Not raising rent for 10 years in California

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bb201
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Not raising rent for 10 years in California

Post by bb201 » Tue Jul 18, 2017 7:18 pm

A friend of ours that has several rentals in California told my wife that if the landlord does not raise the rent on a tenant for 10 years that the tenant can claim ownership of the house. I find this very unlikely. Has anyone heard of anything like this?

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Pajamas
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Re: Not raising rent for 10 years in California

Post by Pajamas » Tue Jul 18, 2017 7:22 pm

Sounds like an urban myth based on adverse possession.

http://www.nolo.com/legal-encyclopedia/ ... ornia.html

Helo80
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Re: Not raising rent for 10 years in California

Post by Helo80 » Tue Jul 18, 2017 7:24 pm

I suppose if an owner fails to collect rent for 10 years..... but I mean, fails to raise rent assuming the lease is renewed at every specified period of time?

I think that you friend is confused, though I'm not a lawyer.

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prudent
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Re: Not raising rent for 10 years in California

Post by prudent » Tue Jul 18, 2017 7:32 pm

Perhaps your friend got that story confused with the one where AirBNB renters in California refused to leave after they rented a place for a little over a month.

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arcticpineapplecorp.
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Re: Not raising rent for 10 years in California

Post by arcticpineapplecorp. » Tue Jul 18, 2017 8:03 pm

bb201 wrote:A friend of ours that has several rentals in California told my wife that if the landlord does not raise the rent on a tenant for 10 years that the tenant can claim ownership of the house. I find this very unlikely. Has anyone heard of anything like this?
1. Has s/he (your friend) not raised the rent in 10 years? I.E., if s/he has raised rents during a 10 year period, why is s/he even worried?
2. If s/he has not raised the rent in 10 years, why not (especially in California where prices seem to only go in one direction)?
3. Has a tenant said something to your friend directly about this? If not, why worry about a problem that doesn't exist?
4. If the tenant has said this, they have one or two intentions: a. claim ownership to no longer pay rent to landlord, b. try to sell the house to another because they claim ownership. If they do "a", landlord follows eviction procedures as per lease. If they do "b" do you think the tenant will actually be able to sell a property s/he doesn't have free and clear title to?
5. If your friend is worried about this, why has she consulted your wife and not an attorney? I'm assuming your wife is not a real estate attorney.
6. Most importantly, if your landlord friend has several properties and doesn't understand 1-5 above, maybe s/he shouln't be in the landlording business?
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Re: Not raising rent for 10 years in California

Post by Grt2bOutdoors » Tue Jul 18, 2017 8:14 pm

bb201 wrote:A friend of ours that has several rentals in California told my wife that if the landlord does not raise the rent on a tenant for 10 years that the tenant can claim ownership of the house. I find this very unlikely. Has anyone heard of anything like this?
Have your friend point to the California statute that describes this. Just like you can't believe everything you read, you can't believe everything you hear either. There's gold and there is fool's gold. Your friend is trying to sell you the fool's gold. Renters can not obtain rights to a propety they rent through adverse possession.

http://www.dca.ca.gov/publications/land ... g-in.shtml

http://www.dca.ca.gov/publications/lega ... lt-2.shtml

^^^ Nothing there talks about it. However, this link does - pay careful attention to point 2. "Renters cannot be adverse possessors of rented property, regardless of how long they possess it. https://www.law.cornell.edu/wex/adverse_possession
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Goal33
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Re: Not raising rent for 10 years in California

Post by Goal33 » Tue Jul 18, 2017 8:26 pm

Luckily nothing to worry about because rent in CA goes up every year with few exceptions.
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2retire
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Re: Not raising rent for 10 years in California

Post by 2retire » Wed Jul 19, 2017 10:19 am

Deleted.

ResearchMed
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Re: Not raising rent for 10 years in California

Post by ResearchMed » Wed Jul 19, 2017 10:23 am

2retire wrote:Although it may be unusual, it isn't necessarily out of the question. All landlords aren't out to make massive profits and get as much as they can out of a tenant.

I lived in the same apartment in a HCOL area for 8 years and never had a rent increase.

Another person I know has lived in the same apartment for 10 years at the same rate. When the tenth year came, the landlord actually lowered the rate by 10% saying the person had been a good tenant all those years.

My grandmother rented out an apartment to the same tenant for 20+ years at the same rent.
Having a very good tenant can more than compensate for getting the "highest possible" (or "legally allowable") rent.
Pushing rent to a maximum can end up with sometimes sketchy tenants.
Slightly below market rent can give an owner a much better "choice" of prospective tenants.
Additionally, keeping the same tenant reduces a variety of "turnover costs".

