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Owner of Income-Restricted Rental Unit in Santa Monica to Pay $120,000 After Alleged Violations of Deed Restriction

October 21, 2019

Owner of Income-Restricted Rental Unit in Santa Monica to Pay $120,000 After Alleged Violations of Deed Restriction

SANTA MONICA, Calif. – Santa Monica landlord, Marble One, LLC, has agreed to a judgment and court injunction under which it will pay $120,000 to the City of Santa Monica and hire a third-party property manager after the City Attorney’s Office threatened legal action for failure to abide by the terms of a deed restriction protecting the unit for affordable housing.

In City of Santa Monica vs. Marble One, LLC, Los Angeles Superior Court Case No. 19SMCV01540, the Consumer Protection Division of the City Attorney’s Office alleged that Marble One, LLC rented a deed-restricted unit to an ineligible tenant and collected monthly rent above the amount allowed.  After an investigation and referral from the City’s Housing Division, the City Attorney’s Office made known its intent to litigate to enforce the deed restriction. The parties then negotiated an agreement which includes a stipulated injunction and judgment against the defendants by Superior Court Judge Elaine Mandel.

Pursuant to the judgment, Marble One, LLC must pay the City $120,000 in damages and fees. This sum represents approximately double the excess rent alleged to be collected by Marble One, LLC during the unlawful tenancy. Judge Mandel also ordered the defendants, who denied liability, to hire a City-approved third party to manage the unit. Future violations of any income restriction or related law or administrative rule will subject Marble One, LLC, to a minimum penalty of $10,000 per violation.

“These two allegations—renting to a tenant who is over-income and then charging more than the rent cap allows—are the two most common types of owner violations in these cases,” said Deputy City Attorney Gary Rhoades. “In nearly all of the City’s income-restricted units, these acts would be violations of both the deed restriction recorded against the property and the City’s Affordable Housing Production Program Ordinance.”

The City Attorney’s Office said that this result appears to be the first judgment and injunction in California, stipulated or otherwise, in a suit brought to enforce the terms of deed-restricted affordable rental housing. (There have been past results in cases involving low-income homeowners.) 

“This lawsuit and judgment protect the City’s investment in affordable housing,” said City Attorney Lane Dilg. “The City has secured income-restrictions on over 1,000 rental units and we will fight to preserve each and every one for the low-income tenants they were intended to house.”

The money paid by Marble One, LLC will go to the Housing Trust Fund to fund future affordable housing.

 

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