SB-91’s Impact on Sales of Residential Property That Are Tenant Occupied

SB-91’s Impact on Sales of Residential Property That Are Tenant Occupied

By: Laura E. Ferret, Esq.

April 6, 2021

As part of our series on the ever-changing atmosphere of landlord tenant law during the COVID-19 pandemic, today we will discuss the options available to property owners who want to take their properties off the rental market and sell them instead. These owners are faced with a maze of restrictions when it comes to terminating the tenancy of the tenant occupying the property. However, if done correctly, landlords can successfully evict their tenants despite the eviction moratorium currently in place in California.

As many know, on January 29, 2021, the California legislature passed Senate Bill 91 which extended the state’s eviction moratorium through June 30, 2021. Under SB-91, a tenant may only be found guilty of an unlawful detainer for certain reasons which are enumerated under the law. In essence, the law extends the “just cause” eviction requirements contained within the 2019 Tenant Protections and Relief Act to nearly all rental property owners. Typically, owners of single-family residences were not subject to this law and did not need to give a reason for terminating the tenancy of a tenant outside of a termed lease. Under SB-91, a property owner must give their tenant a notice of termination of tenancy that lists one of the just cause requirements found in the law in order for a Court to find that tenant guilty of an unlawful detainer if the tenant refuses to leave.

Many landlords mistakenly assume that simply conveying their intent to sell the property will be enough to evict their tenant during the COVID eviction moratorium. Not quite. The landlord must first find a buyer who intends to occupy the property themselves. The owner must then wait to give the tenant a notice of termination of tenancy until after the property is sold. Once the property is in escrow, the landlord may give the tenant a 30-day notice to terminate tenancy. If the tenant does not leave voluntarily before the 30-day period expires, the landlord may ask the Court to find the tenant guilty of an unlawful detainer, even during the eviction moratorium.

But, how does the landlord find a buyer for the property while the tenant still occupies it? The answer lies within a little-known provision of California Civil Code Section 1954, which states that a landlord may give the tenant a 120-day notice of the landlord’s intent to sell the property. California Civil Code Section 1954(D)(2). Once this notice is given, the landlord or their agent may enter the property upon a 24-hour notice for the purpose of showing the property to actual or prospective purchasers or their agents. Section 1954 usually only permits the landlord to enter the property during normal business hours (Monday through Friday 8AM to 5PM). However, California Courts have held that as a matter of law, landlords who use this notice are able to enter the property for the purpose of holding open houses on weekends, as hours during the weekend are normal business hours in the real estate industry. See Dromy v. Lukovsky, 219 Cal. App. 4th 278, 286 (2013).

It is not known at this time whether the eviction moratorium currently in place through the end of June will be extended yet again. Owners who want to take advantage of the current market conditions and sell their property quickly should take great care in ensuring that the proper notices are given to their tenants.

The information presented in this article is not to be taken as legal advice. Every situation is different. If you are facing a legal issue of any kind, get competent legal advice in your state immediately so that you can determine your best options.

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