California Eviction, chances of recovering judgement

California Real Estate Q&A Discussion Forum
4yFollow

California Eviction, chances of recovering judgement

Joel A.
Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes

So I've been dealing with one of those ‘tenant from hell' types for the last couple years in my SFR in Moreno Valley, CA.

He’s been violating city codes by illegally operating an auto repair business on the premises.

He’s been notified to stop several times by the city, myself and my property management company. He was several months behind on rent and continued to defy the city’s demands to comply. I served him a 60 day notice to vacate last January and proceeded to file for eviction in March 2021.

Since then it’s been a long ordeal of waiting, attorney fees, lost rent, city citation fees, and going back and forth with the city, management company, and the tenant. The tenant was being advised by an attorney throughout this process by delaying responses and filing bogus motions to prolong the eviction. Below is a summary of what happened, so that other landlords can get an idea of what an eviction in California might look like… particularly in Riverside County.

January 2021- Served 60 day notice to vacate

March-2021 eviction filing, tenant given x amount of time to respond and waited until the very last day to respond.

May- tenant files for motion to quash, hearing set for June 11

June 2021- tenant files for covid19 related financial distress

June 28- Covid hearing

July 22 - trial set for August

August 11 trial- tenant claims habitability issues and claims $7k of work done on the property. Our lawyers agree on a settlement amount with the tenant agreeing to a payment plan, as long as we seal the eviction from his record. We get a judgement stating tenant is to leave within 60 days. We were supposed to have the writ of possession sent to the sheriff by October.

Sixty days pass, and no writ from the court, and the tenant doesn’t follow through with the payment plan. The courts are reportedly way behind due to Covid.

October passes, November passes, then finally in December the court says they sent the writ of possession to my attorney’s office. Unfortunately my attorney says he never received it. So they wait a bit, and three weeks go by and it looks like the writ got ‘lost in the mail.’ So now my attorney had to file for a lost writ of possession and request a new one. So I’m back to playing the waiting game for who knows how long.

While I wait for the new writ it looks like the tenant will have lived in the property a year for free without paying rent. My loss on the property is approaching $30k including lost rent, attorney fees, city citation fees, not to mention a lot of wasted time. I plan to file a small claims case to try to recoup some of this, but unfortunately my property manager says in his experience it’s very hard to actually recover money in a judgement. He says to expect no more than 5-10% recovery, if anything at all.

My question is what % of judgements are landlords actually collecting/recovering in cases like these? Curious to see what other landlords have been experiencing in similar situations.

0Reply
110 views

Most Popular Reply

Darius Ogloza
Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
4y

Where is the evidence of California-specific anti-landlord bias in the situation here?  I see evidence of an overburdened and underfunded court system, a canny use of a standard judicial process available pretty much everywhere by the tenant's attorney and employment of special rules introduced at the federal level and in most states due to the Covid-19 pandemic?   

2Reply
See this reply in the discussion

20 Replies

Jump to latestLatest
  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    4y

    Sounds like you have two chances of recovering your money here: Slim or none. This professional tenant has legal counsel and is playing the game to his advantage. The judgement will go on the tenant's credit report, but expecting recovery of funds can end up costing you more time and money. Have you tried cash for keys? This could have helped end the nightmare a lot sooner, but based on your post, there is no guarantee anything would have come from it.

    This person has ignored you, your PM, your attorney, the city, and keeps taking you for a ride. Promises have been made but have not been kept. Legal maneuvering has been employed to indefinitely continue this charade. Nothing in your post suggests this tenant has any intention to do anything but prolong his free living as long as he possibly can. I can already predict that if you file a claim in small claims court, he will no-show or ask for a delay in the hearing. Once a date is re-set, he will no show and you will get a default judgement that will never be paid. Maybe you can try to sell the judgement to a collection agency.

    Stop throwing bad money after good. Cut your losses, speak with your accountant about what can be written off, and move on. Your only focus should be on getting him out of there immediately, fixing the property, and getting it on the market or selling it if you so choose. My advice is to sell the judgement (you'll probably get a nickel on the dollar for it), take the little money you receive, buy yourself a nice bottle of wine and drink your problems away. 

    0Reply
  • Franco Montano
    Rental Property Investor · CA · Member since 2020 · 14 posts · 7 votes
    4y

    Sorry to hear about your troubles but what you described is exactly why I've been building my rental portfolio out of state (I also live in CA). I also agree with the previous comment that you have a professional eviction tenant on your hands that is taking advantage of you every chance he can get. 

    In regards to the collectability of any judgement, it'll most likely be zero chance of payment. I wouldn't completely rule out going after the judgment though. Depending on your situation you can go after the full amount of damages, which includes all your attorney fees, losses etc. You may also to be able to go after damages like environmental damage, rehabilitation of the property, etc. I would try to get all that included in my suit. Once you get your judgment you pursue your collection efforts which will most likely not yield anything then you can write the judgement off as bad debt against your income since your debt is now uncollectable. You want to talk with your accountant about this but depending on how much you make it may make sense for you.

