S.F. tenants made millions after suing landlords over bogus owner move-in evictions
https://www.sfchronicle.com/sf/article/S-F-tenants-sued-landlords-over-bogus-owner-16705393.php
Dec. 16, 2021
Four years after the San Francisco Board of Supervisors passed a bill meant to crack down on bogus owner move-in evictions, the legislation is paying off in a big way — at least for a few fortunate tenants.
In the last few months San Francisco real estate investors have paid a total of $4.7 million — $2.1 million in one case and $2.6 million in the other — to settle two lawsuits brought by tenants who claimed they were illegally evicted under the state “owner move-in” laws, which allow property owners to get rid of rent-controlled tenants if they or a close relative moves in for at least three years.
In September a couple who had been evicted from 2034-2036 Greenwich St. received $2.1 million in a settlement from landlords right before the case was scheduled to go to trial. And in June, three tenants who had been kicked out of an apartment at 704 Broderick St. received a $2.6 million settlement, according to tenants attorney Mark Hooshmand, who represented tenants in both cases.
While settlements in eviction lawsuits are not public, Hooshmand said they both set California state records for such cases.
The lawsuits that led to the settlements were taking advantage of 2018 legislation by Supervisor Aaron Peskin that stiffened penalties for property owners who evicted tenants under so-called OMI rules but never intended to move into the unit. It required owners to declare under penalty of perjury that they plan to occupy the property and gave tenants attorneys a three-year window in which to file a lawsuit if evidence surfaced that the eviction was a sham.
Both the Broderick and Greenwich Street cases followed a similar plotline, Hooshmand said. Investors bought two-unit buildings with the intention of clearing out the tenants and selling the units as condos. But rather than relocating to the units for the 36 months required to justify the owner-move-in, they transferred 25% interest to “sham” owners who didn’t actually put money into the property acquisition but had simply agreed to “participate for a few years and then to move out once the time frames were satisfied,” Hooshmand said.
In both cases the evicted tenants filed lawsuits claiming that they were the victim of speculators who exploited California’s owner-move-in eviction laws, which allow property owners to evict tenants if they occupy the unit for 36 continuous months “as their principal place of residence.”
In the case of 704 Broderick the investment group involved — a limited liability corporation affiliated with Urban Green Investment — agreed to pay the “owners” $25,000 for “collaborating with us,” according to court records.
The settlements — both of which exceeded what was paid for the property — “reflect the fact that there is a value to tenancy and stability,” said Hooshmand.
“The whole rent control system was put in place to promote stability for families — people should think beyond, ‘How do I get these people out of their apartment so I can make some money off them,’ ” said Hooshmand. “As much as we want to assume people are acting on good faith there are resources and remedies if you think your landlord is up to no good.”
Attorneys for the property owners in both cases did not return phone calls or emails seeking comment.
In the Greenwich Street case the couple who were evicted had lived there seven years and “loved the apartment, which they had made their home,” Hooshmand said.
In a court filing the owner of the Broderick building characterized the lawsuit as “outrageous demands” put forward by “disgruntled former tenants who, after failing to extort an exorbitant cash payment from the Defendants before moving out, now seek to secure payment through frivolous litigation.”
Tenant Erick Gonzalez had been living with two roommates in the upstairs apartment at 704 Broderick, a Victorian near the Panhandle. After he had been there for two years — his roommates had lived in the unit for seven years — the LLC that had purchased the building evicted him and his roommates, as well as a resident of a downstairs unit.
While Gonzalez found a new apartment in the same neighborhood, he grew suspicious about whether the eviction had been legal and started looking into whether the city had resources for tenants who had been evicted. Eventually he found Hooshmand, who had represented tenants in other sham eviction cases.
“There were definitely red flags,” Gonzalez said. “But the idea of getting into a lawsuit is a little scary. It was overwhelming.”
Only two of the three upstairs roommates participated in the lawsuit, along with one of the downstairs neighbors.
