Transferring a lease after receiving renewal offer from landlord; would new tenant be able to take advantage of same renewal offer?

Question

Location: California, USA

I have a little over a month left on my apartment lease, and my landlord has given a lease renewal offer. (I'm actually thinking to move out even before the lease is up.)

That said, the monthly rent for an equivalent apartment at this place is around $1,000/month higher than the renewal offer I received. (The renewal offer is around $200/month higher than what I'm paying now.)

My question is: if I was able to transfer my lease to someone else, would the landlord be obligated to offer that new tenant the same renewal offer? Or can they legally (in which case they undoubtedly would) jack up the renewal price to the current market price?

I'm basically wondering if it would be possible/realistic to "sell" my lease to someone who would then be able to get the apartment at a much cheaper rate.

Answer 1

This might be done by a sublet, or by an actual; transfer of the lease. Whether you can do it depends on the provisions of your current lease, and on the laws in the specific jurisdiction.

Many residential leases do not permit transfers or subleases. Other permit them only with the landlord's OK.

Normally they are permitted ONLY if the lease explicitly says so, but in some jurisdictions the law makes them permitted by default.

In some jurisdictions such transferable leases are very rare, and I gather that California is one of those.

This answer is not intended for any one specific jurisdiction.

Answer 2

My advice pertains to realities in the modern California and USA rental market, which is what the question is about. If you want to write an answer about other rental markets, be sure to mention that.

I'm basically wondering if it would be possible/realistic to "sell" my lease to someone who would then be able to get the apartment at a much cheaper rate.

No. It is not tradeable and is not yours to sell, to the extent your lease / landlord relationship is an asset.

(...Unless you have a really unusual lease which allows that. What I'm presuming here is that you signed a lease in the last 10 years in California, and signed the lease with the landlord, and you do not recall anything about dealing with the previous tenant, or a transferable lease being offered. Because that would be surprising.)

You are getting a favorable rate either because the landlord considers a tenant like you to be worth 130% of a random tenant sight unseen; or because you live in a city which has adopted rent control. Why would that happen?

Some cities adopted rent control recently, either due to the mad rent inflation that happened in many cosmopolitan areas in 2017-20 which were having rather bad effects for lifelong residents of the community, or COVID, or both. So it's entirely possible you became under rent control during your tenancy.

Virtually all these new rent control regs bind to the tenant not to the unit - so the landlord is free to re-price at market value, once you move out. This effect is well-known to landlords in California, and it's precisely why they almost never write transferable leases!

Also, a HUGE X-factor for tenants these days is the COVID eviction moratorium. Their risk is that a new tenant "talks a good game", behaves like a normal tenant for just long enough to coin the eviction moratorium per the state's rules (30 days in CA), and then stops paying rent. They will be able to stay indefinitely, until the COVID crisis is over (could be years, remember when we thought it wouldn't be?), then of course court dockets will be swamped with eviction actions so they'll be able to parley that into even longer than the normal 3-6 months an eviction can take.

So in that light, you understand why you are so precious as a tenant. However, your value comes from YOU, not your lease. If the landlord assents to transfer the lease to your friend, the friend could stop paying rent on month 2, and the landlord is stuck again.

One weak way to resolve this is a sublet - you remain the responsible tenant, but you sublease it to your friend. Of course, virtually every modern rental agreement in California specifically forbids this... however landlords have been known to turn a blind eye if they're otherwise very happy. I knew a person who "got away with it", perhaps because they also liked to pay their rent 12 months at a time, because they found it more convenient to write 1 check than 12. (So the landlord knew in any dispute, they would be quick to settle.)

But even in that case, the landlord is "doing the math" as to whether they'd make more money keeping you at the lower price or using the violation to take back the unit and re-rent at market rates.