A lesser-known aspect of the Los Angeles residential market — tenancy in common — is stirring controversy just as the statewide rent control law is set to kick in Jan. 1.
Tenancy in common arrangements, in which two or more people share ownership rights to a property though not an individual unit, are growing in gentrifying Eastside neighborhoods like Silver Lake, Echo Park and Glassell Park, according to the Los Angeles Times.
The practice allows residents a form of ownership at a fraction of what it would otherwise cost. But rent control and affordable housing advocates say it represents another way for landlords to displace renters and shed rent-stabilized and rent-controlled units from their rolls.
California’s new rent control law caps annual increases and implements “just cause eviction” protections. It has also prompted landlords to mobilize — some are holding seminars — to come up with different ways to fend off rent stabilization, according to the report.
Tenancy in common has emerged as one such method. Landlords can sell a stake of their rental property to an occupant, thereby getting rid of a renter in a rent-controlled unit, while still maintaining ownership in the overall property. The practice was first popularized in San Francisco; the arrangement has been part of that city’s housing stock for 30 years.
In November, some L.A. landlords began sending eviction notices to tenants at dozens of buildings, hoping to bypass the new rent law. The City Council quickly invalidated those notices.
Renters aren’t the only ones who may lose out under tenancy in common, according to the Times. Banks could, too. Unlike traditional Fannie Mae and Freddie Mac-backed mortgages, a market has not emerged to resell and package loans for tenancy in common ownership. As it now stands, Sterling Bank and National Cooperative Bank are the only L.A. financial institutions that offer tenancy in common homeowner loans, and only at adjustable rates. [LAT] — Matthew Blake