California call for class action lawsuit on Eviction Moratorium

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California call for class action lawsuit on Eviction Moratorium

David To
Newport Coast, CA · Member since 2014 · 95 posts · 73 votes

So I owe two homes that I'm renting out, one tenant is paying just fine but the other tenant owes me two months of non-payment and are not paying since she's been unemployed. If she applies for unemployment, she'd be getting about $4,000 a month in California, which is more than enough for the rent payment. But she isn't cooperating and I believe is abusing the system.

I wonder, what is better to do? With California's judicial council law, you have to wait another 90 days after the governor lifts the eviction moratorium (that means July 28, 2020 plus 90 days afterwards so we are looking at October 28, 2020). That's a potential of 5 - 6 months where the tenant doesn't have to pay me a single dime and will be squatting in my house for free. Not to mention any damages to the property I will have to suffer as well. And it could get extended to 2021.

What's the chance of me getting the rent back-pay owned to me? The tenant can simply delay and move out or get evicted in November and it could end up in small claims court if I want to get any money back or a collection agency will have to go after the tenant (and the collection agency gets 40% of anything they can collect on). 

Should I gamble on this or look into how to file a class action lawsuit against the State of California and the Judicial Council?

Any other people in California having these issues and would like to get together to file a Class Action Lawsuit or offer suggestions on joining local Landlord associations who are already looking to do so? Strength in numbers is the way to do anything about this. 

Do other landlords have problem tenants that are not paying as well?

Let me know your thoughts.

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Ama Ols
Investor · wilmington, NC · Member since 2012 · 3 posts · 28 votes
6y

Absolutely you need to sue them. I own several hundred rental units in other states, otherwise I'd join you in helping cover the costs. California needs businesses to start putting a lot of pressure on it. The good news is that most of the businesses are moving to Texas which is the biggest hurt that they can put on the state. Without businesses it loses its revenue and becomes a trash heap. Sue them. They are violating your constitutional rights and probably violating the takings clause. They are usurping your property for the benefit of the public. They must reimburse you for taking your private property and using it. Start reaching out to landlords, you can get all their contact info using reonomy which only cost about $100 per month to get direct owner contact points. Get a handful together to start, so you have some cash to initiate the class action. If we can get more landlords across the country to take action we have the possibility of 30 million housing units suing the federal and state governments! Federal Cares act alone is causing over 5 billion in damages for it's moratoriums imposed on landlords.

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  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    6y
    Originally posted by @Dennis Cosgrave:

    I completely agree with Keith A. I am at a loss to explain why anyone would buy investment property in any of the blue states, namely, Illinois, California, New York, New Jersey, and Connecticut. Those states are essentially bankrupt and they are experiencing a net annual migration out of their respective states. The government then keeps raising taxes to compensate for the shrinking tax base to fund their bloated civil servant pensions. How is this a positive environment for real estate investment? Add in the current BLM protests where property is destroyed, the police do nothing, and some municipal governments even condone the behaviour! Again, how is this positive for real estate investment? What am I missing here? 

    CA pre corona had a >$9B budget surplus.  A long ways from bankrupt.  Suspect it was in competition for largest budget surplus in the country. Corona impacts will greatly impact this surplus but it is nice that the state had a $9B surplus.

    CA, over the last 10 years, had the 2nd largest net population increase of all 50 states (last I looked - I believe it to still be true).  BTW behind Texas.

    When all forms of taxes are calculated (income, property, and sales tax), CA ranks below the middle of the nation in total tax rate.   Much of this is due to the fairly low actual prop tax (rate actually paid) and that there are so many income brackets (many people pay no state income tax).  If you make a lot of money in CA, you will pay a lot of state income tax.

    >What am I missing here? 

    As for what you are missing: Case Shiller ranking of top residential buy n hold cities for this century had the top 3 spots all being CA cities.  So you missing that investors are well compensated for the risk associated with the various policies/regulations.  There are more policies/regulations than I desire, but I consider it to be what is necessary to achieve the outstanding returns.  I think non-CA RE investors would be shocked at my average monthly return per unit.  It is much higher than the average rent per unit in most of the country.  Note this is my average.  Our top return property is far better than our average return property.

