“Experience is a good school. But the fees are high.” Anonymous

LA’s Relocation Fee Rule Just Got Struck Down — How does it affect you?

“No matter how thin you slice it, there are always two sides.” That’s still true here — but this time, one side just won.

A FEW MONTHS AGO. Back in March, we were concerned about the pending court fight over LA’s relocation-fee mandate — the rule requiring landlords to pay tenants a relocation fee if they raised rent above a certain threshold, even when that increase was completely legal under state law. The Apartment Owners Association appealed, arguing cities can’t financially penalize owners for rent increases Costa-Hawkins already protects.

THE CASE WAS DECIDED. On April 15, the California Court of Appeal ruled — and landlords won this piece of it. The court issued a decision in Apartment Association of Greater Los Angeles v. City of Los Angeles, striking down the city’s Relocation Assistance Ordinance as preempted by the Costa-Hawkins Rental Housing Act. In plain terms: if you own a unit that’s exempt from rent control and you raise the rent lawfully, the city can no longer force you to pay a tenant to leave. Wallacelaw

NOT ALL GREAT NEWS THOUGH. It wasn’t a clean sweep, though. The court upheld the city’s separate Eviction Threshold Ordinance, which still requires unpaid rent to reach a full month’s fair market value before you can file a nonpayment eviction. APARTMENT ASSOCIATION OF GREATER LOS ANGELES (AAGLA) called it a “partial victory,” and it’s possible the case isn’t fully over — the association says it’s weighing further appeals, and other parties could still seek review from higher courts.

HOW DOES IT HELP ? Still, if you own property in LA and have been budgeting for relocation payments every time you adjust rent on an exempt unit, this is real, immediate relief. It’s also a good reminder: rules like this get challenged in court more often than owners realize, and they don’t always survive.

I will keep tracking this one as it develops.

WHAT SHOULD I DO MOVING FORWARD? My first answer, as always is to RAISE YOUR RENTS. By doing so, you are taking advantage of whatever rent raise is available inn your jurisdiction. Know that if you let a year pass without a raise, that money is forever lost- you can’t “double-up”. Also remember that when your rents are at market rate, it affects there value of your building. This can be especially important if you are planning to sell or refinance.

“Effort is measured by setting goals and getting results.” Mark Cuban

WHAT WE AT PRS PROPERTIES CAN DO. We can give you a good idea of the current value of your building. We can suggest changes you might want to make before sale to give you an idea what type of building you would be able to exchange into. You may decide to stay in the rental business or you may want to move into a more passive real estate investment, such as a triple net or a DSL.. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparable in the area of your properties, so that you know what rental values are in your area. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We are currently looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We can offer a 7 day escrow and all cash at closing. Give us a call. We have also put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 45 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.