If you own or plan to own real estate in California, understanding the legal landscape is critical. Recently, I sat down with real estate attorney Sara Naheedy to dive into key issues facing today’s housing providers — from tenant law and eviction options to cash-for-keys agreements, partnerships, and protecting yourself from lawsuits.
Whether you’re a seasoned landlord or a first-time investor, these insights could save you thousands of dollars and a lot of headaches.
2025 Real Estate Legal Trends: What Landlords Are Facing
Sara highlighted that landlord-tenant issues continue to dominate her caseload. Particularly:
- Rent control regulations: Many small landlords (those owning 1–4 units) often misunderstand how rent stabilization ordinances impact their ability to raise rents or terminate tenancies.
- Due diligence failures: One client bought a fourplex in Los Angeles without realizing it was subject to strict rent control laws. His agent didn’t disclose it, leading to major financial consequences.
- Relocation costs: If you want to terminate a tenancy in cities like Los Angeles, you could owe tenants $20,000–$30,000+ in relocation fees — a huge surprise if you’re unprepared.
This shows how crucial it is for both buyers and owners to do thorough due diligence before purchasing and always work with experienced professionals.
Terminating a Tenancy: What You Can and Can’t Do
California’s Tenant Protection Act (TPA) places limits on when you can terminate a tenancy. Acceptable reasons include:
- Owner or family member move-in
- Substantial remodels (with permits)
- Removing the property from the rental market
If your property falls under the TPA, you must give proper notice and pay relocation assistance — typically one month’s rent minimum, or more depending on local ordinances.
However, if your property is exempt (e.g., a newer build or a single-family home not owned by a corporate entity), you can terminate a tenancy without providing a specific reason and without paying relocation.
Sara also discussed Cash-for-Keys agreements, a popular alternative to formal eviction notices. In this strategy, landlords offer tenants money to voluntarily move out. It’s legal, private, and often smoother than formal eviction routes — but you need a proper written agreement to protect both sides.
Best Practices for Cash-for-Keys Agreements
Sara gave a real-world example of a Bellflower property where tenants accepted $5,000 each to vacate within 30 days. Here are some key takeaways:
- Negotiate directly if you’re comfortable — it can save legal fees.
- Use bilingual agreements if necessary, especially in diverse areas like Southern California.
- Stay professional — if you’re emotionally tied to the property or uncomfortable negotiating, bring in an attorney or experienced third party.
A well-drafted Cash-for-Keys contract protects you from tenants later claiming they didn’t understand the agreement or were coerced.
Why Buyers Fear Tenant-Occupied Properties
One major challenge sellers face today is that buyers often want at least one unit vacant. There’s a common fear that once you own a building, you won’t be able to remove existing tenants — but Sarah emphasized that’s not true.
If done properly — with lawful reasons and the correct notices — new owners can:
- Move into units themselves
- Perform substantial renovations
- Negotiate move-outs through Cash-for-Keys
Often, approaching tenants with honesty and empathy (and fair financial offers) results in smoother transitions.
Sara’s advice: Have these conversations early, before listing the property. This way, you’ll know which tenants are open to relocating, improving your chances of a successful sale.
How to Hold Title: Individual Name vs LLC
Another hot topic is how to hold investment properties — should you create an LLC?
- Starting out: It’s fine to hold your first rental property in your personal name, especially if you’re just learning.
- Long-term: Once you become more seasoned, moving the property into an LLC offers liability protection in case a tenant sues you.
- Insurance: Regardless of ownership structure, always carry ample liability insurance. California is a very litigious state, and lawsuits are common.
Every situation is different, but generally speaking, the more properties you own, the more crucial an LLC becomes.
Partnerships: A Cautionary Tale
Forming partnerships (e.g., buying with a sibling or friend) can be powerful — but dangerous without proper planning.
Sara stressed: Put everything in writing before you buy.
Without a partnership agreement:
- You could end up in court over disputes.
- You could be forced to sell the property through partition lawsuits.
- Dividing proceeds, assuming loans, or buying out a partner becomes messy and expensive.
Having a clear exit strategy upfront — like a right of first refusal or a buyout plan — can save the relationship and the investment.
Short-Term Rentals: A Growing Trend (With Risks)
In Long Beach, short-term rentals (Airbnbs) are still thriving. Buyers often purchase multifamily properties intending to short-term rent one unit while traditionally renting others to maximize cash flow.
However, Sara warned: Managing short-term rentals requires diligence. One of her clients lost valuable rental licenses because a property management company forgot to renew them — destroying the property’s income stream and value.
Her advice:
- Stay on top of renewals yourself, even if you hire a management company.
- Understand the city’s rules (e.g., Long Beach allows one short-term rental per property, while other cities might be stricter).
Selling Properties: Disclose, Disclose, Disclose
When selling, Sara’s #1 piece of advice is: Over-disclose everything.
Common examples of what you must disclose:
- Past roof leaks or repairs
- Sewer line backups
- Major insurance claims
- Any habitability issues
Failure to disclose material facts is the #1 reason brokers and sellers get sued. Better to be overly transparent upfront than risk litigation later.
Final Words: Who You Work With Matters
Sara concluded the interview with this crucial point: “Who you work with matters.”
Whether you’re buying, selling, or holding investment property, work with:
- A knowledgeable real estate agent
- An experienced real estate attorney
- Trusted lenders and inspectors
The right team ensures you’re fully protected and sets you up for long-term success.
How To Contact Sara Naheedy
https://www.saranaheedylaw.com/
