A “professional tenant” in Los Angeles had been kicked out of her apartment four times in 12 years. She was finally kicked out after owing over $100,000 in rent and forcing her landlord to go to court for nine months. This shows how tenant-owner relationships work in California right now.
When one of the roommates in a three-bedroom apartment in Santa Monica, just ten blocks from the beach, moved out, the other two tenants used Craigslist to find a third roommate without first checking out the person and getting permission from their owner. This new tenant paid the security deposit and the first month’s rent, but she never paid another dime. Her “very rude” behavior drove out the other two tenants, leaving her as the only occupant while she racked up over $100,000 in unpaid rent and filled the apartment with her stuff, from expensive groceries to piles of clothes.
After nine months of court cases that began after the end of the COVID-19 era eviction moratorium, the tenant was finally kicked out and told to pay $25,000, but Avi Sinai, a real estate and business lawyer in Los Angeles who defended the apartment owner in the case, said she has “zero chance to collect” the money because she has “no assets, no income, no family, and no career prospects.”
With four evictions in 12 years, Sinai said it looks like she planned everything and that “there are no consequences for not paying rent in LA” because of the current rules. Sinai said that this case is typical of the problems California renters face in general. These problems are pushing out small landlords so that big banks can buy properties from owners who have had enough.
Sinai told The Center Square, “There seems to be a pattern of getting a lease through the back door through a sublease, not paying the rent, and then using a process they’re familiar with to get out of the house.” They do this over and over again.
Sinai says that the biggest problem for landlords in California is that tenants have the right to a jury hearing in eviction cases. This makes the process “two or three months” longer and usually leads to two-week trials that cost small and medium-sized landlords $20,000 to $35,000, which is more than they get. However, if the owner’s lawyers make even one mistake on any of the paperwork, the claim will be thrown out and they will have to start all over again, which will make the costs of eviction even higher. Because of this, a lot of property owners use “cash for keys” agreements. In these cases, it may still be cheaper and faster to give a bad renter cash to leave right away, even if they owe tens of thousands of dollars in rent.
“In some states, you meet with a commissioner, get a hearing date in two weeks, and that’s it.” In a few days, the sheriff will show up. “But this time, even with a bench trial, it takes a very long time,” Sinai said.
Sinai also said that policies by the state that make it harder to build new homes and weaken property rights for owners are causing families to own more property through private equity firms and real estate syndicators.
Sinai said that a new statewide vote measure could make things even worse in light of these problems. If the “California Prohibit State Limitations on Local Rent Control Initiative” is passed by voters in November 2024, cities will be able to greatly expand rent control. Units that are already under rent control will not be able to charge new tenants market rent, which is presently allowed. Cities might use the rent paid by the previous tenant as the maximum rent that can be charged to a new renter. This could make many properties very unprofitable to own because rising property taxes, utilities, and upkeep costs will be higher than the rent increases that are allowed by rent control.
Sinai said, “If Los Angeles wants only cruel private equity landlords, this is the only way to get them.”
The California government thinks that the measure will lower the number of homes available and cause private equity firms to merge. It will also lower state and local tax revenues through falling rental property values and landlord income taxes, and it will raise costs for enforcement and administration.