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Rental committee considers tenant buyout rules

Original post made on Feb 2, 2019

Mountain View's Rental Housing Committee is investigating a new set of rules for landlords to "buy out" their tenants as a way to sever their leases. This new system would essentially allow apartment owners to pay renters to move out in order to quickly bring rent-controlled units up to market rate.

Read the full story here Web Link posted Saturday, February 2, 2019, 9:20 AM

Comments (14)

8 people like this
Posted by curious
a resident of Old Mountain View
on Feb 2, 2019 at 5:42 pm

OK Here's the question
If you are controlling the rent on a building you are in control of a stock of housing.
If you allow the landlord to buy out a tenant then your housing stock goes down by one unit.
The landlord makes a profit presumably, the tenant makes a profit because he gets money just to get out, but you, the rent controller get nothing, actually a lot less than nothing.
Ok, you maybe not in "business", but you now have one less place for people to live. So to be fair, the tenant who sells a unit should pay something to the rent controller to compensate him for taking a profit from such a 'negative' act.

---when you comment, try to be an adult and think thru the issue rather than vomit up your political opinion - - - thanks!


34 people like this
Posted by Howard
a resident of Cuesta Park
on Feb 2, 2019 at 7:18 pm

Howard is a registered user.

It looks like the city and the tenants already have taken ownership of the property and the Landlord is buying his property twice? How can this be legal in America?


13 people like this
Posted by Howard
a resident of Cuesta Park
on Feb 2, 2019 at 7:45 pm

Howard is a registered user.

If a tenant takes a buyout then the tenant has capital gains or income. Which one and how is the tenant being taxed?

If the city is making this mandatory then the city needs to set up an escrow account on each buyout and should be liable to pay the taxes on money paid to the tenant.
How will the taxes get paid on this buyout?


6 people like this
Posted by Howard
a resident of Cuesta Park
on Feb 3, 2019 at 10:51 am

Howard is a registered user.

O.K. I answered my own question,

The majority of rent control and rent subsidization rules apply only to individual income taxpayers who are using their leased property for personal use. The IRS does not allow these taxpayers to claim capital gains treatment on the lease buyout payment. Instead, the amount of the payment must be recognized as ordinary income in the year received.

Under current IRS rules, this income paid to tenant must be reported by the landlord in the year paid on a 1099-misc. form if the tenant buyout is $600 or more. There are penalties to the Landlord if he doesn't report the payment of income to the tenant and to the tenant for not disclosing this income to the IRS.

This is the law!


4 people like this
Posted by Vacancy decontrol already
a resident of Cuernavaca
on Feb 3, 2019 at 1:22 pm

State law (not repealed this last November) prohibits local rent control that regulates the initial rent to a new tenant after a lawful vacation of the unit. It is sonetimes called mandatory "vacancy decontrol." Mountain View's rent control law (Measure V) has vacancy decontrol. In that context, deals to leave are legal. In my view, it would be best to make them semi-public so tenants can get a useful deal. So, if the monthly rent is $2,000 below the "market" in Mountain View, tenants might think in terms of the extra $24,000 per year that the landlord will be receiving from a new tenant who has money to burn (but not enough money to buy). Then again, if the landlords manage to get voters to REPEAL RENT CONTROL next year, tenants will not be getting buyouts at all. Most MV tenants will be history.


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Posted by Darin
a resident of Another Mountain View Neighborhood
on Feb 4, 2019 at 2:51 pm

Darin is a registered user.

@curious

Why does the rent controller need to "get" anything. The property owner and the tenant agreed to a mutually acceptable deal. They each got what they wanted. No one else needs to "get" anything.


4 people like this
Posted by More Curious
a resident of Cuesta Park
on Feb 4, 2019 at 4:53 pm

@Curious:

The "rent controller" (by which I assume you mean the city) never has control that unit of housing stock, it just temporarily restricts how the landlord can utilize it, in order to protect the renter that is there. When a landlord "buys out" a tenant, the housing unit doesn't go away -- it continues to be in the housing stock but at a higher (presumably market) price. If the renter moves out for any other reason (e.g., geographical relocation for family reasons) the unit will also continue in the housing stock and will also revert to market price. Therefore, if the tenant moves (for any reason), the "stock of affordable housing" is reduced BUT the stock of *available* affordable housing is unchanged -- i.e., that apartment never is and never will be available as affordable housing stock to anyone other than the tenant who is currently there. The buy-out creates an opportunity for the landlord to bring the rent for the apartment up to market rate AND for the current tenant to get some profit out of it as well. With protections to reduce opportunities for exploitive behavior, it opens the door for a win-win solution.


4 people like this
Posted by Howard
a resident of Cuesta Park
on Feb 6, 2019 at 8:18 pm

Howard is a registered user.

[Post removed due to violation of terms of use]


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Posted by LOL
a resident of Blossom Valley
on Feb 6, 2019 at 8:41 pm

[Post removed due to violation of terms of use]


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Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 7, 2019 at 9:02 am

The Business Man is a registered user.

In respnse to Howard:

You pose a false premise:

You pose the neighbor isn’t paying for the use of the vehicle, like a teant paying for the use of an apartment.

The accurate position is this:

You bought a Mercedes for $120,000.

You leased it to your neighbor for $3,000./month on a month to month lease

You want the car back for some reason.

There is a cost to breaking a contract. Because the neighbor is entitled to the service of the vehicle because they paid for it. Your removal of the services without any opportunity for the neighbor to find an alternative is a surcharge for the break of the contract.

Does this make sense to you?


4 people like this
Posted by Howard
a resident of Cuesta Park
on Feb 7, 2019 at 9:58 pm

Howard is a registered user.

Businessman,

Well the problem is that the city and the tenant already broke the contract prior to the landlord buying back his previous purchased property.

So, how can we have another contract if the city and renter don't acknowledge the first contract?

This is not only illegal under contract law but has created the mess your city lives with.


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Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 8, 2019 at 7:33 am

The Business Man is a registered user.

Howard:

The contract is not broken by any change in laws.

The contract is AMENDED by the laws.

You cannot enforce a contract that contradicts laws.

You are simply not aware that the City, County or State laws cannot break contracts.

All contracts must CONFORM to such laws. This is basic Contract law 101.

Sorry.


2 people like this
Posted by Howard
a resident of Cuesta Park
on Feb 8, 2019 at 8:06 am

Howard is a registered user.

I think it's clear enough to see the injustice in rent control when someone has to "Buy back" their own property that they bought before.

Whether or not it's legal is not the issue. The issue is who is going to continue to do business in that kind of a business climate and what will this do to the cities rental market in 5, 10 years?

I guarantee you google ain't going to bail ya out and the government ain't going to bail ya out. Private money is what drives that market and when you slap it's hand, you slap the hand that feeds the market with investments in it.

Mountain View has a one way door for private money now, OUT!


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Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 8, 2019 at 9:14 am

The Business Man is a registered user.

Howard:

I already explained that oyur argument is not correct.

The fact is you WANT to CLAIM that the process is unfair by making a false analysis.

The people of Mountain View know that your description is simply not accurate.

You made an agreement and you are trying to break it in a apartment buy out.

That has a cost.


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