City of Santa Monica and Rent Control Board are suing NMS Properties Corporation for violations of Ellis Law and unfair business practices

October 5, 2021 1:33 PM

SANTA MONICA, Calif .– In a lawsuit filed on September 28, 2021, the Santa Monica Rent Control Board and the City of Santa Monica allege that since 2018, NMS Properties, Inc. and its affiliates have violated and continue to violate Ellis state law. and local rent control regulations, as well as laws designed to protect long-term tenants and preserve the city’s affordable housing stock. The lawsuit alleges that the owners and managers of the residential rental property at 1242 10th Street, including WMNS Communities, LLC and NMS Properties, Inc., illegally converted what was once a 10-unit, rent-controlled multi-family residential building with stable, long-term tenants, in a building that is now used for illegal vacation rentals and other illegal rental activities.

The complaint alleges that in 2015, the defendant owners purchased the properties at 1238 and 1242 10th Street and began renovations to improve the units for future rentals at market rates, with modern kitchen appliances, integrated washer / dryers, smart technologies and more. . The complaint alleges that the dangerous conditions created by the large-scale construction caused many tenants to vacate the building. The complaint further alleges that when the last three tenants at 1242 10th Street refused to leave or be redeemed, the landlords used the Ellis Act as a mechanism to remove them from their rent-controlled homes, but did not move out. the residential rental business as mandatory. The Ellis Act is a state law that allows landlords to evict residential tenants from a building who are otherwise protected by eviction for cause provisions, if the landlords intend to vacate the building. residential rental business.

“The purpose of the Ellis Act is to allow landlords, who intend to opt out of the rental business, to evict tenants who would otherwise be entitled to stay in their accommodation. It is not intended as a way to evade rent control by chasing long-term tenants in order to get higher rental rates in the market, ”said Alison Regan, general counsel for Santa Monica Rent Control Board.

The complaint alleges that after invoking the Ellis Act, the owners placed ads on sites such as Apartments.com, westsiderentals.com and mysuite.com, which advertised that the units were fully furnished and available for rent. According to a Rent Control Board investigator who visited the property in December 2018, a month after the units were deemed to be taken off the rental market, the units had been “recently refurbished and put in place for occupancy.” .

The Commission and the City allege that the owners and managers engaged in other illegal acts to cover up unauthorized and unauthorized rental activity, including lying to City staff, submitting false and misleading claims to the City and use the accommodations to host unauthorized and illegal short films. term rental activity. The city, on behalf of the people of the State of California, further alleged that the defendants engaged in illegal, fraudulent and deceptive acts and practices in violation of state unfair competition law. Plaintiffs seek a wide range of remedies, including monetary relief and injunction.

The City of Santa Monica et al. v 1238 10th Street, LLC, et al., Case No. 21 SMCV01585, was filed in Los Angeles County Superior Court, Western District, and assigned to Judge H. Jay Ford III.

To contact the Rent Control Board, go to smgov.net/rentcontrol, send an email [email protected] or call 310-458-8751.

To contact the City Attorney’s Office, Public Rights Division, call (310) 458-8336, send email [email protected], or visit SMconsumer.org.

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