    Keep in mind you want to compare what you can write off already compared to what you may potentially write off if you got a judgement that included all additional damages and see what's the best direction for you.

    Just a tip on how I turned lemons into lemonade 😉 Good luck

    0Reply
  • Joel A.
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes
    4y

    @Bob Okenwa 

    We thought about cash for keys early in the process, but knowing how dishonest and unethical this tenant has proven to be just decided to go with the eviction, thinking that he likely wouldn’t follow through anyway. This tenant had a track record of saying one thing and not following through time and time again so I thought why bother. He actually offered to buy the house and really wanted to stay. The eviction was the only foolproof way of getting him out for good.

    I’ll look into your idea of selling the judgement and weigh the options when the time comes. Thanks for throwing that out. Hopefully he’ll be out by January so I can start fixing it up to sell. I see that you're in Peoria. I heard there's been more development in the area, how do you like it as a rental market?

    0Reply
  • Joel A.
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes
    4y

    @Franco Montano 

    Agreed, the current climate in California is very anti-landlord and anti-business… which has me also looking to other states for my next rentals, possibly AZ, TX, or FL. Like you said, I’m planning to also pursue other damages to the property but I won’t be able to tell until he actually gets out. So i’ll have to file two cases, one now since I know where to find him and can serve him, and perhaps another later. If I wait till he’s out to file the small claims case the attorney said there’s a chance he’ll disappear and therefore lose our chance to serve him. Zero chance of payment on the judgement sounds about right, at this point I'm not expecting much of anything. Crazy world we live in when you can cause substantial financial loss to someone and not be held accountable for it. Too many people like this get away scott free. In California down is up, and up is down, but I digress... Thanks for the suggestion with the write off, I’ll keep that in mind when talking to my cpa. 

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Originally posted by @Bob Okenwa:

    Sounds like you have two chances of recovering your money here: Slim or none.

    And Slim done left town........:-)

    2Reply
  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    4y

    @Joel A.

    There's been a ton of development here in the last 5 or 6 years in the residential and commercial sectors. Where I'm at in North Peoria, anything built before 2013 is considered somewhat old lol. Rental price per square foot is around $1-$1.50 and the average square footage of homes in the area is probably like 2500 or so. Everything up here is basically turnkey. "Older" homes just need paint and that's really it.

    Still sucks you had to go through this nightmare with that bad tenant. Hoping you can have a strong start to 2022 and get this behind you!

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Originally posted by @Joel A.:

    @Franco Montano 

    Agreed, the current climate in California is very anti-landlord and anti-business… which has me also looking to other states for my next rentals, possibly AZ, TX, or FL. Like you said, I’m planning to also pursue other damages to the property but I won’t be able to tell until he actually gets out. So i’ll have to file two cases, one now since I know where to find him and can serve him, and perhaps another later. If I wait till he’s out to file the small claims case the attorney said there’s a chance he’ll disappear and therefore lose our chance to serve him. Zero chance of payment on the judgement sounds about right, at this point I'm not expecting much of anything. Crazy world we live in when you can cause substantial financial loss to someone and not be held accountable for it. Too many people like this get away scott free. In California down is up, and up is down, but I digress... Thanks for the suggestion with the write off, I’ll keep that in mind when talking to my cpa. 

    I feel for ya, man...! It's why so many of us have left. You can't do business in a state like that, particularly Real Estate where the game is rigged in favor of the tenant...who has zero 'skin in the game'. It's sad.

    Re: the bigger picture....where does this end, and do the CA 'powers that be' correct their mistakes or do they double down? Having spent 40 years in that once great state, I'd bet they double down.

    I just heard a news story where they reported that from summer 2020 to summer 2021, more than 300,000 people left Cali (actually more than 400,000 left, but some moved in) and this ex-migration is getting worse by the year. Same with New York, actually even more, and Chicago as well......

    If you choose to stay, consider investing your money OOS, you'll be so glad you did......

    Good luck with that tenant....once you get him out, I'd fix it up and sell while the market is still strong there......

    2Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    4y

    Where is the evidence of California-specific anti-landlord bias in the situation here?  I see evidence of an overburdened and underfunded court system, a canny use of a standard judicial process available pretty much everywhere by the tenant's attorney and employment of special rules introduced at the federal level and in most states due to the Covid-19 pandemic?   

    2Reply
  • Joel A.
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes
    4y

    Appreciate the insight into your area @Bob Okenwa I’ll consider visiting the area on my next visit to AZ.

    Thanks for the well wishes, hope you crush your RE goals in the new year!

    1Reply
  • Joel A.
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes
    4y

    Agreed @Bruce Woodruff it is sad to see the state I grew up in become a farce. I also get the feeling the powers that be here will double down on their draconian measures for years to come, with more cities adding rent control and more regulations to housing providers. I can see why Bruce Norris sold most of his CA holdings. In the city of LA there’s been a rent freeze since the pandemic started, with no end in sight. They say for a year after the state of emergency is lifted, but who knows how long this ‘state of emergency’ will last as long as covid is around.

