LA tenants take “cash for keys” buyouts to exit rent-controlled units

Los Angeles tenants are cashing in — and out — of their rent-controlled apartments.

From 2019 through last year, nearly 5,000 “cash for keys” agreements were filed with the city, the Los Angeles Times reported, citing a report by City Controller Kenneth Mejia.

The buyouts known as “cash for keys” have become a frequent tool for landlords to get tenants to leave rent-controlled apartments without going through formal evictions. Such evictions can take time, cost money and have strict rules.

Koreatown, Echo Park and Mid-Wilshire topped the list for the number of buyout agreements, with the Highland Park neighborhood among the top zip codes.

“Tenant buyouts are a tactic that landlords use to compel tenants to move out of RSO (Rent Stabilization Ordinance) units or rent-controlled units, often so landlords can re-rent these units to new tenants at market-rate prices,” Mejia’s office said in a statement.

“In many cases, buyout amounts are not enough for tenants to afford continuing to live in the city of Los Angeles long term.”

Landlords say the buyout agreements give tenants an incentive to move while creating a win-win for owners. Landlords get their units back and renters move out with money to help secure future housing.

The average buyout was $24,704, according to Mejia. More than 200 buyouts were for less than $5,000, while 35 buyouts exceeded $100,000. The total paid for the 4,869 tenant buyouts was $11.3 million.

Chris Gray, president of the property management firm Moss & Co., said cash for keys agreements became important tools for landlords after the pandemic, when many tenants racked up large amounts of unpaid rent debt.

An eviction through the courts can take months and cost tens of thousands of dollars in attorney fees, he said.

“Landlords are in a tough position and all they want to do is get someone into their unit to pay rent,” Gray told the Times. “When you look at a whole picture like that, a landlord would be happy to forgive past rent debt of $30,000, $40,000 or whatever it may be, to get them out and avoid the whole eviction process.”

Tenant advocates say most buyouts aren’t enough to allow low-income families to continue living in L.A., where the cost of housing has soared. They also say the buyout deals reported to the Los Angeles Housing Department fall short of capturing the full extent of cash for keys.

They contend Mejia’s figures include only agreements — not the offers, which often happen informally with a person knocking on the door or making a phone call. Even the agreements themselves, advocates say, may not end up being filed with the city.

“The number of such notices filed with LAHD is likely a tiny fraction of such agreements,” Gary Blasi, professor of law emeritus at UCLA School of Law, told the Times.

Tenants and advocates also say that people who turn down the offers are often met with harassment by landlords. Or the landlords may refuse to fix anything in the apartment, while pushing cash for keys.

The city began regulating buyout agreements in 2017 after tenant advocates protested what they saw as an increasing practice of property owners displacing residents of rent-controlled units without fully informing them of their rights. 

The Tenant Buyout Notification Program requires landlords to provide information to renters when making a buyout offer, as well as file any agreements with the city. 

— Dana Bartholomew

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