Can I sell an RSO building with tenants in place?

Short answer: Yes. You can sell a rent-stabilized (RSO) building with the tenants in place. A sale is not one of the legal reasons for ending an RSO tenancy that the Los Angeles Housing Department lists, so the tenants stay and the buyer takes the building with its current rents and RSO obligations. Source: LAHD RSO overview.

Is my building under the RSO?

Per LAHD, the RSO generally applies to rental properties in the City of Los Angeles first built on or before October 1, 1978. That includes apartments, duplexes, two or more houses on one parcel, and residential units attached to a commercial building. Properties outside the City follow their own city or county rules.

What a buyer will check

• Registration: every unit rented or offered for rent must be registered with LAHD each year. Buyers compare your rent roll with the registry.
• Rents: RSO rents can rise once every 12 months by the allowable percentage LAHD publishes. A unit can go to market rent when a tenant moves out voluntarily or accepts a buyout agreement.
• Records: leases, the rent roll, registration certificates, and any LAHD filings.

After closing, LAHD gives the new owner 45 days to register the property.

Buyouts before a sale

LAHD requires an RSO disclosure notice for all cash-for-keys and buyout agreements. Get legal advice before offering one.

More: how an apartment building sale works, Measure ULA, and a free broker opinion of value.

General information, not legal or tax advice.