In 2022, shortly after a new proprietor acquired the Highland Park rental residence where Ana Lopez, 66, resides with her spouse, the occupants started receiving proposals to vacate. Initially, the offer was around $22,000, as per her statement. One of her neighbors accepted the offer and departed. However, despite the amount increasing to $100,000, Lopez, determined to remain in the rent-controlled dwelling she has called home for over twenty years, consistently declined the offers.
Considering taxes, she believed that the money offered was insufficient to sustain her long-term in her community, where the average monthly rent surpasses $2,000 and the median home sale price exceeds $1 million.
She has experienced pressure to leave and has been informed of the owner’s intention to demolish the property. Nevertheless, she asserts, “We will persist in our fight to retain our residence.”
Mejia’s office has issued a statement highlighting the practice of tenant buyouts, which landlords employ to coerce tenants into vacating RSO or rent-controlled units. This strategy is often employed to enable landlords to subsequently rent these units to new tenants at market-rate prices. However, it is worth noting that the buyout amounts offered to tenants are frequently insufficient for them to sustain their long-term residency in the City of Los Angeles.
Tenant advocates argue that the reported figures provided to the city do not fully capture the true extent of cash for keys transactions occurring throughout the city. They emphasize that the data only account for formal agreements, excluding the informal offers that often occur through personal interactions such as door-to-door visits or phone calls. Furthermore, even the agreements themselves may not be officially documented with the city, as pointed out by advocates.
According to Gary Blasi, a professor of law emeritus at UCLA School of Law, the number of notices filed with LAHD likely represents only a small fraction of the actual agreements taking place.
On the other hand, landlords contend that buyout agreements can serve as a valuable tool, providing tenants with an incentive to relocate while benefiting both property owners, who regain possession of their units, and renters, who receive financial assistance for future housing expenses. The average buyout amount, as indicated by the data, stands at $24,704.
However, according to tenant advocates, even this amount, or possibly more, is frequently insufficient to enable low-income families to continue residing in Los Angeles neighborhoods where housing costs have skyrocketed in recent years, particularly after factoring in taxes.
“When it is received as a single payment, one might think, ‘That is a substantial amount of money,’ but it is also crucial to consider the expenses associated with maintaining housing in the open market,” stated Blasi. “What may appear to be a significant windfall could actually leave the tenant in a far worse situation than before.”
Furthermore, tenants and advocates assert that individuals who decline these offers often face harassment from landlords.
According to Cynthia Strathmann, the executive director of Strategic Actions for a Just Economy, tenants have reported instances of people visiting their homes during dinner time and late at night, persistently urging them to accept certain offers. Additionally, there are cases of landlords neglecting to address maintenance issues in the apartment and then aggressively pressuring tenants to accept cash in exchange for vacating the premises. This creates immense pressure on tenants who are already living in substandard conditions, ultimately forcing them to move out. Strathmann highlighted that neighborhoods like Koreatown and Echo Park, which are at the top of the controller’s list, experience a significant disparity between the monthly rent paid by long-term tenants in rent-controlled units and the market rates that landlords could potentially charge.
Chris Gray, the president of Moss & Co., a property management company, emphasized the significance of cash for keys agreements for landlords, particularly in the aftermath of the pandemic. With many tenants accumulating substantial amounts of unpaid rent debt, these agreements have become essential tools.
According to Gray, landlords find themselves in a challenging position where their primary objective is to secure tenants who can pay rent promptly. Evicting tenants through the court system can be a lengthy and costly process, involving attorney fees that can amount to tens of thousands of dollars.
Considering the overall scenario, Gray pointed out that landlords would willingly forgive outstanding rent debts of $30,000, $40,000, or any other amount, in order to expedite the tenant’s departure and avoid the entire eviction process.
In 2017, the city took action to regulate buyout agreements and gather information about them in response to tenant advocates’ concerns. These advocates were protesting against property owners who were displacing residents of rent-controlled units without adequately informing them of their rights.
To address this issue, the Tenant Buyout Notification Program was implemented, which mandates that landlords provide renters with information when making a buyout offer. Landlords must inform tenants about their entitlement to minimum compensation, which varies from $9,900 to $24,650, depending on factors such as the duration of the tenant’s residency and whether they are elderly or disabled. Additionally, tenants are informed of their right to refuse or revoke the offer and are encouraged to seek legal advice or consult with the housing department.
Furthermore, landlords are obligated to submit any buyout agreements to the L.A. housing department as part of the program. These filings serve as the foundation for the analysis recently released by the controller’s office.
Based on the data, the number of buyout filings reached its peak in 2019, with a total of 1,209 agreements. However, last year saw a decrease in the number of agreements filed with the city, with a total of 789.
The buyout regulation empowers tenants to initiate legal proceedings against landlords who breach the regulations, enabling them to seek compensation for damages and a $500 penalty. However, according to Blasi, this course of action is unlikely to be pursued by many low-income residents.
Blasi suggested that the city should reconsider the tenant buyout notification program and strengthen its enforcement measures. Additionally, he emphasized the importance of conducting extensive outreach to both tenants and landlords to ensure awareness of the program’s existence. Such efforts would benefit all parties involved who are acting in good faith.
For more news on LA check out bargainhousenetwork.com