All Forum Posts by: David Shaw

Hi @Carla Carvalho

I actually sent an email to Dennis Blocks office, they replied with a simple message saying it is in violation of RSO to do so. 

But I think something can be done if we get creative, but may require a complete move out and new application/lease. 

I would not do anything without further legal advice. 

Please keep me posted if you come up with something as well. 

Thanks for the response @Greg M.

All good advice. I wouldn't want to do the loan route as that would not benefit me in any way, just doing work for a measly return. I would prefer to do the upgrades so that it gives the property a permanent higher monthly income and hence higher evaluation if I choose to sell. 

Ideally I'd like to hear from lawyers here who have already done this for someone, or another Landlord that has experienced this in the LA RSO area, may not exist. 

I own a 4-unit Rental Property in Los Angeles city that is covered under LA RSO (Rent Stabilization Ordinance). I have one tenant that has been there for 10 years so their rent is very low. They love living there but they want the unit updated, about a $50k cost. In exchange the tenant is telling me that they are willing to sign a brand new lease at market rent. 

The issue is that I don't know if I am allowed to make a new lease at a much higher rent price with the tenant since he is under RSO, EVEN if the tenant is the one wanting it. I have called LAHD (Los Angeles Housing Department), and they have no idea, apparently no one has seen this scenario, or they are just incompetent. 

Has anyone experienced this? Would I be able to create a new lease agreement with the existing tenant? Or is there a workaround, for example if they move out then move back in? 

Any advice would be appreciated, sad that the department responsible for such issues can't answer me. 

@Dave Foster I have consulted with several other CPAs and they are giving me the same advice as you have. Change title to the partnership before the sale and purchase the new property under the partnership.

@Melanie P. The mortgage is under our names as individuals, however we report everything under the partnership tax filing and each of us get a k1. You are correct, it is a pass through entity.

Thank you @Melanie P., I will look into the forms in more detail. 

Thank you @Dave Foster! This was the most detailed and sensical response I have received on this matter so far. 

I appreciate your help in this matter. 

Hi BP team, Happy New Year!

My brother and I own a 4-unit rental property in Los Angeles, CA, we've owned it for almost 10 years. The property Title is owned 50% by each of us individually, as tenants in common. HOWEVER our taxes for the rental property are filed under a Partnership, each of us owning 50% of the Partnership, then we each get a k1 and file our own taxes etc.. The Mortgage is also under both of our names as individuals, not under the Partnership.

We were interested in selling the property and performing a 1031 exchange, however there is some concern about any issues we would have in the eyes of the IRS with 1031 rules given the way the Title is vs how the Taxes are filed.

The tax filing was setup this way at the advisement of our CPA, however he apparently meant that the property Title should also be changed to be put under the Partnership, there was obviously a miscommunication here.

Would we still be able to perform a 1031, if so can the replacement property Title be structured the same way as we have it now (under each of us as 50% individuals, tenants in common), new mortgage under both our names, and just keep the Partnership for tax filing as it always has been?

1) We would like to avoid triggering any audits due to the Title vs Tax Filing differences.

2) We would like to make sure the 1031 is valid in case of an audit, given the Title vs Tax Filing differences.

Thank you in advance

I definitely agree with your negotiating tactic!

Quote from @Elmo Wally:

Does the amount for cash keys are different from the tenant that still in lease agreement. I have tenant month to month and I am in escrow now I offered her $2,800 She refuse cause it is too small. I guess she wants right amount and I do not know how much is right amount in City of Inglewood. I just dont want them to take advantage of me. I work hard to buy this duplexes. New buyer will occupied the unit that is reason that I need to offer her cash for keys and vacant. I need help so bad. My property management is sucks too when communicating to them and to me too. Hay! This situation making me sick. Any information help. Thank you so much in advance.

If the new buyer will occupy the unit then there is no need for Cash For Keys, but your broker should be able to help you in what needs to be posted, I believe it is a 60 day notice to vacate due to intent to occupy by Owner or Owner Family. Of course the new owner will have to deal with the headaches of making sure the person leaves. . I say offer a more reasonable amount, such as $25k and get rid of them so your sale can go through. I have not heard of cash for keys less than $20k in LA. 

I agree with some others, you need to be VERY worried about your property management. They are either taking money on the side from their contractors, or too incompetent to know how much it should cost. Either way find yourself a better property manager.