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New Los Angeles Law Helps Tenants When Their Landlords Offer Buyouts

In “cash-for-key” schemes, tenants often aren’t aware of their rights

Los Angeles Mayor Eric Garcetti signed into law yesterday an ordinance aimed at helping tenants in rent-controlled units whose landlords offer them money to move out.

The new Tenant Buyout Ordinance calls for landlords to inform tenants of their rights under the rent-stabilization ordinance when they offer a buyout, the mayor’s office said Friday.

“This ordinance will help protect vulnerable populations—like senior citizens and immigrants—from displacement,” Garcetti said in a statement.

The ordinance is at least partially in response to an increasingly common practice called “cash for keys,” in which a landlord seeking to rent out units at a higher rate will offer the tenant a sum of money to vacate voluntarily in a relatively short amount of time. The amount that rent can be hiked each year is capped in rent-controlled units, but a landlord can set an entirely new rate when a new tenant signs a new lease.

Because of protections extended to them under the rent-stabilization ordinance, tenants in cash-for-keys scenarios would usually be entitled to more money and more relocation time (up to 120 days) than what’s offered to them.

But many renters, unaware of their rights in this situation, take the buyout offer. The new law is intended to help tenants make more informed decisions.

It’s a law that stands to help a significant number of Angelenos. Half of LA families live in a rent-controlled apartment, according to the mayor’s office.

The new law also “requires landlords to file buyout agreements with the City, so that staff can better monitor the process. It also permits renters to withdraw from the buyout agreement within 30 days,” according to the release.

“In a time when affordable housing units are scarce, the new ordinance is designed to ensure that tenants can make informed decisions and have the opportunity to seek advice before voluntarily relinquishing their rent-stabilized unit,” said the general manager of the city’s Housing and Community Investment Development, Rushmore Cervantes.

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