    I also heard of the net migration number out of Cali, NY, and Illinois. It’s just the beginning IMHO, so I’ll be skating elsewhere to where i think the puck is going. That is of course, unless a good deal falls into my lap!

    2Reply
  • Joel A.
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes
    4y
    Originally posted by @Darius Ogloza:

    Where is the evidence of California-specific anti-landlord bias in the situation here?  I see evidence of an overburdened and underfunded court system, a canny use of a standard judicial process available pretty much everywhere by the tenant's attorney and employment of special rules introduced at the federal level and in most states due to the Covid-19 pandemic?   

     They would've been out by now in a more landlord friendly state.

    0Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    4y

    @Joel A. I would take my chances on a Marin County judge before trusting any judge in a "machine" city like Chicago, Philadelphia  or Cleveland or Buffalo to enforce landlord rights.  

    0Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    4y

    A couple thoughts: regarding "writing it off"  - you can only write off expenses - you can not write off income not received. 

    Second: Can the OP research Covid rent assistance for the tenant? The tenant would need to (possibly) comply, but it would be worth looking into it asap.   one program here in OR I was able to get 2 months of unpaid rent and did not need the tenants direct input (Tenant had applied for other assistance that had not yet come thru).... 

    0Reply
  • Arya S.
    Rental Property Investor · Oakland, CA · Member since 2021 · 15 posts · 15 votes
    4y

    @Joel A. Don’t listen to the OOS nonsense on this forum. Sorry you’ve had to deal with this. I usually do cash for keys and you can have an attorney draft a legit document which binds the tenant to leave. Since you’re already 95% the way through the eviction, I would just sit tight.

    You will probably never get that $30K back. But don’t worry, I’m certain your property appreciated 3-5x that amount in 2021. That will never happen in an OOS market (other than a select few).

    1Reply
  • Franco Montano
    Rental Property Investor · CA · Member since 2020 · 14 posts · 7 votes
    4y
    Originally posted by @Mary M.:

    A couple thoughts: regarding "writing it off"  - you can only write off expenses - you can not write off income not received. 

    Second: Can the OP research Covid rent assistance for the tenant? The tenant would need to (possibly) comply, but it would be worth looking into it asap.   one program here in OR I was able to get 2 months of unpaid rent and did not need the tenants direct input (Tenant had applied for other assistance that had not yet come thru).... 

    If you get a judgement and fail to collect on it then you can write it off as a bad debt. The key here is you have to try to collect on it. If you don't try to collect on that judgement then you won't be able to write it off. There is a lot of information about this online. 

    If you don't get a judgement then yes you would be limited to only writing off your expenses.

    0Reply
  • Rob Pollock
    Accountant · MI · Member since 2018 · 18 posts · 13 votes
    4y

    You can't right off a judgement. You can write off actual expenses paid not what you tried to collect. 

    The income you did not collect was never reported on your tax return so you can't deduct that amount either.

    1Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    4y

    I think folks get confused as we hear about big businesses "writing off" income. They can do this as they reported their income (and paid taxes on it) using the accrual method of accounting- which means they report the income when the service or sale happens - not when the funds are received . So, if something is uncollectible they will need to "write it off" to reverse that previous recognition of income and to remove it from their tax returns. 

    Most (but not all) investors use the Cash accounting method where we report our income and expenses when they are paid  or received.  Therefore if rent has not been paid it has not been reported or taxes paid on it therefore no need to "write off" anything. 


    1Reply
  • David M Trapani
    Rental Property Investor · Franklin, TN · Member since 2019 · 160 posts · 125 votes
    4y

    In my experience, collecting a judgment against a tenant in CA is nary impossible. Knock on wood, only had two evictions in 40 years. Not fun. CA rent control, laws favoring tenants over landlords, rent moratoriums etc. are reasons I traded (1031) out of CA LTR's. No more of those please. Airbnb and out of state (red state) properties and NNN QSR's now.

    1Reply
  • Joel A.
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes
    4y
    Originally posted by @Mary M.:

    A couple thoughts: regarding "writing it off"  - you can only write off expenses - you can not write off income not received. 

    Second: Can the OP research Covid rent assistance for the tenant? The tenant would need to (possibly) comply, but it would be worth looking into it asap.   one program here in OR I was able to get 2 months of unpaid rent and did not need the tenants direct input (Tenant had applied for other assistance that had not yet come thru).... 

    We did apply for Covid rent assistance, but unfortunately in this area it requires input from the tenant. The tenant has not been compliant and so this is off the list, although at the very least it will show that we at least tried to apply on our end. 

    1Reply
  • Joel A.
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes
    4y
    Originally posted by @Arya S.:


    You will probably never get that $30K back. But don’t worry, I’m certain your property appreciated 3-5x that amount in 2021.

    That will never happen in an OOS market (other than a select few).

    While it makes sense to fix and sell to recoup, that appreciation in 2021 does make one consider holding.  CA appreciation does continue to be crazy, even in the boonies like Mo Val lol.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free