    I do not get to make the rules (and there are many rules/regulations that I do not like), but the rules have not prevented me from making good profits in CA real estate.

    4Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    6y

    You can't just look at budget surplus and say everything is rosy. 

    That <$6B surplus was pre-COVID. The idiot politicians were looking for ways to piss it away. It is now a $54B deficit. But don't worry, the CA government has come up with a new and unique approach to this. They've voted to raise taxes on businesses. No joke! 

    CA has over $1 TRILLION in unfunded liabilities. That works out to $74,000 per taxpayer. That has to be around the highest in the country. 

    CA has the highest sales tax rate in the country. CA has the highest income tax rate in the county. CA has the highest gas tax in the country.  CA has property tax rate that is a little lower than the median. CA taxes the **** out of everything. They have excise taxes on a zillion things. 

    CA ranks in the top for people leaving the state. This is partially offset by high international immigration and births. People who pay into the system are leaving and people who take from the system are entering. Not a good combination. 

    2Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    6y
    Originally posted by @Greg M.:

    You can't just look at budget surplus and say everything is rosy. 

    That <$6B surplus was pre-COVID. The idiot politicians were looking for ways to piss it away. It is now a $54B deficit. But don't worry, the CA government has come up with a new and unique approach to this. They've voted to raise taxes on businesses. No joke! 

    CA has over $1 TRILLION in unfunded liabilities. That works out to $74,000 per taxpayer. That has to be around the highest in the country. 

    CA has the highest sales tax rate in the country. CA has the highest income tax rate in the county. CA has the highest gas tax in the country.  CA has property tax rate that is a little lower than the median. CA taxes the **** out of everything. They have excise taxes on a zillion things. 

    CA ranks in the top for people leaving the state. This is partially offset by high international immigration and births. People who pay into the system are leaving and people who take from the system are entering. Not a good combination. 

    >That <$6B surplus was pre-COVID. 

    I do not know where you got the <$6B because the $9B was the lower end of numbers I have seen.  With rainy day funds included there are reports that CA had over $20B surplus.  Maybe you are just looking at the projected 2020 surplus which due to Corona is not going to happen.  A lot of numbers out there, but regardless of the source the surplus was very large.

    >CA has the highest sales tax rate in the country. CA has the highest income tax rate in the county. CA has the highest gas tax in the country. CA has property tax rate that is a little lower than the median.

    Total tax rate CA is in the middle of the country on total taxes paid per dollar of income.  it does have the highest sales tax and the highest top bracket of income taxes (I believe).  Many CA, as you implied, do not pay any income taxes.  The paid prop tax is something on the order of 0.7% (going from memory) which is fairly low.  Overall, most sources have CA total tax rate (all taxes collected as a rate) below the average state.

    If you make a lot of money (which is probably most CA on BP), you pay a lot of taxes.  

    >This is partially offset by high international immigration and births.

    It is not partially offset.  Over the last 10 years CA has the 2nd largest population gain of all states.  That means any outgoing migration is fully offset plus a lot of people.  My own feeling about those leaving is good riddance.  I think one of the worse things about CA is how crowded the various large coastal cities are (traffic, event crowds, pollution, housing shortage, etc.).

    The question was posed why invest in RE in states like CA.  The answer for CA is the outstanding total return.  Case Shiller indicates no US location has produced a better return than San Fran, LA, or San Diego for this century.  

    1Reply
  • Jose Mo
    Realtor · Antelope Valley, CA · Member since 2020 · 5 posts · 3 votes
    6y

    Hello My Fellow Landlord’s,

    Unfortunately, I’m on the same boat as some of you Landlords! I have now Squatter(s) residing on my property which have NOT paid rent since March and/or before COVID-19. No response from my notices that I have sent out requesting to notify Landlord in writing within 7 days as required by executive the order due to hardship of nonpayment of rent due to COVID-19. I have been patiently waiting  for response to No Avail. The lift on the moratorium shall lift On 6/30/20 to take Action and Slam Squatters with Lawsuit.

    0Reply
  • David To
    OP
    Newport Coast, CA · Member since 2014 · 95 posts · 73 votes
    6y

    I believe the California eviction moratorium has been extended to July 28, 2020 by the Governor so it's not 6/30/2020 like what you stated.

