Clients thinking about terminating their resident manager often want to know whether they will be able to evict after they end the resident manager’s employment. A simple question but — even ignoring any Covid eviction rules — one that does not always have a simple answer. Many factors come into play and, even after those factors are sorted out, the answer sometimes remains frustratingly unclear.
So, I invite you below into my world – the world of legal analysis – as I explore how this question might play out both under the Los Angeles Rent Stabilization Ordinance (RSO) and the California rent control rules. My goal is for you to come away with at least a sense of the different factors that play a role in answering this deceivingly complex question.
Resident Manager Under L.A. RSO
Let’s start with a common example. Assume you own or manage an apartment building in the City of Los Angeles that is subject to the Los Angeles RSO. You hired a resident manager, but he is not working out as you hoped and you want to replace him. The problem, of course, is that he is living in the apartment unit you need for his replacement. So, can you evict?
Under the Los Angeles RSO, an on-site manager, under certain circumstances, obtains the rights of a regular tenant – meaning he can be evicted only for certain RSO-permitted reasons. These rights kick in under the following circumstances: if he already was a tenant when you hired him as a manager, if you granted him tenant rights in a written agreement (like a lease), if you allow him to remain as a tenant after you end his employment or, if during his employment, you did not give him a completely free apartment and pay him the California minimum wage (i.e., no rent credit).
This last point is worth repeating. In the City Los Angeles, how you pay your on-site manager may impact whether you can automatically evict him when his employment ends. HCIDLA’s position is that the RSO’s tenant protections apply to an on-site manager unless he “receives compensation in the form of free rent plus income that meets the minimum wage standards of the State of California.” As an interesting side-note, it does not seem necessary to pay the manager the City of Los Angeles’s minimum wage – but rather only that of the State (the city’s minimum wage has historically been higher than the State’s).
Resident Manager Under California Rent Control
Now let’s assume the same set of facts – except your building is not subject to the Los Angeles RSO, but rather is subject to the California Tenant Protection Act – otherwise known as “AB 1482” or California’s rent control law.
AB 1482 requires “just cause” to evict a tenant who has “continuously and lawfully occupied an apartment for 12 months.” The law defines “just cause” to include when an employee fails to move out after his employment ends, assuming – and here is the big caveat – that he “became the occupant … as a[n] … employee” and you lawfully terminated his employment.
What’s the Difference?
If you are paying attention, you probably noticed several differences between AB 1482 and the Los Angeles RSO. First, under the RSO, a tenant obtains tenant rights immediately; there is no 12-month waiting period. Second, unlike the RSO, AB 1482 contains no limitations on how you can pay a resident manager to avoid providing him tenant rights. Seemingly, unlike under the RSO, you can charge a resident manager rent (in an amount permitted by law) or use a rent credit to pay him without granting him any tenant rights by doing so.
However, while AB 1482’s lack of specificity perhaps makes it in some ways more flexible for property owners than the Los Angeles RSO, that same lack of specificity also creates some uncomfortable gray area where the law is not yet developed or clear.
For example, presumably you cannot evict an on-site manager – even after the employee/employment relationship ends – if he already had lived in an apartment building as a tenant for more than 12 months before you made him a resident manager (I say “presumably” because the alternative result – that you can evict someone in that situation – would seem to defy common sense, run counter to the language of the statute, and invite mischief). However, what if an existing tenant became your resident manager after living in his apartment for nine months (i.e., he had not yet reached AB 1482’s 12-month threshold) and, two years later, you fire him (and want to evict him)? On the one hand, he is/was a “tenant,” which the law defines as someone who lawfully occupied residential real property (and includes someone with a lease or sublease). He also will have “continuously and lawfully occupied an apartment for 12 months.” On the other hand, he arguably did not “continuously and lawfully occup[y]” that apartment as a tenant for 12 months – because he became an employee after only nine months. I can imagine arguments on both sides of this issue, and there is no way to know yet how a court would view it.
Another difference between the Los Angeles RSO and AB 1482 is that the RSO explicitly allows you to evict an existing resident manager and, in some circumstances, a tenant, to put in a new manager. However, AB 1482 seemingly does not. Its definition of “just cause” to evict a tenant does not include evicting to hire a new manager, and it therefore would appear to be unlawful under AB 1482 to evict a tenant or existing resident manager (who previously was a tenant) even to replace him with a new on-site manager. But, again, I am not aware of any cases that have tested this.
All this suggests two things: (1) if your lawyer answers your resident manager eviction question with several of his own questions, he simply is doing his job; and (2) to the extent possible, you should think through all of these issues when hiring, because who you hire and how you do it may have serious ramifications on your ability to evict later on.
Gary Ganchrow chairs the Litigation Department at the 107-year-old downtown Los Angeles law firm of Parker Milliken Clark O’Hara and Samuelian, served as an Adjunct Professor at the USC School of Law, and is a frequent contributor to AOA Magazine. He regularly advises on, litigates and writes about a variety of employment, property management and business matters, and can be reached at 213-683-6535 and [email protected]. This article is for informational purposes only and should not be considered legal advice or establishing an attorney-client relationship.