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?
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.
In order to report a non payment of rent to the credit bureau, you have to have a judgement against the tenant. I spend all day trying to figure out how to do so and that’s what I found out. It’s crap!
As a landlord you can report payment and non payment to the credit bureaus without a judgement. It requires registration, so there could be some fees or work involved in setting up. You are better off working with a collection agency who will report to the bureaus. They will charge you money, but getting this on their credit report is a strong motivation for them to pay. That is why the collection agency does it.
I know some people consider it a lost cause, but many people with bad credit attempt to clean it up at some point. This will force them to settle up with a landlord to clear the outstanding payments.
I tried rentrecovevery service with a $19.99 plan on another tenant that owed me money and still does and got nothing with it. I filed it a year ago. So it's not very reliable. But I have a property manager right now that uses their own collection agency (which I have to pay and which they will get 40% of anything they can get back) so hopefully, it's better than nothing.
California has been trying to pass every housing problems over to the landlords, from rent control to just cause eviction, to this horrible no-eviction crap. However, think on the positive side, the unintended consequence of these law will keep rent high. You just need to screen better, and add in some extra security / insurance cost in the rent.
On a side note, anyone with rental property in San Jose / Bay Area & want to get out, please PM me.
I'm in the same boat unfortunately, got someone in at the end of March, was only supposed to be in in the unit for a few months but with all the freezes she is refusing to leave citing the stay at home order. Someone else was supposed to move in after her which she knew about and was fine with back in March, then all of a sudden less than a week before the new person was supposed to move in she pulls this crap@David To if you happen to do a class action I am all for it please keep me updated. Its ridiculous that we have no options here.
Please go to the next CA Judicial Council Meeting and picket, make a public statement and picket if you can. It's on July 23 and the details of how to do it are on their website You can contact me through my website californiaevictionmoratorium .com
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.
The past may have been good to California investors but from the current data, the future does not look so promising.
Your looking at migration while I am looking at total population. The state population has the 2nd highest increase of all states over the last 10 years. Look at census numbers. Going back longer durations, it has the highest increase.
For those leaving, I think good riddance. Too little housing, too many people. I would like Ca population to decrease over the next 10 years.
Corona has largely affected the Ca state budget. Prior to Corona, we had one of the largest emergency funds of any state (possibly largest of all states). I do not choose to look at the budget after a once in a lifetime event such as Corona and use it to judge the state’s finances.
We are getting off topic. The class action law suit is the topic.
Choose to invest where you want. I am still investing in CA and believe there are a lot of opportunities and I have done quite well in CA RE.
I'm in the same boat unfortunately, got someone in at the end of March, was only supposed to be in in the unit for a few months but with all the freezes she is refusing to leave citing the stay at home order. Someone else was supposed to move in after her which she knew about and was fine with back in March, then all of a sudden less than a week before the new person was supposed to move in she pulls this crap@David To if you happen to do a class action I am all for it please keep me updated. Its ridiculous that we have no options here.
Short term tenants are not protected by the the eviction ban. Get them out immediately. Refer to them as short term rental tenants. Our STRs have a PM who handles the STR tenants. We are a long ways from our usual occupancy rate, but I guarantee you that our PM would get the tenants out for the next tenant. STR tenants do not have the same rights as long term rental tenants.
@Dan H. Thanks Dan, I've been speaking with an attorney and he hasn't mentioned this. Either way though I technically still couldnt evict her right now anyway right? Were waiting to see how things are by the end of July here in CA (heros act ect) to see if we can serve her then, but even so, I imagine it will be difficult but I will mention this time him and see if theres hope lol. Thanks!
@Dan H. Thanks Dan, I've been speaking with an attorney and he hasn't mentioned this. Either way though I technically still couldnt evict her right now anyway right? Were waiting to see how things are by the end of July here in CA (heros act ect) to see if we can serve her then, but even so, I imagine it will be difficult but I will mention this time him and see if theres hope lol. Thanks!
>I imagine it will be difficult
No I do not agree. Having an STR tenant leave at the end of their stay is not protected by the Corona eviction moratorium. It is similar to you renting a hotel room and deciding to stay. The management would call law enforcement that would tell you that you have to go.
I have seen our PM boot out a STR tenant at 3 AM with a single hours notice and the tenants pleading to stay. STR tenants do not have the protection of LTR tenants. For example, they can be booted immediately for rules violations.
Do not think of your tenant as an LTR tenant. They are similar to a tenant that rented your place via AirBnB and are refusing to leave for the next tenants’ arrival.
The longer they stay, the more they look to be long term tenants. Get them out immediately.
@Dan H. Thanks Dan I will mention it to my attorney. I did talk to the sheriff of the county and he had also told me at the moment that they are ordered to stand down because of the Governor. I think normally they would of been able to remove her but things are just so crazy right now. But I will see if theres any wiggle room. Thanks so much for the info
@Dan H. Thanks Dan I will mention it to my attorney. I did talk to the sheriff of the county and he had also told me at the moment that they are ordered to stand down because of the Governor. I think normally they would of been able to remove her but things are just so crazy right now. But I will see if theres any wiggle room. Thanks so much for the info
I suspect it is because they and possibly you are treating them as LTR tenants.