    0Reply
  • Ricardo P.
    LakeWood , CA · Member since 2018 · 268 posts · 331 votes
    6y

    Gentleman, for Los Angeles County the moratorium ends June 30 2020 if NOT extended. California’s eviction Moratorium is set to expire July 28 2020. Judicial Council of California is set to expire 90days from the day the governor lifts the state of of emergency. Might be sooner if all the lawsuits go through 

    1Reply
  • Jose Mo
    Realtor · Antelope Valley, CA · Member since 2020 · 5 posts · 3 votes
    6y

    Ricardo P,

    That’s exactly 100% Right! The LA County moratorium is set to expire and be lifted on  June 30th, 2020. David is referring to the State moratorium which was extended from May 31st until July 28th. I just hope that LA County Does NOT extend it after June 30th.

    The Interesting and BIG Questions are following; 

    Let’s do say and hope that the moratorium does expire and it is lifted on the 30th of June, what would be the proper way to handle and serve the 3 day notice?!?

    A. Do you serve notice immediately on July 1st yourself, do you hire a Server/Attorney?        

    B. Do you wait until the 3days after the moratorium has expired meaning you serve notice on Sunday July 5th or Monday 6th?                                

    C. Do you hire an Attorney to draft and serve 3 day notice with Total Balance for all backed month’s owed  on July 1st?               

    D. Do you serve 3 day notice to just tenants on the rental agreement or do you mention everyone residing or squatting, but how would you know who to name or their names if you need to add them on the 3 day notice?!?                                           
    E. Or do you send a Final notice to notify tenants that moratorium will be expiring on Tuesday June 30th and tenant will have a LUMP SUM BALANCE come July 1st for All backed rents owed along with July’s rent?!?    

    F. Or just leave it Alone because at this point and time, the tenants have completely abandoned and ignored all sources of communication and are guilty of fraud because of Lack of evidence of hardship for nonpayment due to COVID-19 and have FAILED with cooperation to the Landlord as required by the moratorium.

    1Reply
  • Ricardo P.
    LakeWood , CA · Member since 2018 · 268 posts · 331 votes
    6y

    @Jose Mo to be honest. I don’t think you can do ANYTHING. LA County is going to wash their hands and say that it’s all up to the Judicial Council on when and how to process paper work since they are in charge of court proceedings. (That’s how LA County will stay out of Lawsuits) Now, The way the Judicial Council is going to wash their hands and try to stay out of it is say that they have to wait until the governor claims the state of emergency is over. When that can take place YEARS from now. 
    Lastime I spoke to my attorney I would say maybe a month ago he did mention to me that courts aren’t taking any eviction papers at the moment. 

    0Reply
  • Jose Mo
    Realtor · Antelope Valley, CA · Member since 2020 · 5 posts · 3 votes
    6y

    Ricardo P,

    I guess it’s a waiting game, so we’ll just have wait and see what’s going to unfold within the next few days prior June 30th?

    And hopefully the Lawsuits will help the ban on evictions to expire on June 30th, for our share and turn as Landlords to process evictions, a UD and possibly a Judgment.

    0Reply
  • Ricardo P.
    LakeWood , CA · Member since 2018 · 268 posts · 331 votes
    6y

    @Jose Mo unfortunately that’s all we can do. July should be a very interesting month that’s when:

    •The Senate Votes on the Heroes Act(landlords can’t evict tenants for 12months) 

    •California “ends” eviction Moratorium 

    •unemployment for the additional $600 stops

    Interesting year to be alive🇺🇸  

    1Reply
  • Jose Mo
    Realtor · Antelope Valley, CA · Member since 2020 · 5 posts · 3 votes
    6y

    @Ricardo P.

    Yes July will be interesting. My concern is if  the moratorium does get extended by LA County up until July 28th just as the State of Ca. had planned, I would hope and suggest for the State and County to take up our backed owed rents for the last 4 months or more and since when the tenants-Squatters stopped paying rent. It should be Demanded by the Government that if such tenants-squatters don’t have proof or did NOT get impacted by COVID-19, the State or  the County or the City should pay the Landlords for losts of Rental income and go after the tanant-squatters for defrauding the Landlords and executive order. But for that to happen we shall see?

