriendly legislation/rules.. what do you expect here!?!

    2Reply
  • DG A.
    OP
    San Francisco Bay Area · Member since 2015 · 196 posts · 181 votes
    10y

    Thanks @jthomasmartin1 

    Thanks for the recommendation. I've reached out to a few attorneys. I found a couple of good ones that I'm talking through this stuff with. 

    I'm working on an FSBO deal that I found. So, I'm going to have the attorney quote me on 3 things:

    1. Review the California Association of Realtors standard sale contract. 
    2. Legal research, and a memorandum with advice about my rights as an owner-occupying landlord, and the current state of the rent control laws and evictions laws in Oakland. 
    3. A flat fee quote on a specific type of eviction. Essentially, I could use the "Just Cause" exemption to evict a tenant, where I am the property owner, AND I live on the property, AND the property is 3 or 2 units, AND I do not claim a homeowner’s property tax exemption on any other real property in the State of California.

    I want to help other folks who are starting out, and in a similar position as me. I'm just getting started, and all I have is a 3.5% down payment and an FHA loan.

    It's definitely rough making deals work in Oakland right now.  So, what ever I wind up learning, I will post here for others to learn from as well. 

    3Reply
  • Calvin Kwan
    Oakland, CA · Member since 2015 · 246 posts · 127 votes
    10y

    Keep us updated, Daniel!  I'm sure tons of folks are interested in what you discover.

    0Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @DG A.:

    I'm working on an FSBO deal that I found. So, I'm going to have the attorney quote me on 3 things:

    1. Review the California Association of Realtors standard sale contract. 

     Unless you have some very specific question or a niche situation, that might be a waste of billable hours. 

    "Hey what would paragraph 17 mean if X happened?" or "what if I check this box, instead of that box, and then Y happens?" - worth it. 

    "Can you review this contract?" - waste of money. 

    The CAR RPA has been through several iterations, and is generally intended to mean what it says it means at face value. Let's be real, if average lenders and realtors can understand it... it can't be THAT complicated. 

    If your FSBO seller comes up with some crazy alternative contract, just shoot it down and make 'em use CAR RPA.

    1Reply
  • Mike Hanneman
    Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    10y

    @DG A.

    Am I missing something? If your tenants are on month to month leases why are you evicting them? All you have to do is tell them you will not be renewing their lease there is no need for eviction. In my area I have to give the tenant 30 days notice that I won't be renewing their lease and they need to find somewhere else.

    Correct me if I'm wrong or didn't get the whole story.

    I'm under contract right now with a duplex that I want one tenant out(under rented), before I close so I can do repairs and list the unit at market price. I had to push my closing back 30 days to do this but I will have a vacant unit to do the remodel.

    0Reply
  • Wes Brand
    Investor · San Francisco, CA · Member since 2016 · 314 posts · 153 votes
    10y

    @Mike Hanneman You don't understand the rent control laws in the Oakland/SF area. Month to month means the tenant can leave whenever they want. You, as the landlord, don't have a choice -- you're stuck with the tenant unless they meet one of the just cause for eviction criteria. You're also limited in how much and how often you can increase rents (last year SF was 1.6% for rent controlled units, the year before, 2.1%)

    2Reply
  • Mike Hanneman
    Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    10y

    Oh I'm sorry didn't realize the month to month laws. So if you want a tenant to leave even when the lease is up you can't have force them leave by not renewing their lease?

    0Reply
  • Wes Brand
    Investor · San Francisco, CA · Member since 2016 · 314 posts · 153 votes
    10y

    @Mike Hanneman It goes beyond that, but yes. This is why it's critical to know the landlord/tenant laws in your investment area. 

    As an example, and scoping this to only rent controlled property in SF: 

    If you offer a "same" (so same timeframe, allowed rent increase, etc, but you can't change the terms) lease and the tenant refuses to sign it you can evict them for not signing, otherwise they convert to month to month under the terms of the old lease. You can also evict for breaking the terms of the lease and failing to correct after written notice, but the terms that are broken need to be legally allowed. For example: Subtenants are allowed by law so if your tenant is subletting you can't use that as a reason to evict, even if your lease explicitly bans it(you can require approval, but there are only a few reasons you can deny approval, and credit score isn't one of them). 

    There's far more that could be written, but the short answer is just because it seems like something should work a certain way doesn't mean it actually does everywhere in the country.

    0Reply
  • Mike Hanneman
    Investor · Coeur d'Alene, ID · Member since 2016 · 551 posts · 218 votes
    10y

    Thanks for the knowledge, didn't realize the difficulties in getting a tenant out in SF.

    Is there a time when the landlord can go to the tenant and say I'm not renewing your lease you need to find somewhere else?