I am very confident that my STR PM would be able to evict an STR tenant that over stayed their reservation in less than a day and likely in less than a couple/few hours. If this was not the case, I would not be currently renting our 2 STR units out. I would rather they sit empty (as they did for a couple of months) than have a squatter living in them.
The eviction moratorium does not apply to STR tenants. If the sheriff knows it is an STR situation, they should be able to get them to leave.
Dan Heuschele, as many a prospectus states, past history is no indication of future performance. CA real estate has been good for many investors. I am definitely not saying, don't invest in CA. I am just saying, proceed with caution. We are in uncharted territory and there is no historical reference we have to suggest the most prudent course of action. I sincerely wish you great success.
Just found this thread here today and created an account to post. All, I feel so sorry to hear about each of your situations. Even though landlords across the country are suffering, there is so little media out there that sympathizes with what we're going through. Not all of us are rich enough that we can forego months' to years' of rent and still stay afloat, and we're definitely not greedy for defending our right to the use of our property. The government has essentially shoved the burden of homelessness on our shoulders, promising that we will get paid eventually, but they're not considering how costly, emotionally tolling, and time-consuming it will be when we have to sue for back-rent in civil court...all the while knowing that, realistically, we have little chance of getting anything back if the subtenants "can't pay" or are judgment proof. My mom's rental situation is taking a huge emotional toll on her, so my siblings and I are looking for solutions and are interested in joining any class action lawsuits against the right entity. There is power in numbers, and we want to stand up for our rights.
Our situation began before the eviction moratorium, and we've felt really trapped for months. My mom is a landlord in LA and relies on rental income from a few small residential properties. In February 2020, the tenants in a unit on a lot she lives on vacated per a 60-day notice, after my mom discovered they've been subletting the house to internet strangers without her consent, violating the lease agreement. The notice to vacate included all the Jane and John Does currently residing in the property but, unfortunately, the unauthorized subtenants did not leave. They've been avoidant, unwillingly to communicate with us/disclose their names in the beginning, and hid whenever they saw my mom. While they apparently only subletted the back room from the previous tenants, they now occupy the whole house freely without paying any rent, and we've been unable to file an unlawful detainer due to the eviction ban even though we posted the notice in mid-February.
Due to the eviction ban that just keeps getting extended, our lawyer suggested we try offering cash for keys since my mom is suffering emotionally living on the same lot as these people. We offered a generous $3k to help with rent and moving costs, since they apparently only subleased the single back room for $900/month ($2,X00/month for whole house). They asked for more—$15k to be exact, after not even being authorized to live there and or bothering to work things out with us all year; apparently, the John Doe in the house has PTSD and just finished dialysis (neither of which we knew since they never talked to us!), and we caused emotional distress to him via this ordeal, so they deserve more for emotional distress. When we responded empathetically to his situation and tried negotiating up to $5k, they said no and shared they will now also be going after my sister for "intimidation". Apparently, when my sister parked in the driveway when visiting my mom, she revved her engine too loud and honked at her to intimidate her (according to my sister, she did no such thing and I believe her—we are adults). This is clearly extortion on their part because they know they can live rent-free without being evicted for months and will only leave for $15k. We are now preparing to foot costly lawyer fees ($10k+ according to our lawyer's experience with difficult cases like this), and likely won't see a cent back since we have so little information about these people and they may not have anything to lose.
My heart goes out to everyone who is truly struggling due to the pandemic and are, in earnest, doing their best to be responsible tenants by communicating with their landlords and trying to work things out. The people we are dealing with are definitely not such people. This entire eviction moratorium is truly very unfair to landlords dealing with people who are abusing the system, and my family would like to help fight for what's just if we can.
@Chris H. I'm very sorry to hear about your situation, it makes me so upset to hear these stories. The fact that we can do nothing is infuriating, these blanket policies need to go. I'm very worried with everything spiking they will let the freeze go on even longer :(
I have no updates. Some research on my part pretty much indicates the chance of winning a class action lawsuit against the State of California / Judicial Council is slim. There's already lawsuits filed already from others but the eviction moratorium still got extended so those lawsuits are not having any effect. I am rescinding to the fact that I'll be out of 6 months minimum of rent and most likely a lot longer. This year is totally screwed.
@David To I feel horribly and I hope you get out of this soon. We’ve all some way some how taken a hit from covid 19. On the bright side I believe there’s a vaccine that’s supposed to be launched at the end of 2020 early 2021🤷🏽♂️
I did hear about this for LA City and County landlords. The good thing about it is the payments go directly to the landlord and not the tenant. There is a 100 million dollar budget for LA City landlords and a 30 million dollar budget for LA County landlords.
A similar issue is going on in Connecticut, where a coalition of landlords has filed a lawsuit against the governor's eviction moratorium. The lawsuit states that the Governor of Connecticut overstepped his bounds and violated property owners' rights to private contract, equal protection, and their right from having their property taken for public use without sufficient compensation when implementing the statewide eviction moratorium. One of the sore points in the moratorium is that the Governor is allowing tenants to use their security deposit to back pay their rent if they have more than one month's security deposit.
I really hope we can get momentum and do something like this in CA. I havent heard anything yet, waiting on what they decide in the next stimulus package....stay strong guys :(