Santa Monica's Buyout Rules Are Backfiring on the Tenants They Were Built to Protect

Written by:

Alejandra Rodriguez

Date:

01 Jul 2026

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When a tenant and landlord both want to part ways, a cash-for-keys agreement used to be one of the cleaner solutions available. The landlord pays the tenant to vacate voluntarily, the tenant walks away with money in hand, and both sides avoid the cost and stress of eviction court. In Santa Monica, that option has been significantly narrowed, and legal practitioners working in the space argue the restrictions are hurting the very tenants the rules were designed to help.

The Rules That Block Deals

Avi Sinai, founding attorney of Sinai Law Firm, a Los Angeles-based eviction and real estate litigation practice, handles these negotiations regularly. His assessment is pointed: the city has inserted itself into private negotiations in a way that blocks outcomes both parties would otherwise choose.

Cash-for-keys agreements in Santa Monica and other rent-controlled jurisdictions involve regulated steps. Both parties must sign a disclosure form provided by the city or rent control board before any negotiation begins. The resulting contract must include specific language, and the agreement is only valid if the buyout meets a city-mandated minimum.

When the Floor Is Too High

That minimum is where the problem surfaces. Sinai describes a scenario that plays out frequently: a tenant is willing to accept a smaller payment, say, eight to ten thousand dollars, to vacate. The landlord is willing to pay that amount. But the law requires a minimum buyout of forty thousand dollars for the agreement to be legal. The landlord cannot offer what the law does not permit, and so the negotiation collapses entirely.

“The tenant might say, ‘I would love to get $8,000 or $10,000 to leave, and I’m willing to take it,'” Sinai said. “But the landlord is legally not allowed to offer it.”

The Intent Behind the Rule

The intent behind minimum buyout rules is straightforward. Regulators worry that tenants, particularly long-term renters in controlled units, will accept inadequate compensation under pressure, giving up housing stability for a payment that does not reflect what they are losing. Setting a floor is meant to prevent that.

But the floor has a ceiling effect. When the mandated minimum exceeds what the landlord is willing or able to pay, the negotiation does not produce a higher settlement for the tenant. It produces no settlement at all. The tenant stays, the dispute escalates, and both parties end up in eviction court – a process that now routinely takes six to nine months and costs landlords ten to twenty thousand dollars in legal fees, according to Sinai. That outcome serves neither side.

Tenants and Landlords

For tenants considering whether to negotiate a voluntary departure, this is a practical constraint worth understanding. In Santa Monica, you cannot agree to leave for less than the city-mandated minimum, even if you want to. If the landlord is unwilling to meet that minimum, your only remaining path is to stay and wait, either for the landlord to change their position or for the dispute to move into formal legal proceedings.

For landlords, the calculus is different but equally constrained. The mandatory minimum effectively sets a price floor for getting a tenant out voluntarily. If that price exceeds what makes financial sense, factoring in the property’s income, the cost of carrying a non-paying tenant, and the legal fees of a contested eviction, some landlords will simply absorb the loss rather than pay it. Others will pursue eviction through the courts, where the outcome is uncertain, and the timeline is long.

“The city has decided that they need to stand in the shoes of both sides and dictate what’s best for everyone,” Sinai said. “I think it’s a big mistake.”

What is notable about this critique is that it does not come from a landlord advocacy position alone. The argument is that the rule removes a tool that tenants were using, and in some cases preferred. A tenant who has already decided to move, or who needs cash more than continued occupancy, loses options when the minimum buyout is set above what the market will bear.

More Restrictions Coming

The broader regulatory trend in Santa Monica and LA County is toward more restrictions, not fewer. New rules arrive roughly every six months, according to Sinai, and each layer adds procedural requirements that create new grounds for disputes. For anyone entering a lease in a rent-controlled jurisdiction – as a tenant or a landlord – understanding the buyout rules that apply to your specific location before signing is now a meaningful part of evaluating the agreement. In Santa Monica, the minimum buyout thresholds are public record and available through the city’s rent control board.

About the Expert: Avi Sinai is the founding attorney of Sinai Law Firm, representing housing providers across LA County in eviction litigation and real estate law, with approximately 80 percent of his caseload involving unlawful detainer proceedings.

This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.