    0Reply
  • Calvin Kwan
    Oakland, CA · Member since 2015 · 246 posts · 127 votes
    10y

    Also, here's a rent control cheat sheet from Bornstein.  Applies to SF, but may be similar to Oakland.

    https://www.dropbox.com/s/p9l0v0xrrv6m3ln/SF-Rent-Control-Co-branded-Jan12-2014.pdf?dl=0

    2Reply
  • Wes Brand
    Investor · San Francisco, CA · Member since 2016 · 314 posts · 153 votes
    10y

    @Mike Hanneman Not in SF. If the property is not subject to rent control you can just raise the rents a ridiculous amount subject to the proper notification period (60 days for > 10% increase), but if it is subject to rent control you're stuck with a tenant for life. This is why you want to make sure you buy crappy units and ask more money than they're worth. Top of market for a studio (currently 2600ish) that's in an ok location will get people moving out all the time -- "I can pay 2600 for a studio in a prime location, or I can get a 1 bed in a not-so-prime area for 3000 and split the rent with an SO..." so you can continually adjust to market as people move. A 3 bed subject to rent control is the kiss of death here -- people are never going to move, and in fact they can't move and get anything even remotely close to their current rent after a few years. 

    One thing to beware of @DG A. is what happens to the unit after you evict. In SF a no-fault eviction means the unit could be subject to rent control in the future even if it is not currently. I haven't done the research for Oakland, but there could be similar rules on the books there.

    1Reply
  • Catherine Decker
    Investor · Oakland, CA · Member since 2015 · 36 posts · 5 votes
    10y

    @DG A. - Look like you have a lot of resources that were offered here. I didn't see anyone mention that if a tenant is over 60, in Oakland, you pretty much can't evict them for anything. Double check, but that's a concern of mine as I consider investing here. (Oakland/ Berkeley)

    1Reply
  • Brian Garlington
    Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
    10y

    @DG A.

    Save yourself the headache and the wasted money on attorney fees and do not buy a rental property in Oakland with tenants already there if the numbers do not work.

    Find a multifamily property in Oakland or Berkeley that is VACANT. That's what I did. Short of that consider buying in Pittsburg, Baypoint or Antioch. Yes the drive to work will be further but the property will not cost as much as Oakland and there is NO RENT Control. They are still close to BART 

    0Reply
  • Chris May
    Rental Property Investor · Durham, NC · Member since 2016 · 354 posts · 288 votes
    10y
    Originally posted by @DG A.:

    Hi Everyone, 

    I have read measure EE "Just Cause for Eviction" rules in Oakland. I see that the rules DO NOT apply to a property of 3 units or fewer, where the owner lives in of the units. Here's the language from the document: 

    I'm offering on 2 different duplexes right now, and I intend to owner-occupy if I get into contract. In this case, I meet the requirement that excludes me and my property from the "just cause for eviction" requirements. 

    One of the duplexes I'm offering on has one empty unit, while the other unit is rented to a tenant paying about $1,000/month below market. The other duplex has both units occupied by tenants, and both units in that duplex are rented below market by ~$1,000/month. Both duplexes are in the Fruitvale area in Oakland's 94601 zip code.

    My questions are these:

    Is my interpretation correct, that, because I intend to live in the duplex I buy, measure EE -- just cause for eviction does not apply to me?

    If just cause for eviction is not applicable to me, I intend to evict the tenant and bring the unit up to market rate rents. How do I go about evicting low paying tenants?  Or is it really as straight forward as contacting a lawyer, and posting notices under their instruction?

    For the duplex where both units are occupied, I'll have to first get one of the tenants to agree to move, to open up one of the units for me to live in. And then, I'll need to do an eviction without the requirement of "just cause" as outlined in Measure EE. Let's assume in every instance here that the tenants have been living in the units for ~3 years and are on month to month leases. Is the process really as straight forward as it seems? Or am I blind to a million things that will stop me?

    It seems to me, that I have an opportunity to create value for myself by buying properties where the tenants are paying low rents. Often, the low rents are holding down the value of the property from the perspective of investors. As an owner-occupy guy I can buy the property that does not have a high enough return for the investor that lives off-site. Then I can evict the tenant, and rent the property out at market rate. This seems like a path to cash-flow, which is rarely an opportunity here in Oakland for a guy with a 3.5% down payment and an FHA loan.

    Am I onto something here?

    I'm aware of the 90-day moratorium on evictions and rent increases on rent-controlled properties in Oakland right now (as of April 5th 2016). I have no idea how eviction policy will look on the other end of this 90-day window. 

    -Danny

     My understanding is you cannot just bounce around evicting people from new properties every year. To do an owner occupancy eviction in Oakland, you need to live in the property for 3 years or the prior tenant can come after you for damages.

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