Los Angeles Introduces “Cash for Keys” Amendment To Regulate Tenant “Buyout Agreements”

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Effective January 25, 2017, the Los Angeles City Council enacted Ordinance 184673, amending the Los Angeles Municipal Code §151.31, to require certain disclosures by landlords to their tenants concerning their rights in “cash for keys” agreements.

Landlords must now provide a notice informing tenants that they do not have to accept a “buyout offer” and that a landlord may not retaliate against them for declining, that they may consult an attorney or the city, that they have 30 days to rescind a properly executed agreement, and they may rescind an improper one at any time. Notices must also be filed with the city.

Los Angeles now joins Berkeley, Santa Monica and San Francisco in regulating buyout discussions between landlords and tenants. Landlords often find these agreements to be an attractive alternative to non-fault eviction regulations, which require noticing periods and relocation assistance payments, and which may lead to relinquishing certain land use rights (e.g., approval for condominium conversion) and to the uncertainty of litigation.