City Crackdown on Cash for Keys
A new year brings new laws, making it harder to invest in real estate.
There are a slew of new laws—on the local, state and federal level—that will affect the way you manage your real estate investments. Today we will look at one of the more egregious ones on the local level.
One of the tools property owners use to convince a tenant to move out is a process called Cash For Keys. Basically, the tenant and owner agree on an amount of money that the owner will pay the tenant in exchange for the tenant moving out. This is a totally voluntary arrangement between two adults. But the city of Los Angeles doesn’t think so and has taken the side of the tenant, tromping on the rights of the landlord in regard to his property.
Major Garcetti approved the Tenant Buyout Ordinance, which goes into effect January 25th, 2017 and imposes several requirements on the landlord:
- Serve all his tenants the RSO Disclosure Notice, which outlines tenant rights including the amount the City mandates for forced eviction relocation fees
- Allow the tenant the right to cancel the relocation agreement for any reason for up to 30 days
- Provide written buyout agreement in a delineated format
- File with the City a dually executed RSO Disclosure Notice and Buyout Agreement
Violations subject the landlord to prosecution for damages.
In the City’s never ending quest to make life easier on tenants—at the cost of property owners—they have interjected themselves even further into the private ownership of income producing real estate. When will it stop? Is it fair for the government to take sides?
Feel free to vent below.