Are new tenant protection rules applicable during ownership transfer and at lease end

Investor · San Diego, CA · Member since 2017 · 107 posts · 35 votes

Hello fellow investors,

I couldn't find a clear answer to my questions related to the new San Diego tenant protection regulations and thus my post. I am wondering if they still apply during property acquisition. Is the new owner required to comply to these rules if a property comes with tenants? On that same note, if one decides to keep tenants during acquisition and in general what happens at the end of lease? Can one choose NOT to renew it under these new rules?

1 Reply

48 views

Most Popular Reply

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

Quote from @John Clark:

Quote from @Michael Ndjondo makadi:

Thanks for your reply @Dan H.. This is what I was trying to understand and it seems like a very bad deal for the investing community.

Irrelevant. You don’t have the votes. Also, you don’t mention the fact that landlords would “sell” to sham/shell buyers in order to dump tenants. As a bona fide buyer, lower your price at the start.

I do not believe the government should be able to mandate a change to existing contracts. If they want to put limits on future contacts that is different than passing a law that changes a contract between 2 consenting, competent parties that was legal when entered into.

When rent control is first passed and applied to existing leases, the government is changing the contract. You know who got the most $crewed? It was landlords that were giving their tenants discounted rent whether it was through naivety, kindness, stupidity, etc. I feel those that were doing it for kindness was also doing it with naivety; they probably never foresaw a case where their kindness would make it difficult to sell their property at comp value.

when rent control passes, rents go up. The rent control advocates in their stupidity believe this is because LL are more greedy than they were. They ignore economic theory on so many fronts. The risk has increased due to more difficult to terminate poor tenants. Tenant flip costs go up due to more difficulty terminating bad tenants. Those rents that are under market need to increase at max allowed rent for the property to sell at its comp value in the future. Rents have to go up more than inflation to compensate for years were inflation may exceed maximum rent increase.

Reasonable rent control (such as AB1482) is great for professional managed units because market rents will rise faster than they would have otherwise and their rents are already near market rate.

is it good for investors or bad? I believe for the more sophisticated investors, reasonable rent control (such as AB1482) will increase profits. For kind, naive property investors, it can be very bad.

best wishes.

1 Reply

See this reply in the discussion

5 Replies

Jump to latestLatest

Sort by

Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
2y
Quote from @Michael Ndjondo makadi:

Hello fellow investors,
I couldn't find a clear answer to my questions related to the new San Diego tenant protection regulations and thus my post. I am wondering if they still apply during property acquisition. Is the new owner required to comply to these rules if a property comes with tenants? On that same note, if one decides to keep tenants during acquisition and in general what happens at the end of lease? Can one choose NOT to renew it under these new rules?

San Diego’s tenant protection act does apply to new owners upon acquisition. As such you cannot simply decide to not renew a lease without meeting one of the lease termination criteria. The two most common lease termination criteria is to move family into the unit extensive rehabs. These lease termination will cost 2 month’s rent, 3 if senior disabled.
If you purchase a property with below market rent, realize it will be costly to get to market rent. Unit rehab typically only makes sense if the unit is in poor condition or very old.
Good luck
1 Reply
Michael Ndjondo makadi
OP
Investor · San Diego, CA · Member since 2017 · 107 posts · 35 votes
2y
Thanks for your reply @Dan H.. This is what I was trying to understand and it seems like a very bad deal for the investing community.
0 Reply
John Clark
Member since 2018 · 1k+ posts · 1k+ votes
2y
Quote from @Michael Ndjondo makadi:

Thanks for your reply @Dan H.. This is what I was trying to understand and it seems like a very bad deal for the investing community.
Irrelevant. You don’t have the votes. Also, you don’t mention the fact that landlords would “sell” to sham/shell buyers in order to dump tenants. As a bona fide buyer, lower your price at the start.
1 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
2y
Quote from @John Clark:

Quote from @Michael Ndjondo makadi:

Thanks for your reply @Dan H.. This is what I was trying to understand and it seems like a very bad deal for the investing community.
Irrelevant. You don’t have the votes. Also, you don’t mention the fact that landlords would “sell” to sham/shell buyers in order to dump tenants. As a bona fide buyer, lower your price at the start.
I do not believe the government should be able to mandate a change to existing contracts. If they want to put limits on future contacts that is different than passing a law that changes a contract between 2 consenting, competent parties that was legal when entered into.

When rent control is first passed and applied to existing leases, the government is changing the contract. You know who got the most $crewed? It was landlords that were giving their tenants discounted rent whether it was through naivety, kindness, stupidity, etc. I feel those that were doing it for kindness was also doing it with naivety; they probably never foresaw a case where their kindness would make it difficult to sell their property at comp value.

when rent control passes, rents go up. The rent control advocates in their stupidity believe this is because LL are more greedy than they were. They ignore economic theory on so many fronts. The risk has increased due to more difficult to terminate poor tenants. Tenant flip costs go up due to more difficulty terminating bad tenants. Those rents that are under market need to increase at max allowed rent for the property to sell at its comp value in the future. Rents have to go up more than inflation to compensate for years were inflation may exceed maximum rent increase.

Reasonable rent control (such as AB1482) is great for professional managed units because market rents will rise faster than they would have otherwise and their rents are already near market rate.

is it good for investors or bad? I believe for the more sophisticated investors, reasonable rent control (such as AB1482) will increase profits. For kind, naive property investors, it can be very bad.

best wishes.
1 Reply
John Clark
Member since 2018 · 1k+ posts · 1k+ votes
2y
Quote from @Dan H.:

Quote from @John Clark:

Quote from @Michael Ndjondo makadi:

Thanks for your reply @Dan H.. This is what I was trying to understand and it seems like a very bad deal for the investing community.
Irrelevant. You don’t have the votes. Also, you don’t mention the fact that landlords would “sell” to sham/shell buyers in order to dump tenants. As a bona fide buyer, lower your price at the start.
I do not believe the government should be able to mandate a change to existing contracts. If they want to put limits on future contacts that is different than passing a law that changes a contract between 2 consenting, competent parties that was legal when entered into.

When rent control is first passed and applied to existing leases, the government is changing the contract. You know who got the most $crewed? It was landlords that were giving their tenants discounted rent whether it was through naivety, kindness, stupidity, etc. I feel those that were doing it for kindness was also doing it with naivety; they probably never foresaw a case where their kindness would make it difficult to sell their property at comp value.

when rent control passes, rents go up. The rent control advocates in their stupidity believe this is because LL are more greedy than they were. They ignore economic theory on so many fronts. The risk has increased due to more difficult to terminate poor tenants. Tenant flip costs go up due to more difficulty terminating bad tenants. Those rents that are under market need to increase at max allowed rent for the property to sell at its comp value in the future. Rents have to go up more than inflation to compensate for years were inflation may exceed maximum rent increase.

Reasonable rent control (such as AB1482) is great for professional managed units because market rents will rise faster than they would have otherwise and their rents are already near market rate.

is it good for investors or bad? I believe for the more sophisticated investors, reasonable rent control (such as AB1482) will increase profits. For kind, naive property investors, it can be very bad.

best wishes.
I agree. I also thing that there’s no such animal as “reasonable” rent control.

All that is beside the point. Now that there is rent control in that city, one can’t evade it by selling to a new owner. Not only is the new owner taking subject to local law, but taking subject to means current owners cannot conduct sham sales in order to evade tenant protections.
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.