Evictions for substantial rehabilitation and remodels
Major work may require a tenant to leave. Whether that creates a lasting vacancy — or an opportunity to reset the rent — is another question entirely.
A rehabilitation eviction is not a vacancy strategy
Major rehabilitation may require tenants to leave while the work is performed. But owners should not assume that displacement will be permanent — or that completing the work will allow the unit to be immediately re-rented at market.
Substantial rehabilitation evictions receive significant scrutiny. The work must actually qualify, required permits and procedures must be followed, and the contemplated rehabilitation must be carried through. Depending on the jurisdiction, tenants may also be entitled to relocation assistance and the right to return after the work is completed.
Before committing to a major renovation, owners should understand both sides of the equation: what is required to recover possession for the work and what obligations may remain after the tenant leaves.
The work actually has to be substantial
A substantial rehabilitation termination cannot be used simply because an owner wants to modernize or improve a rental unit. Cosmetic work is not enough.
The scope of work must satisfy the requirements of the law governing the tenancy. Calling a project “substantial” does not make it so — and getting that determination wrong can jeopardize the eviction and expose the owner to liability.
Permits, plans and completion matter
Owners should have the project properly planned and obtain the permits required for the contemplated work before relying on rehabilitation as a basis for terminating a tenancy.
The work then has to be performed as represented. Failing to commence or complete the rehabilitation — or performing materially different work — can create serious problems after the tenant has been displaced.
Assume temporary displacement, not permanent vacancy
Recovering possession so major work can be performed does not necessarily terminate the owner's obligations to the displaced tenant.
Depending on the jurisdiction and circumstances, the tenant may have the right to return after the rehabilitation is complete — potentially at the prior rent, subject to lawful increases.
Run the economics before you begin
Construction costs are only part of the calculation. Relocation payments, lost rent, the duration of the work and a tenant's potential right to return can materially affect the economics of a rehabilitation project.
Owners should understand those post-displacement obligations before assuming that renovating a property will produce a permanent vacancy or an opportunity to reset the rent.
What happens after the tenant leaves may depend on the address.
Local ordinances can impose additional requirements involving relocation payments, temporary displacement, rights of return and the rent that may be charged after the work is complete. Before treating rehabilitation as a path to vacancy, owners should understand both the rules for removing the tenant and the obligations that follow.
Permanent displacement is the exception, not the assumption
An owner contemplating major work should not begin with the assumption that a rehabilitation eviction will permanently remove the existing tenant.
There are circumstances in which demolition, major structural reconfiguration or other qualifying work may result in permanent displacement. But those situations require careful analysis of the project and the laws governing the property.
Even when a unit becomes temporarily uninhabitable — because of construction, a fire or another condition requiring tenants to leave — continuing obligations to displaced tenants may remain. The right to reoccupy should be evaluated before plans are made around a permanent vacancy.
How Bornstein Law helps
A substantial rehabilitation should be evaluated before an owner commits to an eviction strategy — or builds an investment plan around the expectation of a permanent vacancy.
Bornstein Law helps property owners evaluate whether the contemplated work qualifies, identify the permits and procedures required, understand relocation and right-to-return obligations, and determine how state and local rules affect the project.
We also help owners assess what happens after the work is complete so that the legal strategy and the economics of the rehabilitation are considered together.
Planning major work? Understand the rules before you plan around the vacancy.
Evaluate the project, the displacement requirements and the tenant's potential right to return before moving forward.