City Sues Landlord On Rent Control

By Jack Simon, Observer Staff Writer

The city of Santa Monica has sued a local landlord for allegedly converting a rent-controlled apartment building on 10th Street into a complex mostly used for “unlawful vacation rentals,” thereby violating the Ellis Act and local rent control regulations.

In a lawsuit filed on September 28, the city and the Santa Monica rent control Board allege that since 2018 NMS Properties, Inc. and its affiliates have violated the Ellis Act as well as local laws intended to protect long-term tenants and preserve the city’s affordable housing stock, local officials said this week.

The Ellis Act is a state law that allows property owners to evict their residential tenants – who are otherwise protected by just cause eviction provisions – if the owners intend to leave the residential rental business.

The lawsuit alleges that the owners and managers of the residential property at 1242 10th Street – including WMNS Communities, LLC and NMS Properties, Inc. – “unlawfully converted what had once been a rent-controlled 10-unit multi-family residential apartment building with stable, long-term tenants, into a building that is now used for unlawful vacation rentals and other unlawful rental activity.”

The complaint also alleges that in 2015 the owners bought the properties at 1238 and 1242 10th Street and started renovations “with the purpose of upgrading the units for future market rate rentals,” with modern kitchen appliances, in-unit washer/dryers and smart technologies, city officials said in a statement.

“The dangerous conditions created by the extensive construction drove many tenants out of the building,” said city officials.

According to the lawsuit, when the last three tenants at 1242 10th Street refused to leave or accept a buy-out, the owners invoked the Ellis Act as a mechanism to remove them from their rent-controlled units but they did not leave the residential rental business as required by law.

“The purpose of the Ellis Act is to allow landlords, who intend to get out of the rental business, to evict tenants who would otherwise have a right to remain in their homes,” said Alison Regan, general counsel for the Santa Monica rent control Board. “It is not designed as a means of evading rent control by driving out long-term tenants in order to command higher, market rental rates.”

After invoking the Ellis Act, city officials said, the owners placed ads on such sites as apartments.com, westsiderentals.com, and mysuite.com, and advertised the units as fully furnished and available for rent.

According to local rent control board investigator who visited the property in December 2018, a month after the apartments were reportedly taken off the rental market, the units had been “recently renovated and staged for occupancy,” city officials said.

In city lawsuit, the city contends that the owners and managers engaged in unlawful acts to conceal the unauthorized and unpermitted rental activity and using the units to host illegal short-term rentals.

The complaint further alleges that the defendants engaged in unlawful, fraudulent, and deceptive acts and practices in violation of the state’s Unfair Competition Law. The plaintiffs are seeking a “wide range of remedies, including monetary and injunctive relief,” city officials said.

The case City of Santa Monica et al. vs. 1238 10th Street, LLC, et al., Case No. 21 SMCV01585, was filed in the Superior Court of Los Angeles County, West District.