This month, instead of my usual rantings and ravings, I wanted to cover a couple of stories that have been reported to me. Perhaps there are some lessons to be learned here?

The Rent Increase and Corruption in the Legal System?

Recently, I became aware of a matter involving an elderly property owner who had been renting out his single-family home in the Los Angeles area. The property owner happens to be in his late 70’s and is in poor health. The owner requires the services of a caregiver. The home, which has 3 bedrooms and 2 ½ baths, originally belonged to his parents, and he had inherited the home from his brother.

The current owner had inherited the property from his brother who had passed away a few years ago, and as a result, the property was reassessed for property tax purposes by the County Assessor. Accordingly, the property taxes shot-up from about $2,000 per year to more than $10,000 per year, and in fact, the County Assessor went back to the original date of transfer, and this owner soon received a property tax bill for about $45,000!

The owner rented the home to their tenants starting in 1996 for $1,699 per month, and as of October 2023 the monthly rent was just about $2,450 per month. Now, under the Costa Hawkins Rental Housing Act of 1995, the owner has the latitude to increase rent without rent control limits (no “caps”). So, to help cover the $45,000 property tax bill and increased annual property taxes going forward, the property owner provided the tenant with a “Ninety (90) Day Change in Terms” and requested a $1,500 monthly increase in rent, which by the way, was below the going market rate for a 3 bedroom / 2-bathroom home of $4,500 per month – More than 10% below market. In effect, the increase from the original rental rate of $1,699 to $3,950 amounts to just an increase of about $80.00 per month each year for the 28-year lease term. However, unfortunately, no good deed goes unturned.

The home’s owner served the 90-day notice of the rent increase on the first of the month earlier this year. On the very same day notice was received by the tenant, the tenant refused to pay the rent, and in the following month, the tenant hired attorneys at BASTA, which is the largest tenant rights organization in Southern California. Things went way down hill from there.

Fast forward 8 months later, rent still has not been paid, and the court ordered a mandatory settlement. Unfortunately, on the advice of BASTA, the tenant refused to mediate anything – no compromise, nothing. The BASTA attorney threatened that the tenant will go to trial and told the elderly owner that if they lose, they will appeal and drag this matter on for at least another 2 years. The BASTA attorney suggested the owner settle – does this sound like extortion to you? It sure does to me.

So, the owner offered to forgive the unpaid rent so far, but that going forward, rent would need to be $3,950 per month. Offer…rejected.

This owner is clearly being held hostage here. He’s had to pay a large property tax bill, and he has not received rent for at least 9 months. No trial date has been set. The courts are backed up, so that could take time. Meantime, the poor owner who is not in good health has had no income for months, and his property tax bill payment due in December. This is the sad state of our regulatory environment and legal system that is so stacked against rental property owners. The rules are completely unbalanced, and tenants who are merely temporary occupants of our owned properties, have all the leverage and the sympathy of the regulators and judicial system. Something has got to give.

When all this is done and settled, I will try to provide an update. For now, fingers crossed for a favorable and fast result. But, I guess, sometimes a rent increase of this magnitude is just “poking the bear.”

Beware of Section 8 Entrapment

A young family, with 3 school age children, own a one-bedroom condominium in the Los Angeles area, which they recently listed for rent on Zillow a few months ago after their long-term tenants had moved out. After listing on Zillow, they received an inquiry about the condominium that they described as seemingly “routine” at first.

The caller asked if the condominium was available, and they confirmed that it still was and they told the caller about a scheduled open house. The caller then asked if they were the owners of the condominium, which they of course confirmed, and the caller then asked if they accept Section 8 housing vouchers. The owners responded: “”Unfortunately, the property isn’t onboarded for the Section 8 program.” The owner then followed up by providing the caller with the details about the scheduled open house. Saying, “…the property isn’t onboarded for the Section 8 program” apparently is not the right answer. Stay tuned.

The condominium never heard back from the caller…no application was ever received and the owners never met the caller. In hindsight, the owners wished they had answered the Section 8 question in a million other ways including in the affirmative, “YES.”

The owners, very nice and accommodating people, were attempting to be helpful to the caller, and thought by responding in that manner, they were letting the caller know that possession of the unit may take longer due to inspection requirements by the housing authorities and other administrative hurdles that would need to be covered. They never said “no” and, in fact, had invited the caller several times afterwards to view the condominium. The thought never crossed their mind that they were being targeted and set up.

Sadly, weeks later, harassment of the nice young family started. As they describe it, “we were blindsided by a lawsuit.” The lawsuit filed against the single condominium owners alleged multiple infractions, including violations or evidence of: (i) Fair Employment and Housing Act, (ii) Unruh Civil Rights Act, (iii) Negligence, (iv) Los Angeles Municipal Code, and (v) Unfair Business Practices. The owners then found out that there were at least 33 other identical landlords lawsuits filed during the previous 30-days with the exact same plaintiff and same lawyer, all filed within Los Angeles County. They also found that another plaintiff had filed at least approximately 25 similar lawsuits.

Of course, what will end up happening is that nearly all of the defendants in these lawsuits will settle the cases for what will likely run thousands of dollars. More extortion money paid out by hard working, honest, “mom and pop” landlords.

Like all baseless claims as this one is, the lawsuit is an emotionally and financially draining matter. It’s hard to keep emotions out of this. The lawsuit is tormenting a nice, young couple who are working hard to raise and provide for 3 little children. The husband is the sole provider for the family while the wife works in the home by day and is studying nursing at night. They are the perfect American family, and just recently finally saved enough money to buy their first home while at the same time hanging onto the condominium as a “little nest egg” someday for their children.

Now, some unscrupulous attorney and a “shill” for a Section 8 voucher holder are seeking to steal away some of their hard work. Sadly, they are just one case of many out there. There might be hundreds or even thousands of similar lawsuits filed to shake-down unsuspecting landlords. All I can say is “landlords beware!” Be sure to pass this story onto your friends and family who own rental property in this crazy state we live in.

Remember, both California and local law prohibit housing discrimination based on a person’s source of income, including Section 8 vouchers. This means that housing providers cannot refuse to rent to someone because they have a Section 8 voucher. Some examples of discrimination based on source of income include:

• Refusing to comply with requirements of a housing subsidy program
• Applying different terms to a tenancy based on source of income
• Advertising a preference or limitation based on source of income
• Posting “No Section 8” or “No Vouchers” in rental advertisements
• Asking to see if someone has Section 8 before giving them an application

Written by Daniel Yukelson.

Daniel Yukelson is the Executive Director of the Apartment Association of Greater Los Angeles. He lives in a Los Angeles Area apartment with his 140-pound St. Bernard named Bella.