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celia
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Re: Not raising rent for 10 years in California

Post by celia » Wed Jul 19, 2017 4:59 pm

Have you ever heard of rent-controlled properties? San Francisco is full of them. As long as you stay in the unit you are renting, in a rent-controlled building, your rent cannot go up. New renters get the increased rate.

Would that mean that everyone who stayed in their unit for 10 years would get to own it? Does that make sense?

Hey, then maybe they can rent out their "new unit" at a higher price to someone else!

RECAP: First you punish the landlord for foolishly owning a rent-controlled building. Then you slowly take each unit away from him. Then the old tenants get the rents that the landlord should have been entitled to all along.

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White Coat Investor
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Re: Not raising rent for 10 years in California

Post by White Coat Investor » Wed Jul 19, 2017 5:30 pm

Why anyone would buy a rent-controlled building as an investment is beyond me.
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Thesaints
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Re: Not raising rent for 10 years in California

Post by Thesaints » Wed Jul 19, 2017 5:36 pm

White Coat Investor wrote:Why anyone would buy a rent-controlled building as an investment is beyond me.
People buy gold and that has lower chances of appreciation.

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Pajamas
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Re: Not raising rent for 10 years in California

Post by Pajamas » Wed Jul 19, 2017 7:10 pm

White Coat Investor wrote:Why anyone would buy a rent-controlled building as an investment is beyond me.
The price of rent-controlled buildings takes rent control into account. It's no different than buying a building that is in an undesirable location or is in poor location, the market price incorporates that factor.

I don't know much about rent control on the West Coast, but in NYC, it is individual apartments rather than entire buildings that are under rent control or rent stabilization. An apartment being under rent control is not necessarily permanent. There may be succession rights for co-tenants but an apartment frequently becomes free market when a tenant moves or dies. Many regulated apartments have market rents that are actually lower than the highest permissible rent. It is also not true that there are no rent increases on regulated apartments, it's just that there are either limits on the increase or the increase is determined by a board on an annual basis and takes into account a landlord's costs such as taxes and fuel. (Occasionally there is no increase for rent controlled apartments.)

There is actually a market in NYC for rent controlled apartments where the tenant pays well under the monthly maintenance charges, to say nothing of the cost of the apartment itself. The investor gets to take advantage of a hefty tax benefit from the losses until the apartment is eventually deregulated and dramatically increases in value.

Unscrupulous landlords often buy buildings under rent regulation and neglect maintenance and even harass the tenants to try to get them to move out. Tenants are then forced to take the landlord to court repeatedly just to get basic services such as heat and hot water. Other landlords will offer buyouts to get tenants to move. That happens frequently when a building is going to be demolished.

"Investors only" is the usual phrase in the listing. Here's an example where the tenant actually pays slightly more in rent than the monthly maintenance charges:

https://www.trulia.com/property/3209149 ... k-NY-10023

Here's one where the tenant pays significantly less than the monthly charges:

https://www.trulia.com/property/3262985 ... k-NY-10016

Notice that most of the listings are pending sale. They seem to get snapped up quickly.
Last edited by Pajamas on Wed Jul 19, 2017 7:21 pm, edited 2 times in total.

DVMResident
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Re: Not raising rent for 10 years in California

Post by DVMResident » Wed Jul 19, 2017 7:17 pm

Former small time CA landlord here. I've read the NOLO CA landlord legal series (they're awesome), much of the CA code around rentals, and have never come across anything remotely resembling this comment. That's such an oddball claim, I can't imagine it's NOLO, other publications, and RE forums would miss such a glaring liability.

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celia
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Re: Not raising rent for 10 years in California

Post by celia » Wed Jul 19, 2017 7:25 pm

White Coat Investor wrote:Why anyone would buy a rent-controlled building as an investment is beyond me.
Yeah, especially since they can get it for free after 10 years! :D

denovo
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Re: Not raising rent for 10 years in California

Post by denovo » Wed Jul 19, 2017 11:53 pm

bb201 wrote:A friend of ours that has several rentals in California told my wife that if the landlord does not raise the rent on a tenant for 10 years that the tenant can claim ownership of the house. I find this very unlikely. Has anyone heard of anything like this?
Lol, no. Are you sure he's actually a landlord. This is one of those goofy things you hear like "a husband and wife can't be charged for the same crime"
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ResearchMed
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Re: Not raising rent for 10 years in California

Post by ResearchMed » Thu Jul 20, 2017 7:08 am

celia wrote:
White Coat Investor wrote:Why anyone would buy a rent-controlled building as an investment is beyond me.
Yeah, especially since they can get it for free after 10 years! :D
:happy

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LadyGeek
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Re: Not raising rent for 10 years in California

Post by LadyGeek » Thu Jul 20, 2017 8:12 pm

This thread is now in the Personal Finance (Not Investing) forum (rent question).
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