But first . . . a few disclaimers.
I am not a lawyer. I’m just a super detail-oriented chick whose been through this myself. Also – I don’t know any specifics about your town. All I know is how it all went down for me in Los Angeles. Your city or state might have different rules, or no rules at all. For example, a friend was recently given the boot in Redondo Beach – where there is no rent control. Be 100% sure of the rules in your situation.
There are a whole bunch of people who know more than me, so start here with these helpful links:
*This is a good starting point for negotiation.
*Here is some good analysis on how to figure out how much your place might be worth in a buyout.
* Next, make it your full-time job to find out as much as possible about the laws in your city or state. When I started researching my own buyout, luckily I had the luxury of time. I read a lot online, I made a LOT of phone calls. I reached out to community housing groups and others who’d successfully been through buyouts.
* While you’re at it, also make it your full-time job to research the hell out of your landlord. How many times have they done this in the past? What’s their business plan for your place? Does he/she have an online bio you can read over with a fine-tooth comb and glean any info from? For instance – I took screen shots of my landlord’s website of his architectural plans for our property. I also took screen shots of his actual AirBnB business where he’d converted other places similar to mine. And in his bio, it was clear that he was negotiation savvy. If you suspect your landlord is buying you out to convert your affordable unit into an AirBnb, then you’ve got another great negotiation point, since an action like that might be illegal. Again, you’d have to check your local laws. I even asked for one complimentary week in the refurbished unit after the unit has been made into a short-term AirBnb rental. That let him know that I knew what his plans were. I ended up not getting it, but it felt really great to ask for it.
* Next, run the numbers. This can be scary for some people, so they don’t want to do it, but it’s VERY important. You’re definitely going to be moving to a place that costs a LOT more than that affordable unit you have now. Find out about how much a comparable unit in your neighborhood would be. How much more is that than your current rent? Add about 18 months’ worth of the difference in old rent vs new rent to your budget. Next, rack your brain and think of any costs you can associate with moving. I mean everything, including cost to board your pets while you move. Add in your original deposit plus interest for the years it’s been held. (In Los Angeles you are entitled to the interest.) You don’t want to have to haggle about the deposit after all this negotiation, so add it in now.
Add in movers, moving supplies, cost of new things you’ll need in the new place, lawyers fees and do not forget TAXES (you will have to pay state and federal taxes, so add it in as a line item expense) . . . add in any damn thing you can think of. Then add a contingency fee of 10%. Then add a 20% negotiation pad to your bottom line number. In the end, your number should be high, way higher than what you’d ever expect to get. This is part of the ‘dance.’ But then again, you don’t want that number to be so ridiculously high that negotiations fold. Keep it on the high end of real.
* Find other people who’ve been through a successful rent control buyout negotiation in your market. Pick their brain. Preferably friends – as these negotiations can involve large sums of money. For instance, I’m not going to freely publish how much my own buyout was . . . but if a friend asked, I’d gladly tell them. Use your friends’/contacts buyout numbers as a guide for your own sweet spot for what you’ll take.
* Keep a file folder handy that includes all your budgets, research, contacts, scrawled notes, screen shots and don’t forget your lease – very important!
* You do have a copy of your lease, right? Some people don’t or worse yet, were not offered one. Get it asap. And know the terms of it inside and out. Because once you start this negotiation dance, you MUST ‘keep your nose clean’ as my lawyer told me. For instance, if there is a nuisance clause in your lease, you better not have any crazy parties any time soon.
* Oh, yeah: get a lawyer. Do your homework and hire the right person. You aren’t going to hire a personal injury lawyer for a rent control buyout. And you probably don’t want to arbitrarily hire Joe Schmoe or a vague friend of a friend. Honestly, lawyers for lease buyouts are sort of difficult to come by.
* You have two lawyer strategies. You can hire a lawyer to do all the negotiation for you and they will get a percentage fee for doing so. My neighbors found a lawyer who was involved in a positive outcome for the tenants of a famous Venice case – a good choice for them. But not for me, because . . .
I was fairly confident I could successfully negotiate for what I wanted. So I went with strategy #2 and hired an hourly lawyer because I just needed a trained legal professional to look over the contract and make sure there were no loopholes in the landlord’s favor. I made about a dozen phone calls before I found the right lawyer and asked a lot of questions. Ultimately, I picked someone who called me back right away and who I had a great phone rapport with. I was very up front with him and told him exactly what I needed him to do and what my concerns were. I also pointed out that I was happy to pay his rate but that I was counting on him to work expeditiously. I was not disappointed. In an effort to work more quickly, he even asked me to get a word document of my contract. Do this if you can. It will save your lawyer hours of silly document editing time. Pro-tip: there were cheap lawyers in the phone book who say they ‘specialize’ in tenant rights. I did NOT pick one of those guys. You’re gonna have to pay well for good legal help.
* Weigh your options. Do you really want to move? You may not have to. In my case, I felt like the offer would never come again. I also didn’t want to dig my heels in and fight the LONG fight that was sure to come. I just didn’t have enough energy for that. But maybe you do. In many instances, when a buyout offer comes, you can peacefully decline. But be prepared for a lot of push-back. Things may not get fixed in your apartment, which could be a giant pain for you to deal with or worst case scenario – resulting in an issue which could be damaging to your health. (ie, leaky, moldy roof, etc)
* Call any friends you have who are good at negotiation. I called a friend who has an MBA, because I know she took classes in negotiation. She taught me to always know your BATNA. BATNA is an acronym: Best Alternative To The Negotiated Agreement. Knowing your BATNA lets you know how far you can push.
* Be civil. I know, it’s hard. That jerk of a landlord wants you to move! The nerve! You can get mad. In fact, I think you probably should get mad. But always, be nice. Be firm. But be civil. This is a dance. You want to get what you want.
* Brevity. Your landlord probably offered you a sum. Of course you want to counter-offer*, and counter offer in a ridiculously high but not absurdly high range. Keep it brief. Just say something along the lines of “The number that makes me comfortable to leave my home of X number of years is X.” Do not give a lot of exposition to justify yourself. Do NOT give your budgets to your landlord. Those are for your use only. Do mention the number includes your deposit plus interest, though. *Note: make absolutely sure that you really do have rent control before you start the real, numbers-based negotiation.
* Keep bouncing numbers back and forth until you get into that range of what you wanted for a buyout. And obviously, this is most likely not going to be your high number that included the negotiation pad. That’s what the negotiation pad is for, so you can make your initial offer ridiculously high and then dance down to the range you really want. That’s the goal.
And one last thing, something that a friend helped me understand. Sometimes, these numbers sound like big numbers to us renters, but to a landlord who stands to make a LOT, a ridiculous lot of money by kicking you out, these numbers are not high to them. Your landlord may cry that they ‘don’t have the money’ but these numbers don’t really mean a lot to them. They may even be able to write it off on their taxes. They probably have a line item in their budget for your buyout.
GOOD LUCK with your buyout. It could be a little bit of a silver lining.
Is there anything I forgot? Please post your own advice in the comments below.