How to Ask a Tenant to Move Out Before Selling a House in California

A Guide for SLO County Property Owners

If you own a rental property in San Luis Obispo County and you're thinking about selling, you might assume the first step is pretty simple:

Give the tenant 60 days' notice, get the house vacant, clean it up and put it on the market.

In California, it may not be that simple.

That means wanting to sell your house vacant isn't necessarily, by itself, a legal reason to terminate a protected tenancy.

However, that does NOT mean you're stuck with the property forever or that you can't sell it. There are legal pathways that may allow an owner to recover possession. The right strategy depends on the property, lease, occupants, reason for vacancy and whether the tenancy is actually covered by the Tenant Protection Act. Let's walk through the basics.

First Question: Does California's Tenant Protection Act Apply?

Before you start talking about 30-day notices, 60-day notices or just cause, you first need to determine whether the property and tenancy are actually subject to the Tenant Protection Act.

There are exemptions. For example, certain individually owned single-family homes and condominiums may qualify for an exemption, provided the ownership and statutory notice requirements are satisfied. Other exemptions can apply to certain newer housing, some owner-occupied properties, affordable housing and other specific situations.

This is why we don't recommend making assumptions. Pull out the lease. Determine how title is held. Find out how long the tenant has occupied the property. Review any TPA exemption language or notices that have been provided.

If there's any uncertainty, have a landlord-tenant attorney review it before taking action.

Does a 60-Day Notice Automatically Allow You to Remove a Tenant?

No.

This is one of the biggest misconceptions we see from property owners. Depending on the circumstances, California law may require 30 or 60 days' notice to terminate certain month-to-month tenancies.

But here's the distinction: the notice period and the legal reason for terminating a protected tenancy are two different things. If California's just-cause protections apply, simply reaching the end of a 60-day notice doesn't necessarily give an owner the right to terminate the tenancy. You may also need a legally permissible just cause.

So if you're thinking, "I'm selling the house. I'll just give the tenant 60 days," stop there and get professional advice before serving anything.

What Is "No-Fault Just Cause" in California?

Not every termination happens because a tenant did something wrong. California recognizes certain circumstances where an owner may terminate a protected tenancy even though the tenant hasn't violated the lease. These are generally referred to as no-fault just cause terminations, and several of these can be particularly relevant to property owners preparing for a sale.

Option 1: The Owner or a Qualifying Family Member Intends to Move In

California law provides a potential no-fault just-cause pathway when the owner or certain qualifying relatives genuinely intend to occupy the property as their primary residence. Qualifying relatives can include an owner's spouse, domestic partner, children, grandchildren, parents or grandparents.

But this isn't supposed to be a workaround to temporarily remove a tenant so you can turn around and sell or re-rent the property. Under the rules strengthened by SB 567, there are specific requirements surrounding owner and family occupancy. Generally, the intended occupant must move into the property within 90 days after the tenant vacates and use it as their primary residence for at least 12 continuous months.

There can also be requirements involving the owner's interest in the property, the availability of other units, the lease language and the information contained in the termination notice. In other words: don't claim that Mom is moving in unless Mom is actually moving in and the situation satisfies the law.

Option 2: Withdrawing the Property From the Rental Market

Another recognized no-fault just cause is a genuine withdrawal of the residential property from the rental market. This can potentially apply when an owner intends to stop using the property as rental housing.

But this is another area where owners should be careful. "I'm selling my rental" and "I'm legally withdrawing the property from the rental market" should not automatically be treated as the same thing. Other state or local requirements can potentially come into play depending on the property and circumstances. If this is the strategy you're considering, have a qualified attorney determine whether it applies and how the notice should be handled.

Option 3: A Genuine Substantial Remodel

This is a big one for sellers. Imagine you own a rental property that's been occupied for 15 years. The house is tired. You want to get the tenant out so you can paint everything, replace the carpet, landscape the yard, update the kitchen, stage it and sell it.

You might think: "We're substantially remodeling the house, so we can ask the tenant to leave." Not necessarily.

California has a specific definition of what can qualify as a substantial remodel for this purpose. A qualifying remodel generally involves replacement or substantial modification of structural, electrical, plumbing or mechanical systems requiring a permit, or qualifying hazardous-material abatement. The work also generally must be significant enough that it cannot reasonably be completed safely with the tenant remaining in the property, and it requires the tenant to vacate for at least 30 consecutive days.

Cosmetic work such as painting, decorating and minor repairs doesn't qualify by itself. That's an extremely important distinction for homeowners preparing a rental for sale.

