Buying Real Property (Oakland)

July 1, 2016

 

When a new owner purchases a residential rental property in Oakland, he or she steps into the shoes of the prior owner. In other words, the new owner is bound by the prior owner’s actions regarding any residential tenancy and must comply with all of the terms and obligations of that tenancy. So for instance, if a rental agreement provides for no pets but the prior owner orally permitted the tenant to have a pet, then a new owner cannot thereafter seek to enforce the no pet provision of the rental agreement. The new owner is bound by the prior owner’s agreement.

For this reason, it is important for a new owner to get as much information as possible about any tenancy. This is commonly done by getting copies of all rental agreements and rent increases and other agreements concerning the tenancy from the prior owner during the purchase process. It is also common to request the tenant to provide a document commonly referred to as an estoppel. An estoppel document is a written statement by the tenant certifying certain facts pertaining to the rental agreement. From the estoppel document, the new owner can typically get a better understanding of the terms and conditions of the tenancy. While estoppel documents can be useful, sometimes tenants refuse to provide them.

From the information obtained about the tenancy, the new owner will be in a much better position to know the important terms and conditions of the tenancy and can act accordingly as the new landlord. It will also help to have a general understanding of the local rent and eviction control ordinances. Most rental units in Oakland are subject to the rent and/or eviction control ordinances, so you will be expected to comply with it. You may consider consulting with an attorney for this purpose. Other groups and organizations, such as the East Bay Rental Housing Association and the Oakland Rent Board may also provide some information about the ordinances.

In addition to the above, there are a multitude of other things a new property owner should or could do, but each owner’s obligations vary depending on the circumstances. So I will outline a few other things that every new owner should do to make sure he or she gets off to a good start.

Insurance

 

The rent laws in California can make it lucrative for residential tenants to sue their landlords. Many local eviction ordinances allow tenants to recover treble damages and attorney’s fees if they prevail in litigation. These laws are flypaper for tenant attorneys. One way to manage the risk of a tenant lawsuit is to have insurance coverage for claims of wrongful eviction. All residential landlords in rent or eviction control jurisdictions should have coverage for claims of wrongful eviction. So every new owner should be sure to obtain an insurance policy that includes coverage for wrongful eviction. 

Introductory Letter

Within 15 days of an ownership change, the new owner must give the tenant an introductory letter. The letter must disclose certain information, including the name, street address, and phone number of the person to whom legal documents may be served and to whom rent payments are to be made. You can find a more comprehensive overview of the required disclosures in California Civil Code Section 1962. If the new owner fails to make the required disclosures, then the owner is precluded from evicting a tenant for nonpayment of rent. So a new owner should be sure to comply and deliver an introductory letter containing all the required disclosures.

Since the introductory letter is often the new owner’s first communication or interaction with the tenant, the new owner may tailor the letter accordingly. First impressions are important and may set the stage for the future landlord/tenant relationship. So for instance, it may go a long way to simply inform the tenant that the security deposit was transferred to the new owner, that the current terms of the tenancy will remain in place, and that any concerns will be diligently addressed. Such letter is customizable and varies depending on the owner and circumstances.

RAP Notice

An Oakland property owner of rent controlled units must serve his or her tenants with a Notice to Tenants of the Residential Rent Adjustment Program (“RAP Notice”) at the commencement of the tenancy, at the time of any rent increase, and at the time of any notice changing the terms of tenancy. The RAP Notice provides the tenant with information about rent increases and tenant rights. It can be downloaded directly from the Oakland Rent Board website. If it is not properly given, then any rent increase may be void.   

If it is determined that RAP Notices were not properly given by the prior owner, then the new owner should immediately serve them on all the tenants. By doing this, the previous failure to properly give the RAP notice will be cured 6 months after the new owner properly gives it, so future rent increases after that 6 month period can be safely given. Of course, the new owner must be sure to give the RAP Notice again with the future rent increases.   

Habitability and Quiet Enjoyment

Every new owner must be aware that he or she is required by law to provide the tenant with a habitable rental unit. This generally means a rental unit that is in good repair and free from dilapidations. Similarly, he or she must is also required by law to provide the tenant with quiet enjoyment of the rental unit. This generally means peaceful possession of the rental unit without disturbance. If the new owner is ever informed that repairs are needed or that the tenant is being disturbed, then the new owner should promptly respond and take any needed steps to rectify the situation. 

© 2016 by Fried & Williams LLP.  All Rights Reserved.  The information contained in this article is general in nature.  For advice on any particular matter, please consult with our attorneys because the facts of your situation may be unique and the law changes from time to time.

 

 

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