July 12th, 2021 at 2:34 pm
Short Answer: The best answer is to tell the seller that this is a very complicated area of the law. We, unfortunately, have no easy nor straight-forward answers for any given situation, and for a detailed analysis, we would strongly recommend that the seller consults with the seller’s own attorney if needed.
Explanation: Our company decided many years ago to refrain from performing any property management services for ongoing landlord-tenant matters. Additionally, as a listing agent, you cannot give your clients any legal advice anyway, which is precisely why C.A.R. publishes many legal articles for you to give to your clients in lieu of giving any legal advice (see Resources below). Also, it will ultimately be up to the sellers, not us, to decide whether to contractually obligate themselves to their buyers to deliver the property vacant at close of escrow (e.g., perhaps consider entering into a Cash For Keys Agreement (CFK) with their existing tenants). As an alternative, the sellers may negotiate for their buyers to take title subject to the rights of the existing tenants (using the C.A.R. Tenant in Possession Addendum (TIP)).
COVID Eviction Moratorium: As a big hindrance to residential landlords, California’s COVID Tenant Relief Act has generally been extended until September 30, 2021, unless further extended. Under this law, a residential landlord is generally prohibited from terminating a tenant (who is a natural person) absent a “just cause” reason, or in limited circumstances, when selling the property if certain conditions are met (see below). This prohibition against terminating tenancies applies to a month-to-month tenant, or even a fixed-term tenant who is at the end of the lease term.
Serving an NTT-CTRA: Landlords claiming a valid exemption from the COVID Tenant Relief Act may serve their tenants with a C.A.R. Notice of Termination of Tenancy: COVID Tenant Relief Act (NTT-CTRA). The NTT-CTRA sets forth the 4 “no fault” just cause reasons to evict a tenant (see paragraphs 1A to 1D of the NTT-CTRA). Concerning paragraph 1B, selling the property is probably not the same thing as “Owner intends to withdraw the Premises from the rental market.” However, that would be “one of those things” that the seller’s own eviction attorney should address for the seller.
Limited Exemption for Sale of Property: Aside from the “just cause” reasons, residential landlords selling their property may terminate a tenancy under paragraph 1E of the NTT-CTRA if all of the following 6 requirements are met:
1. Property is a single-family home or condominium.
2. Owner has entered into a contract for sale.
3. Buyer is a natural person who intends to occupy the property.
4. Owner is not a corporation, LLC with a corporate member, or Real Estate Investment Trust (REIT).
5. Owner has given the tenant the C.A.R. Rent Cap and Just Cause Addendum (RCJC) confirming items #1 and #4 above.
6. Eviction under California state law is not superseded by federal law or pre-8/19/20 local law, including rent control laws. The federal CDC eviction moratorium has been extended until July 31, 2021. It is not altogether clear whether California state law is superseded by federal law in this instance. Click here for more information about the CDC Order (including FAQs).
Resources: More information is available from C.A.R.’s COVID legal articles, such as the State Rent Moratorium Extension Q&A (password-protected for C.A.R. members only). The full text of Assembly Bill 832, which extends the COVID Tenant Relief Act, is set forth at http://leginfo.legislature.ca.gov/.
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