Curtis Jeter recalls fearing for his future when his new landlord told him he must move from his South Los Angeles apartment because the building in the gentrifying neighborhood would no longer be for rent.
In early August, when Los Angeles developer CIM Group offered the West Adams resident $8,000 if he left his rent-controlled unit within 30 days, Jeter quickly signed a buyout agreement.
He’d have to leave anyway, he figured, and better some money than none. The cash would pay for storage, give him time to find a place and, eventually, put down a deposit on a new apartment.
What Jeter didn’t know was he didn’t have to go anywhere. And if CIM eventually did make the required legal filing to demolish the building or perhaps convert the units into condos, he’d get much more: specifically, $19,700 and the option to live there for another year.
“I knew I would be OK for two months and two months is almost up,” he said. “I didn’t know I had the right to get anything else.”
CIM did not respond to a request for comment. But tenant advocates say Jeter’s story is increasingly common in a red-hot Los Angeles real estate market, where property owners look to speed rehabs or redevelopments of rent-controlled properties by ridding them of long-term tenants who pay far below market rent and have strong protections against eviction.
The practice, known as “cash for keys,” is sparking street protests and action from the Los Angeles City Council, which this week approved a plan to crack down on the practice, which can be unethical if not illegal.
Many renters don’t realize they’re not required to sign the agreements and they can often get much more money and time if they wait for landlords to formally file to remove their units from the rental market. That kicks in protections under the state’s Ellis Act, which allows tenants to stay four months to a year longer, depending on their age. They are also due required relocation payments that range from $7,600 to $19,700, an amount determined by the length of tenancy, age and any disabilities.
Until that notice is filed, tenants of rent-controlled buildings cannot be evicted as long they pay rent, follow their lease and don’t damage or use their unit for illegal purposes. They can not be forced out for renovations.
By contrast, tenants of buildings not under rent control can be told to leave in 30 or 60 days.
Tenant groups contend that unethical landlords are even using the threat of an eviction to coerce a buyout, only to turn around and re-rent the units at a higher price after renovations. The Ellis Act prohibits units taken off the market following evictions from being rented again for five years, but that prohibition does not apply to buyouts.
“We are seeing this [buyouts] primarily to re-rent,” said tenant-rights attorney Elena Popp.
The nature of L.A.’s rent control law, which primarily applies to multifamily buildings built before October 1978, means big bucks are at stake for both tenants and landlords.
When a tenant first moves in, landlords can charge as much as they want, but annual increases are limited, currently to 3%. Comparatively, average L.A. rents rose 11.5% to $2,278 last year — even including rent-controlled units, according to real estate firm Zillow.
That spread means long-time tenants can pay far below market rent, and in today’s drum-tight market may have to pay two to three times more for a new apartment — a disparity that quickly saps even Ellis-mandated relocation fees.
Larry Gross, executive director of Coalition for Economic Survival, said low-income residents often don’t know their rights and get offered less than they are owed under Ellis, if anything at all.
“They get screwed,” he said.
Tenant groups say buyouts are becoming more common. Though there is no data on how often they occur, over the last three years as Ellis evictions soared, half of the nearly 2,700 units landlords removed were vacant, according to city records.
“Our concern is those tenants were either coerced out or bought out,” Gross said. “We assume this is just the tip of the iceberg.”
On Tuesday evening, around 40 advocates and residents fighting to stay in their homes marched down Beverly Boulevard in Koreatown to protest buyouts in the area. To chants such as “Tenants and neighbors under attack, what do we do? Fight back! Fight Back!” passing cars honked in approval.
“Landlords and their representatives will lie to you and tell you that you have to accept the voluntary vacate or cash for keys,” a member of the L.A. Tenants Union bellowed into a microphone. “You have rights.... Don’t sign, don’t move and don’t take the money.”
You have rights.... Don’t sign, don’t move and don’t take the money.
Sometimes landlords or management companies revert to strong-arm tactics to coerce tenants to sign, especially immigrant residents who speak only Spanish, alleged Trinidad Ruiz, a protester and member of the tenants union.
“They are believing everything these people are saying,” Ruiz said. “What they say is, ‘We are going to turn off your power, we are going to call immigration on you.’ ”
On Wednesday, the Los Angeles City Council took action to help such tenants, voting to have the city attorney draft an ordinance to require landlords to file buyout agreements with the city and inform tenants of their rights when offering such deals.
The ordinance would allow tenants to change their minds within 30 days of accepting a buyout. If a landlord fails to notify tenants of their rights, the buyout could be negated at any time, with owners subject to prosecution or a civil suit from tenants.
The Apartment Assn. of Greater Los Angeles said it supports the notifications, but opposes the proposal over fears that individual buyout agreements would be public once filed with the city.
“Harassment absolutely should not be taking place and people should know their rights,” said spokesman Fred Sutton. But “public disclosure of private agreements is concerning.”
The proposed ordinance still must return to the Council for final approval.
Tenant advocate Gross said the measure would help tremendously, though it’s not a cure-all.
Teresa Cedillo, 48, who had joined the Tuesday protest, said she was one of those tenants.
She signed a $10,000 buyout agreement in May after she said she was harassed and told different explanations for what would happen to the rent-controlled unit she’s called home for 16 years. She said a representative of her new landlord first told her she had to pay for renovations if she didn’t sign, and later that the building would be demolished.
“I signed it because every day, she was showing up at my door,” said Cedillo, who pays about $630 for the single unit she shares with her son. “I felt desperate, so I signed it.”
At the moment, Cedillo still lives at the East Hollywood unit and is working with Popp to get more money. “You have to sign or the sheriff will evict you,” Popp said Cedillo was told.
Gary Goren, co-owner of Cedillo’s building, said he’s offering buyouts so he can renovate a run-down property, calling Cedillo and Popp’s version of events “totally false.”
He said he told tenants, including Cedillo, that they didn’t have to accept a buyout, though he acknowledged he wasn’t present every time his representatives discussed the issue.
“It’s all about the money,” he said, contending that Cedillo was “very happy” with the buyout until an attorney arrived.
But Cedillo said she doesn’t know where she will go. Similar units nearby are going for $1,200 — $570 more than her current home.
If she rented one of those, her current buyout money would be exhausted in about 18 months.
“I’ve been looking, but I can’t find anything because it’s so expensive,” Cedillo said in Spanish.
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Times staff writer Ben Poston contributed to this report.