Eviction Headache

Richard Artman said that the tenants at the single-family home he rented out in Pacoima lied about not being able to pay rent and even resorted to illegal subletting.“We offered to reduce rent to 80 percent before the state relief package was available,” Artman said. “We also filled out the paperwork for the tenants and requested they provide their information so we could be paid. They refused but would not explain why.”

Ronda Katinos of Santa Clarita said she is owed $63,000 by her tenant.

“It’s our personal home which we rented out,” Katinos said. “He paid two months and stopped paying. Now I’m trying to evict him and have paid $10,000 in attorney fees. I’ve applied for rent relief and have been waiting since July to receive it.”

Katinos and Artman are caught in the same dilemma, as many landlords can’t evict tenants because of a Los Angeles County-imposed moratorium. But they can’t collect rent either.

“Eviction bans such as the county’s merely encourage unscrupulous renters to skip paying rent with past due rental debts continually piling up that in most instances will never be repaid,” said Jeffrey Faller, president of Apartment Owners Association of California Inc. “Moratoria on evictions are unfair for those residents who have worked hard and sacrificed to pay their rent.”

The situation has gone on for so long – more than 700 days, according to Faller – that his organization and the Apartment Association of Greater Los Angeles have filed a joint lawsuit in Los Angeles County Superior Court seeking a preliminary injunction against the moratorium.

The legal move, which was announced March 8, follows the county’s Jan. 25 extension of the temporary COVID-19 related residential eviction protections until June 30, 2023. 

In their joint complaint, the organizations declared that there is no rational basis for extending the eviction moratorium and creating what is, in effect, a “rent holiday” that has not only allowed renters to remain housed without paying rent for up to two years, but which has now been extended into next year.

Daniel Yukelson, executive director of the Apartment Association, doesn’t understand the point of extending the eviction moratorium further when the country appears to have pulled out of the crisis for many weeks now.

“Nearly two years into this pandemic, with state and federal eviction bans now having expired long ago, with business back to normal, and following a major event like the Super Bowl here in the Los Angeles area, it is nonsensical for the county to continue to impose its eviction ban,” he said. 

Moms and pops

The two landlord organizations have asserted that the county’s moratorium has gone way beyond what is necessary by providing benefits to renters at the expense of landlords, particularly the small business, “mom and pop” variety who make up most of the rental property owners in the market. 

“Landlords in the county continue to suffer under the county’s ordinance with no relief or assistance of any kind offered to help those landlords who are clearly struggling financially,” AOA’s Faller said. “Despite the availability of state rental assistance funds, many landlords are finding that tenants merely do not qualify for relief, approvals and funding is slow to nonexistent, and many tenants are not cooperative or have moved on. It’s a big problem and a major financial burden that has been placed on the backs of small owners.”

Yukelson feels that no other business sector has been singled-out and forced to provide so much service for free. 

The property owners the Business Journal spoke with said that California’s Housing is Key rent relief program is a systemic fail that makes it impossible for landlords to collect rent or evict bad tenants.

Katinos lives in her mother’s five-bedroom house so she could rent out her house to a tenant with a wife and two kids. The arrangement quickly went south.

“He moved in of February of 2020,” Katinos said. “He paid for two months but has not paid since. … I gave him a 60 day notice I wanted him out. He claimed that he had been affected by COVID, which is why he doesn’t have to pay.”

Katinos said she had invested about $50,000 to fix up the property.

Anuj Bansal of Valencia is another landlord with a story.

Bansal rented out his single-family home to a tenant who owns a wine bar.

Bansal’s tenant moved in May 2018 on a year lease that was eventually renewed again to May 2020. 

“The restaurant was shut down because of COVID,” Bansal said. “He told us he was affected and wouldn’t be able to pay the rent.”

At first, Bansal was sympathetic and didn’t pressure him.

“That went on for about a year,” Bansal said. “He paid us zero rent.”

At that point Bansal had lost $34,000 in unpaid rent.

In March 2021, Bansal learned about the Housing is Key rent relief program. He tried to get his tenant to apply.

“We would have this conversation almost every month,” Bansal said. “There was always a story that he continued to delay.”

By October 2021, his tenant still had not applied.

“He claimed he had applied,” Bansal said. “Every time we would check, they’d say no, the application is not complete. He kept insisting that he applied but we knew for sure that he hadn’t.”

In January, Bansal took him to small claims court and won the case. But that didn’t end the matter because Bansal said judgments are hard to collect. Even with the restaurant open again, the tenant won’t pay rent.

“There has to be a check and balance,” Bansal said. “When it’s one-sided, you open to all kinds of fraud. Our tenant was an opportunist, he saw an opportunity and refused to pay rent.”

Leaving the state

The losses to lanwdlords involve more than money and include friends and desire to remain in California.

Artman in Pacoima said that his non-paying tenants were great for 12 years prior to the pandemic. 

“Then COVID hits and they’re not going to pay,” he said. “I considered them my friends when this happened.”

Artman finally got them out of the house; now he’s working to fix it up from disrepair.

Bansal, the landlord in Valencia, said “it seems like the county is doing everything they can to drive the landlords out of business.”

He and his wife want to their sell houses and move out of state.

“We’re kind of done with California with just this experience we’ve had these two years,” he explained. “California is not the U.S. anymore, it’s something else.”

Bansal added that the situation cost him more than just missed rent.

“The financial pressure is just one piece of it. But the cost in stress is just terrible on your family relationships, on your health,” Bansal said.

Yukelson with the Apartment Association said regulations will cause large-scale damage to the already scarce rental housing inventory.

 “As the small rental property owners are driven out of this business,” Yukelson said, “major corporations will take over these smaller, older properties that have traditionally provided the bulk of affordable housing throughout the county and will redevelop the properties into luxury units or condominiums thereby removing these affordable rentals permanently from the market. This can only result in a major loss of affordable units within the county.”