The City of West Hollywood's Rent Stabilization Ordinance has been in effect since June 27, 1985, and regulates the amount of rent that can be charged for most rental units in the city. The Ordinance also makes certain specific requirements of owners when property is purchased in the City. This fact sheet highlights those requirements as well as provides additional information real estate brokers may require. Failure to comply with these requirements may result in liabilities for owners as well as their representative agent. This is not intended to be a substitute for legal advice or reading the Rent Stabilization Ordinance and Regulations.1) Rental Units Covered Under The Ordinance.
Most residential rental units in the City are subject to the Ordinance. This includes, but is not limited to, apartment complexes, condominiums, duplexes, and single family homes. Buildings with a certificate of occupancy first issued after July 1, 1979, government subsidized housing, units rented to transient guests of certain hotels, motels or rooming houses, and other institutional facilities are not subject to most provisions of the Ordinance.Please contact the Department regarding the registration requirements and current status of any specific property. Also note that relocation benefits as described in Section 6 of this fact sheet apply to all residential rental units in the City, including those with a certificate of occupancy issued after July 1, 1979.
2) Registration of Rental Units
All rental units that are not exempt under the Ordinance must be registered with the City of West Hollywood. Failure to register a unit will prevent the property owner from utilizing many provisions in the Ordinance, and will subject the owner to monetary penalties and possible criminal prosecution. The property file which contains all the registration and correspondence on the property may be reviewed at the Department of Rent Stabilization during normal business hours.3) Escrow Requirements
A seller of rent stabilized property is required to deposit in escrow the following documentation:
- A list setting forth the Maximum Allowable Rent for each and every rental unit on the property;
- A certificate of compliance or a statement of non-compliance with the Ordinance and Regulations;
- A list of all applications pending with the Rent Stabilization Department and any legal actions that have been filed by the Department regarding the property.
If a unit does not have a base rent, and is owner or employee occupied, it is advisable to secure an affidavit from the seller that the particular unit has not been rented since January 1, 1984. For assistance in obtaining any of the above information, please call the Department at (213) 848-6450.
4) Change In Ownership
Upon change in ownership, the new owner of the property is required to notify both the City and tenants within thirty (30) days by filing a Property File Amendment with the Department and providing a copy to each tenant. Please contact the Rent Stabilization Department for the form and for any additional details regarding ownership of the specific property.5) Interest On Security Deposits
Property owners are required to pay tenants interest on all monies being held on deposit, regardless of what they may be called (last month's rent, damage deposit, cleaning fee, etc.). The interest rate is determined by the market, and announced by the Rent Stabilization Commission by September 1 of each year. Such interest will then be payable by January 31 of the following year, or when a tenant moves out, whichever comes first.Before purchasing rental property, a buyer should make sure that all security deposits and interest on all security deposits have either been paid to the tenants or are being transferred to the buyer with the transfer of title. The buyer may be responsible for paying such amounts even if they are not received from the seller.
6) Buying Rental Property For Owner Occupancy
The City of West Hollywood has very specific requirements when an owner or relative wishes to move into an occupied rental unit:
- 90 days written notice must be given to the tenant accompanied by a relocation fee that ranges from $2,000 to $5,000 dollars.
- The buyer must wait until escrow has closed before they can serve the written notice to the tenant.
- There must not have been an owner or relative occupancy eviction, for that particular property, within the last six years (regardless of changes in ownership).
- The owner must be a real person and possess legal title to at least 50% of the property.
7) Registration Fees
A registration fee of $120.00 is due on July 1 of each year for each unit which is subject to the provisions of the Ordinance. The penalty for late payment of the registration fee may be as much as 100%, depending upon when the fees are received.One half of the annual registration fee may be passed on to the tenant in twelve (12) equal monthly installments of $5.00. Certain senior or disabled property owners may be eligible to have registration fees waived by filing a Registration Fee Deferral application with the Department.
Property owners may file an Exemption Application to waive the Registration fees on certain units, such as, owner or relative occupied units and units subsidized by the government (Section 8 Housing Vouchers, for example).
Potential buyers of rental property should make sure all past and current registration fees are paid before acquiring title. The new owner may be liable for delinquent registration fees even for time periods predating the transfer of title.
8) Condominium Purchases
Where the sale involves a condominium, call the Department and verify whether or not the unit has ever been registered as a rental. If it has, ask for the Maximum Allowable Rent (MAR). Please note that on condominium conversions, there are no provisions in the law that allow you to change the MAR merely on the basis of the conversion. If the unit has never been rented, it is advisable to get an affidavit from the previous owner stating the unit has been owner or relative occupied since January 1, 1984. Homeowner Association fees may not be passed on to the tenant as an additional rental charge above the MAR.
Things To Check:
- Is the unit/building subject the Ordinance?
- If so, are the registration fees paid?
- Provide the buyer with a list of the Maximum Allowable Rents for the property along with information on any pending applications or legal actions involving the property and the Department.
- If the unit has never been a rental, but would fall under the jurisdiction of the Ordinance should it ever be rented, get an affidavit from the seller that the particular unit or property has not been rented since January 1, 1984.
- Provide a Property File Amendment and Exemption Application (if the owner is to occupy a unit) for the buyer to complete and return to the Department within 30 days of the close of escrow. A copy of the completed Property File Amendment should be provided to each tenant on the property as well.
- Deposit in escrow or return to the tenant all security deposits and interest on those security deposits.
The Rent Stabilization Ordinance is amended periodically. Tenants and property owners are encouraged to contact the West Hollywood Rent Stabilization Department for the most current version of the Ordinance. This fact sheet is one in a series published by the City of West Hollywood's Rent Stabilization Department.
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