How To Properly Inform Tenants about ADU's Being Built on Property

[Leticia Ramos]

Hello BP Team. We informed our tenants about the possibility of building two ADU's in our property about 2 months ago. We spoke to each tenant and gave them a letter explaining our potential plans. The letter was a template used from CA. Apartment Association. Recently we decided to move forward and submitted our plans to the city. We need to inform our tenants about the new changes and would like some guidance as to which is the best way. We were thinking about having a management company or other professional help generate a letter with details about the scope of the work. Two of our tenants will need to clear out their assigned garage in order to prep that area for one of the ADU's. A common area will need to be cleared as the other ADU will be build. Our goal is to provide tenants with some suggestions as to how they can arrange for new ways to locate their things (storage facility, city yard sales, arrange for hauling service, etc.) Our tenants have been loyal and been there for about 15 years. We understand this can be challenging for our tenants, but we are planning for our children's future and teaching them about the REAL ESTATE benefits.

Do any of you have suggestions as to how we can best approach this or can refer me to someone who can prepare a letter addressing our plans for the build?  Our property is located in South Gate, Los Angeles County. 

Your thoughts and suggestions are greatly appreciated.

Leticia

[Dan H.]

Quote from @Leticia Ramos:

Hello BP Team. We informed our tenants about the possibility of building two ADU's in our property about 2 months ago. We spoke to each tenant and gave them a letter explaining our potential plans. The letter was a template used from CA. Apartment Association. Recently we decided to move forward and submitted our plans to the city. We need to inform our tenants about the new changes and would like some guidance as to which is the best way. We were thinking about having a management company or other professional help generate a letter with details about the scope of the work. Two of our tenants will need to clear out their assigned garage in order to prep that area for one of the ADU's. A common area will need to be cleared as the other ADU will be build. Our goal is to provide tenants with some suggestions as to how they can arrange for new ways to locate their things (storage facility, city yard sales, arrange for hauling service, etc.) Our tenants have been loyal and been there for about 15 years. We understand this can be challenging for our tenants, but we are planning for our children's future and teaching them about the REAL ESTATE benefits.

Do any of you have suggestions as to how we can best approach this or can refer me to someone who can prepare a letter addressing our plans for the build?  Our property is located in South Gate, Los Angeles County. 

Your thoughts and suggestions are greatly appreciated.

Leticia

 My view is AB1482 requires you to negotiate with tenant any significant change of lease terms (loss of garage definitely a change of lease terms, loss of yard and construction zone may be change of lease terms) and your tenant can likely block your efforts.  

It appears you are planning to Proceed with caution which would be my advice.  Consult with professionals.  Expect there to be costs to appease the tenants.  

Good luck

[Nathan Gesner]

Quote from @Leticia Ramos:

If this were any other state, I would recommend you type up a letter yourself and deliver it to them. But you are in California where nothing is as simple as it seems.

I would contact an attorney. Draft the letter, let the attorney refine it, and they can give you the risks associated with your plan and hopefully keep you out of hot water.

[Bill B.]

How much are you discounting their rent? I mean how much is a garage worth $500/mo? More? Certainly I would be expecting a discount in any state outside of NY/CA. In those 2 states I might just say “No, I’d prefer to keep using my garage.” Or the garage was worth half of what I was paying, so I’ll pay 1/2 rent until I get it back. Did they also have access to the yard where you are building the ADUs? Are you taking that from them as well?  I don’t know the most this could cost you. But a year or two of rent is the least I would expect to lose after they got free tenant lawyers and met you in court. DEFINITELY don’t take anything or say they can’t have anything that’s in their lease. Offer hard cash for everything they lose every month they lose it, that MIGHt protect you. Unless they court thinks your pressured them or took advantage of them. 

Taking yard space or a garage space is no more defensible than removing a bedroom. BE CAREFUL!

[Rick Bassett]

@Leticia Ramos if this were me, I would only proceed if we had specified in our lease with them that this was an eventuality and that they had agreed to it by signing the lease.

If your lease is silent on this, then I would wait until lease renewal time and make those conditions part of the new lease.

In short, if it were me, I would not do that construction until I was legally covered by the leases. You can get all your permits in order before then so you’re ready to go, but you might have to wait a year to start the project depending on when those leases expire.

[Leticia Ramos]

Quote from @Bill B.:

How much are you discounting their rent? I mean how much is a garage worth $500/mo? More? Certainly I would be expecting a discount in any state outside of NY/CA. In those 2 states I might just say “No, I’d prefer to keep using my garage.” Or the garage was worth half of what I was paying, so I’ll pay 1/2 rent until I get it back. Did they also have access to the yard where you are building the ADUs? Are you taking that from them as well?  I don’t know the most this could cost you. But a year or two of rent is the least I would expect to lose after they got free tenant lawyers and met you in court. DEFINITELY don’t take anything or say they can’t have anything that’s in their lease. Offer hard cash for everything they lose every month they lose it, that MIGHt protect you. Unless they court thinks your pressured them or took advantage of them. 

Taking yard space or a garage space is no more defensible than removing a bedroom. BE CAREFUL!

 Thank you for the information you provided. We have contacted a professional attorney who understands the nature of this situation. The additional garage fee was minimal ($100.00 extra per month). We have spoken to them and explained our purpose but they are still willing to cooperate and work with us. I understand the construction project can change and things may need to be modified as we move through it. Trying to make good choices and allow our tenants to also have some good choices along way. They are on a month-to-month tenancy.