A hardship adjustment is a formal LAHD process allowing RSO landlords to apply for rent increases above the standard annual cap when current rents fail to provide a "just and reasonable" return.
RSO includes a provision permitting landlords to apply for above-cap rent increases when they can demonstrate genuine hardship — typically documented through unusual expense increases (insurance, property tax, capital work) or overall NOI deterioration.
The application requires substantial financial documentation, takes 4–9 months for LAHD decision, and is often partially approved (increase granted but smaller than requested).
Hardship adjustments are underused in LA RSO because they're underpublicized. For landlords with documented expense pressure or qualified capital improvement exposure, hardship can provide above-cap rent capture that would otherwise be impossible. A full guide on the process lives at /guides/hardship-adjustment-la-rso-raise-rent-above-cap.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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