    0Reply
  • Ricardo P.
    LakeWood , CA · Member since 2018 · 268 posts · 331 votes
    6y

    Alot of tenants in California specially around the Los Angeles area were living paycheck to paycheck before the pandemic. Chances are slim to non you’ll recover your lost rent. Tenants will just move out once it’s time to re-pay the past rent.  Even if you take the tenant to court once everything is said and done. I highly doubt you’ll see anything back. They’ll just hit you with the “ I don’t have the money” 

    0Reply
  • Jose Mo
    Realtor · Antelope Valley, CA · Member since 2020 · 5 posts · 3 votes
    6y

    The Squatters can say what they want to say and they have to prove it with documentation. As a Landlord why would you just take his excuse or his I don’t have it? Specially if you say that you have an Attorney. Naa Man Sorry but that’s NOT going to work! How about the stimulus check received? How about the tax refund? How about if Unemployed and receiving $600-$1,000 per week, How about that? And lastly how about the extra squatters that do have income and are paying the main squatters $$$ for subletting.
    We need to put up a fight and “DEMAND” what’s owed in backed rents and if the squatters don’t comply than see the them in court with an UD along with including All the John and Jane Dows that are squatting with the main squatters and most likely hit them with a JUDGMENT with a DING on the main squatters credit including his wife’s credit along with wage garnishments. Don’t just let it be and give in just like nothing has happened. Game Time is Over!!

    2Reply
  • Cheryl Vargas
    Rental Property Investor · Rohnert Park, CA · Member since 2014 · 307 posts · 160 votes
    6y

    For these non-paying tenants, will landlords be able to collect rent from them later?  After the tenant gets a job, can you collect 30%-40% of back rent owed monthly for a year, whether they stay in your house or move out and go somewhere cheaper? Can the landlord also collect attorney fees from the defaulting tenant?

    0Reply
  • Ricardo P.
    LakeWood , CA · Member since 2018 · 268 posts · 331 votes
    6y

    Yes, we can all sue non paying tenants but chances of getting a dime out of them after the lawsuit is slim to non. On top of that you have to remember if it’s easier for them to just leave the property and pay 0 and live elsewhere that’s what they’ll do. There will be good tenants whom will pay you back but those tenants should have never been behind or late in the first place. Responsible tenants always have something tucked away for a rainy day

    1Reply
  • Tia Dedeaux
    New to Real Estate · Chicago, IL · Member since 2019 · 5 posts · 1 vote
    6y

    @Jonathan Klemm we are just getting started again consistently. So right now maybe 2-3 a month and we’re working on more!

    0Reply
  • Ji Kang
    Investor · Fullerton, CA · Member since 2020 · 9 posts · 2 votes
    6y

    @Ama Ols

    How did you get to several hundred rental properties and how fast?

    I'm just starting out and my goal is where you are.

    Would love to connect and hear you. I'm also ca investor looking for out of state multi family properties. Especially in Texas and Arizona

    0Reply
  • Dennis Cosgrave
    Rental Property Investor · Member since 2019 · 304 posts · 462 votes
    6y
    Originally posted by @Dan H.:
    Originally posted by @Dennis Cosgrave:

    I completely agree with Keith A. I am at a loss to explain why anyone would buy investment property in any of the blue states, namely, Illinois, California, New York, New Jersey, and Connecticut. Those states are essentially bankrupt and they are experiencing a net annual migration out of their respective states. The government then keeps raising taxes to compensate for the shrinking tax base to fund their bloated civil servant pensions. How is this a positive environment for real estate investment? Add in the current BLM protests where property is destroyed, the police do nothing, and some municipal governments even condone the behaviour! Again, how is this positive for real estate investment? What am I missing here? 

    CA pre corona had a >$9B budget surplus.  A long ways from bankrupt.  Suspect it was in competition for largest budget surplus in the country. Corona impacts will greatly impact this surplus but it is nice that the state had a $9B surplus.

    CA, over the last 10 years, had the 2nd largest net population increase of all 50 states (last I looked - I believe it to still be true).  BTW behind Texas.

