“When government gets involved in pricing, I don’t think it’s the right way to look at a business.” Jamie Dimon

Should Landlords Have to Pay Tenants to Raise the Rent? This sounds like a rhetorical question but is it?

“The right to make a lawful decision does not include the right to be free of all costs associated with that decision.” That’s the kind of reasoning courts have wrestled with lately — and it’s exactly the fight playing out in Los Angeles right now.

HERE IS THE PRESENT SITUATION LA has an ordinance requiring landlords to pay tenants a relocation fee if they raise rent above a certain threshold — even when that increase is completely legal under state law. An apartment owner association is now appealing the case, arguing cities can’t financially penalize owners for rent increases that Costa-Hawkins already protects.

THIS IS NOT HAPPENING IN A VACUUM Pasadena had a nearly identical relocation-payment rule, and a California Court of Appeals already ruled it conflicts with Costa-Hawkins. If LA’s case goes the same way, it could stop similar relocation-fee mandates from spreading to other cities — something owners across the region should be watching closely.

CAN THIS BE LEGAL? “Can a city really make me pay someone to leave over a rent increase I’m legally allowed to make?” Increasingly, the courts are saying: not so fast.

As one attorney following the case put it, “The core legal question is whether cities can impose financial penalties tied to rent increases on units that state law expressly exempts from local rent regulation.” That’s the crux of it — and the outcome could set precedent well beyond LA’s borders.

WHAT TO DO? If you own property in a city with a relocation-payment ordinance tied to rent increases, this is worth tracking. A ruling against LA could mean real savings — and fewer landmines — the next time you need to adjust rent to keep up with costs.

We’ll keep you posted as this one develops.

“Everyone has the will to win, but only a few have the will to prepare to win.” Mark Cuban

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