When values were soaring, many California landlords have taken advantage of the increases in the values of their apartment buildings by turning the units into condominiums and selling them. To understand why, let's do the math. A 10 unit apartment building may be worth one million dollars (as an apartment building). After the same building is converted to 10 individual condos, each unit may sell for $200,000.00 or more. 10 units times 200,000 each is two million dollars. Therefore the building just doubled in value by converting it! Even with permits, renovations and costs of the sales, the building becomes worth so much more than it was as an apartment. The downturn in the economy since 2007 has slowed this practice down significantly but they are still out there and will probably come back during an economic recovery.
As a tenant, you have many rights including relocation benefits in some cases. Many landlords may try and take away your rights by forcing you to move out without all the required notices or simply by the harassment of construction activities during renovation. Many times, the tenant is entitled to significant benefits including compensation and more time to look for a place to live. At the Tenants Legal Center, we routinely assist tenants being faced with issues arising from condominium conversations. Seek advice if you feel you are not being treated properly. Remember to protect your rights before you lose them.
Impact of Foreclosure
Many condominiums that were converted were purchased by homeowners looking to own their own home and investors looking to make some money on the real estate boom which ended in 2005-2006. The investors rented the units to tenants. Both homeowners and investors saw the values decline so much that they simply could not or decided not to pay the mortgages and fell into foreclosure. If you are renting a condominium that may be impacted by foreclosure, you have rights.
Tenant notice requirements:
Apart from normal eviction notice requirements, all tenants to be evicted because of condominium conversions are entitled to extensive written notices which must be in correct form including.
(a) 60-day notice before filing tentative tract map application:
(b) 10-day notice re application for public report:
(c) 10-day notice of final map approval: .
(d) 180-day notice before termination of tenancy:
(e) 90-day notice of exclusive right to buy:
Prerental notice to prospective tenants:
Before execution of a rental agreement in a complex already approved for conversion and that are being offered for sale, the landlord must give any prospective tenants a notice (in 14 point type) advising: "The unit you may rent has been approved for sale to the public as a condominium project . . . The rental unit may be sold to the public, and, if it is offered for sale, your lease may be terminated. You will be notified at least 90 days prior to any offering to sell. If you still lawfully reside in the unit, you will be given a right of first refusal to purchase the unit." The complex (i.e. condo project) "shall not" be referred to in rental agreement as an "apartment" on or after date of final map approval for condo conversion
90-day notice of intent to sell:
Tenants who rent after final map approval (above) must be given at least 90 days' written notice of the intent to sell their rental units to the general public.
Right of first refusal to purchase:
Further, tenants who rent after final map approval must be given notice of a right of first refusal to purchase their units on the same or more favorable terms and conditions initially offered to the general public.
Individual Cities may provide for relocation benefits to affected tenants.
City of San Diego Relocation Benefits
In the City of San Diego, the landlord must pay low income tenants displaced by condominium conversions relocation funds equal to 3 months of rent when the vacancy rate is below 7 percent. To be eligible, tenants must have been a renting that unit "...on the date of mailing of the notices of the hearing on the application for the tentative map and, were also tenants on the date that the applicant gave notice to vacate the premises for the purpose of converting the
affected unit or units." See SDMC 144.0505 (b)
USEFUL LINKS FOR MORE INFORMATION
San Diego Municipal Code (SDMC) - Condominium Conversions
San Diego Housing Commission Tenant Information
City of San Diego Notice requirements
City of San Diego INFORMATION BULLETIN 539
San Diego Housing Commission Information for landlords
City of San Diego information for landlords
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California law for San Diego is applied in these pages. Such laws may or may not be applicable in other jurisdictions. The information provided herein is of a general nature and is not intended to be taken as specific legal advice. For legal advice in a particular situation, promptly consult with an appropriate attorney.