LA Tenant Buyouts Explained

In Los Angeles, a tenant buyout—often called “cash for keys”—is a legal way for landlords to pay tenants to voluntarily move out of a rent-controlled unit. But strict rules apply. You must follow the LA Housing Department’s process, file the right forms, and disclose tenant rights—otherwise, you could face major penalties.

What is a Tenant Buyout?

A tenant buyout is a voluntary agreement between a landlord and a tenant, where the tenant accepts a cash payment to move out. Landlords often use this strategy to:

• Vacate a rent-controlled unit

• Reset rents to market value

• Prepare a property for sale or renovation

Key Rules:

• Tenants can refuse or rescind the deal within 30 days.

• You must serve a Disclosure Notice before any buyout discussions.

• You must file both the Disclosure and Buyout Agreement with LAHD within 60 days.

📝 LAHD - Tenant Buyout Program

Legal Steps for a Tenant Buyout in Los Angeles

To stay compliant under LA’s Rent Stabilization Ordinance (RSO), follow these steps:

✅ Step 1: Serve the Disclosure Notice

Before negotiating, give the tenant a written notice of their rights. This includes:

• Their right to refuse or consult an attorney

• Their right to cancel the agreement within 30 days

✅ Step 2: Negotiate the Terms

Buyout amounts typically range from $8,000 to $25,000, depending on:

• Tenant’s rent

• Length of tenancy

• Unit location and desirability

• Tenant’s willingness to leave

✅ Step 3: Sign and File the Agreement

Once signed:

• File both the Disclosure and Agreement with LAHD within 60 days

• Provide tenants with copies of all forms

✅ Step 4: Follow Through

• Pay the agreed-upon amount

• Ensure tenant vacates as agreed

• Do not attempt re-rental before agreement terms are met

⚠️ Non-compliance can lead to:

• Civil penalties

• Tenant lawsuits

• Invalidation of the agreement

Risks & Alternatives

What Could Go Wrong?

• Tenants may claim coercion or harassment

• Skipping the required notices can nullify the buyout

• Filing errors can result in fines or legal delays

Other Options to Consider:

• Ellis Act: For removing all units from the rental market

• Owner Move-In: If you plan to occupy the unit

• Wait-and-Raise: If you prefer to wait for the tenant to leave naturally and apply annual increases

Real Example

A probate client of The Borges Real Estate Team inherited a tenant paying $1,000 in an area where market rents were $2,500. After properly disclosing their rights and negotiating respectfully, the tenant accepted $20,000 to vacate—giving the client flexibility to renovate and sell.

Need guidance on tenant buyouts in Los Angeles? The Borges Real Estate Team can help you navigate the process with confidence. Let’s connect.