Advice on buying rent controlled house w/ tenants Los Angeles

[Benton S.]

Hello, this is my first post here. I don’t really belong since I’m not an investor but I’m in contract on a tenant occupied property and I’ve found better information here than anywhere else on the internet, so I was hoping some of you would be generous enough to offer some input on my situation.

The property is a single family home in Los Angeles with an attached ADU. I have the paperwork from HCIDLA and it states that the main home is subject to the RSO, and the ADU is partially subject to the RSO (rent increase protections do not apply, eviction protections do). The main home tenant has lived there for 8 years, the ADU tenant has lived there for 14. Main house rent is just below market rate, the ADU rent seems farther below market (around 1k for a 500sqft 1b/1b). Both tenants are under the age of 60. My family and I want to inhabit the entire home and the ADU. For this to happen, we will need both tenants to leave. The seller is elderly and only wants to sell the property with tenants, so unfortunately having it delivered vacant isn't an option.

I've already read just about every piece of information about the RSO that I can find, and had brief conversations with two attorneys over the phone, but I've received conflicting information. I would like to remove this property from the rental market, and we have no plans to rent any part of it at any point in the future, so it seems to me that the Ellis act is the way to go for us. My only hesitation is that one of the attorneys I spoke to told me that the only way I can use the Ellis act is if I tear down the entire property, but I can't find that mentioned anywhere in the actual description of the law. It also seems like we could do an owner move in eviction for the main unit and simply raise the rent of the ADU to get the tenant to leave, but this seems less fair and potentially more problematic than giving both tenants the proper relocation assistance. Cash for keys also seems to be an option.

I understand that the timing of all of this is uncertain due to COVID and the wait is something we’re willing to accept in order to get a home we love. We also aren’t looking to kick anyone out on the street immediately, we understand that these are trying times and we want to do our best to respect the tenants. My question for you all is, do you see any holes in my understanding of the law? Is there something major I’m missing here that will come back to screw me down the line? I know that any eviction process can have unforeseen hurdles but it seems like we’re well within our rights here so at least we’re starting at a good place.

Additionally, if I do move forward with this purchase, can anyone recommend an attorney in Los Angeles who specializes in these matters?

Thank you in advance for your help, I appreciate anyone who took the time to read this!

[Nabil Suleiman]

@Benton S. Hi Benton, For now I would say any deal with a tenant in the home that does not want to leave or is not leaving before close of escrow would be a hard pass right now. uUnless you are calculating for an unknown number of months that the governor won't allow evictions of any kind, + 90 days on top if it when those restrictions are removed, + the time it may take to get them out through the backed up court system from the possibility of pent up evictions needing to go through, + depending on the judge, and how many years the tenant has lived there the $ they would ask you to pay to the tenant to move out. 

If all of that is still cool with you and you want to move forward you can look at Jaurigue Law Group. You are reading the Ellis law correctly, and I know people who have used it, but in todays times the paragraph above will overrule it until they lift those restrictions, and you would have to file and pay for both tenants to move out, then also you would not legally be able to rent it for two years so it really should be family living there. 

Anyways, If you can, I would put the responsibility not he seller, or try to write in the costs of what it will take to do the above into the offer you are writing. Good luck.