Selling a rental property with tenants still in place adds a layer of complexity that a standard owner-occupied sale doesn’t have. Los Angeles has some of the strictest tenant protection laws in the country, so it’s important to understand your options and obligations before you list. This is general information, not legal advice, and you should consult a real estate attorney familiar with LA’s rent stabilization ordinance for guidance specific to your property.
Know Whether Your Property Is Rent Stabilized
Many multi-unit properties and older buildings in the City of Los Angeles fall under the Rent Stabilization Ordinance (RSO), which limits rent increases and restricts the reasons a landlord can terminate a tenancy. Whether your property is subject to RSO or other local rent control rules significantly affects your options, so this should be one of the first things you and your agent confirm.
Selling With Tenants in Place
In many cases, you can sell the property with the tenant’s lease intact, and the buyer takes over as the new landlord subject to the existing lease terms. This tends to work well for buyers who want the property as a long-term rental investment, since they inherit an already-occupied, income-producing asset.
Coordinating Access for Showings
California law requires proper notice before entering an occupied unit, typically at least 24 hours for non-emergency access. Building a respectful relationship with your tenant and giving them as much notice as possible for showings tends to result in a smoother process and a more cooperative tenant during the sale.
What If You Want the Unit Vacant?
If a buyer wants the property delivered vacant, or you want to sell to an owner-occupant, ending a tenancy in Los Angeles requires following specific just-cause eviction rules and, in many cases, paying relocation assistance to the tenant. These rules are detailed and change periodically, which is exactly why this is a conversation to have with an attorney before taking any action toward ending a tenancy.
Pricing and Marketing Considerations
Tenant-occupied properties are often marketed differently than vacant homes, sometimes emphasizing the in-place rental income and cap rate for investor buyers rather than staging the home for an owner-occupant buyer pool. Your agent should have a clear read on which buyer pool makes sense for your specific property and situation.
Thinking about selling a tenant-occupied property in LA? Contact James Malcom to talk through your options and the right strategy for your situation.