Option 4: Certain Government or Court Orders Requiring Vacancy

Another potential no-fault just cause involves compliance with certain government or court orders, local ordinances or other circumstances legally requiring a property to be vacated. This can become relevant with seriously substandard properties or certain habitability situations. But again, a homeowner deciding that a property "needs a lot of work" isn't the same thing as a government agency requiring it to be vacated. If you're dealing with a property in very poor condition, this is an area where legal guidance is particularly important.

What About Paying the Tenant to Move Voluntarily?

There's another strategy worth discussing: a voluntary agreement. Sometimes the most practical outcome for both the landlord and tenant is to mutually agree on a move-out date and terms. An owner may decide that offering financial assistance with moving expenses, additional time to find another home or another mutually beneficial arrangement is preferable to an adversarial process. This can sometimes create a much smoother transition.

But "voluntary" needs to actually mean voluntary. We recommend having an attorney prepare or review any tenant buyout, surrender or voluntary termination agreement so that both parties clearly understand what they're agreeing to and applicable laws are followed.

No-Fault Terminations Can Require Relocation Assistance

If the Tenant Protection Act applies and an owner uses a qualifying no-fault just cause, California generally requires the owner to provide relocation assistance. Under the statewide TPA, this generally involves either:

• Paying the tenant relocation assistance equal to one month's rent, OR
• Waiving the tenant's final month's rent

If the owner chooses relocation assistance, state law generally requires payment within 15 calendar days after service of the termination notice. The termination notice itself also has requirements surrounding the tenant's relocation rights.

These details matter. A defective notice can create significant problems and potentially require an owner to start the process over. That's one reason we strongly recommend having an attorney review the situation before the notice is served, not after there's a problem.

Selling the House Isn't Necessarily Just Cause to Remove the Tenant

This is probably the single most important takeaway for California property owners. You can sell a house with a tenant living in it. California's just-cause laws don't prevent you from selling your property. But you shouldn't automatically assume that deciding to sell gives you the right to remove a protected tenant beforehand.

Depending on your situation, your strategy might be to:

• Sell the property occupied
• Reach a voluntary agreement with the tenant
• Use a legitimate no-fault just-cause provision if your situation qualifies
• Wait until the appropriate point in the tenancy
• Or pursue another legally available strategy recommended by your attorney

Why Does Vacant Possession Matter When Selling?

Here's where the real estate side comes in. There can be an enormous difference between selling an investment property occupied and selling it vacant. If the property is vacant, we may be able to clean it thoroughly, remove accumulated belongings, address deferred maintenance, complete strategic repairs, paint or replace flooring where appropriate, improve landscaping, professionally stage it, photograph it properly and make showings easier. That combination can help market the home to both investors and owner-occupants, and potentially create significantly more competition for the property.

But that doesn't mean getting the tenant out at all costs. Our job as real estate brokers is to help you understand the potential difference in market value and marketability. Then you, your attorney and the appropriate professionals can determine what options are legally available.

The Right Order of Operations When Selling a Tenant-Occupied Property

If you own a tenant-occupied property in San Luis Obispo County and are considering selling, we recommend starting the conversation early. Don't wait until you're ready to put the house on the MLS. A good process might look something like this:

Selling a Tenant-Occupied Property in San Luis Obispo County?

If you're thinking about selling a rental property in San Luis Obispo, Paso Robles, Atascadero, Arroyo Grande, Pismo Beach, Shell Beach, Grover Beach, Morro Bay, Los Osos, Nipomo, Templeton or elsewhere in San Luis Obispo County, start the conversation early. You don't need to have everything figured out first.

In fact, we'd rather talk to you before you serve a tenant notice, spend money remodeling the property or make other major decisions that could affect the eventual sale. We can help you understand the real estate side of the equation:

• What might the property sell for today?
• What might it be worth vacant and properly prepared?
• Which improvements might actually produce a return?
• Does it make sense to sell occupied?
• How long should you realistically budget for preparation?
• And what local professionals might you need to involve?

Then, when legal questions arise around tenants, probate, trusts or other matters, we can help connect you with qualified local professionals who can provide the appropriate advice. We're real estate brokers, not attorneys, and we cannot provide legal advice. But we deal with complicated real estate situations all the time. Our job is to help you identify the issues early, assemble the right team and develop a strategy to get your property from where it is today to a successful sale.

The Schwaegerle Team • San Luis Obispo County Real Estate • Helping You Love Where You Live
Owen Schwaegerle, DRE #02040597 • Camille Schwaegerle, DRE #02107467