    When all forms of taxes are calculated (income, property, and sales tax), CA ranks below the middle of the nation in total tax rate.   Much of this is due to the fairly low actual prop tax (rate actually paid) and that there are so many income brackets (many people pay no state income tax).  If you make a lot of money in CA, you will pay a lot of state income tax.

    >What am I missing here? 

    As for what you are missing: Case Shiller ranking of top residential buy n hold cities for this century had the top 3 spots all being CA cities.  So you missing that investors are well compensated for the risk associated with the various policies/regulations.  There are more policies/regulations than I desire, but I consider it to be what is necessary to achieve the outstanding returns.  I think non-CA RE investors would be shocked at my average monthly return per unit.  It is much higher than the average rent per unit in most of the country.  Note this is my average.  Our top return property is far better than our average return property.

    I do not get to make the rules (and there are many rules/regulations that I do not like), but the rules have not prevented me from making good profits in CA real estate.


    According to the California legislative analyst's office, California suffered a net out migration of 1 million people between 2007 and 2018. The net out migration continues at the rate of 200,000 per year. Read the full report here.

    https://lao.ca.gov/LAOEconTax/Article/Detail/265

    California may have had a $9 billion surplus. It now faces a $54 billion deficit. Read the full article here.

    https://www.politico.com/states/california/story/2020/05/07/california-faces-54b-budget-deficit-1282926

    The past may have been good to California investors but from the current data, the future does not look so promising. 


     

    0Reply
  • Dennis Cosgrave
    Rental Property Investor · Member since 2019 · 304 posts · 462 votes
    6y

    Dan Heuschele,

    According to the California legislative analyst's office, California suffered a net out migration of 1 million people between 2007 and 2018. The net out migration continues at the rate of 200,000 per year. Read the full report here.

    https://lao.ca.gov/LAOEconTax/Article/Detail/265

    California may have had a $9 billion surplus. It now faces a $54 billion deficit. Read the full article here.

    https://www.politico.com/states/california/story/2020/05/07/california-faces-54b-budget-deficit-1282926

    The past may have been good to California investors but from the current data, the future does not look so promising.

    2Reply
  • David To
    OP
    Newport Coast, CA · Member since 2014 · 95 posts · 73 votes
    6y

    I'm going to wait till the end of July 28,2020 and see how everything plays out. Then depending on whether my property manager can evict the tenant in August, or at the very least file the proceedings, I would be out 4 months of rent by then. And it would take more time to actually evict the tenant so tack in another 1-2 months or so. My property manager will use their own collection agency to try to get all back-pay. But I would most likely use this URL 
    https://www.findlegaladvice.org/guide-sue-government-california/
    to hire a civil attorney to sue the state of California for all lost income / rent since the chance of getting anything back through a collection agency is slim.

    1Reply
  • Ricardo P.
    LakeWood , CA · Member since 2018 · 268 posts · 331 votes
    6y

    @David To that doesn’t sound like a bad idea. I wish you the best. But I honestly don’t think we will be able to evict in August I think it’s more towards September. But if it does go over September I think that just abuse on the governors side towards landlords. I hope we all get out of this one. 

    1Reply
  • Noel Wilson
    Member since 2020 · 10 posts · 4 votes
    6y

    David To from Newport Beach. I have a tenant who has not paid rent since February. I own one home. I feel the exact same way you do and would like to join your class action suit. I’ve spoken to Various attorneys and they all say we need more people on the class action. 

    0Reply
  • Ricardo P.
    LakeWood , CA · Member since 2018 · 268 posts · 331 votes
    6y

    @Noel Wilson that’s Awesome! I have a tenant who’s been acting funny these past couple of days. He pays but lately has been paying later than usual. So I might be jumping on that same ship with you guys soon...  

    0Reply
  • Ricardo P.
    LakeWood , CA · Member since 2018 · 268 posts · 331 votes
    6y

    Los Angeles County just extended their eviction Moratorium another 30days. Now it’s the end of July

    0Reply
  • Wesley W.
    Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
    6y
    Originally posted by @Ricardo P.:

    Los Angeles County just extended their eviction Moratorium another 30days. Now it’s the end of July

    That's a page from NY's playbook.  Keep moving the goal posts back until the desired outcome is achieved.

    0Reply
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