Landlord-tenant lawsuit against a rental-property company lands in California court
Two men from Sacramento sued a real estate company for failing to properly maintain their rental properties, a federal judge ruled Wednesday.
The case comes a year after a California court ruled against a man who sued a property management company for not keeping up on rental-home prices.
The suit, filed in federal court in San Diego on behalf of David and David O’Reilly, contends that their rental property, the 6,200-square-foot home in San Francisco’s East Bay, is in a “significant financial distress.”
The O’Rices purchased the home in 2016 for $1.9 million.
Their lawyers have said they were not aware that the house was in foreclosure at the time they bought it, the Los Angeles Times reported.
The O’,Rices have been in a legal battle with the California Department of Land and Natural Resources for the past two years, arguing that the agency has been too slow to collect rent and other taxes on the property.
In February, the department filed a motion for an emergency stay that would prevent the agency from enforcing a requirement that the property owner maintain its property taxes and fees on the rental-housing stock.
The motion argued that it was not legally possible for the O’Rs to enforce the lease and rental-unit requirements, and therefore the O’,Rs were unable to collect the required taxes on their rental-units.
After the motion was denied in June, David O. O’Reillys attorneys filed another suit on the same grounds.
On Wednesday, U.S. District Judge Barbara A. Jones ruled in favor of the ORIs.
She noted that the court had already issued a preliminary injunction barring the ORs from enforcing the lease requirements and also ordered the agency to continue collecting rent and interest on the mortgage.
“It is important to note that the OREs are not a ‘property-owners’ like tenants,” Jones wrote in her ruling.
“Their rental-leaseholds are ‘rental’ entities.”
In addition to the Oreills, a group of renters filed a separate lawsuit last year on behalf and against a property-management company in New Jersey, saying that the company did not maintain property-tax records, which could have led to a default.
More than 10 million people are in default on their mortgages, according to the Department of Housing and Urban Development.