For years, Santa Monica landlord Barbara Bills was forced to forego significant rental income because three of her one-bedroom units were rent controlled. Tenants only paid $765, $765, and $714 per month, respectively, despite apartments in the same Santa Monica neighborhood pulling in upwards of $1,900. Each month, Bills was losing out on more than $3,000—just from these three apartments alone!
But, under Santa Monica law, the landlord’s hands were tied. The only way Bills could increase rent was if her tenants voluntarily moved out or if she had “just cause” to evict them (for instance, if they didn’t pay rent or if they were using the apartment for illegal activity).
Bills started with a friendly approach. She offered the tenants lump sum payments in order to buy them out of their low-rent leases. But that didn’t work. The tenants clearly realized they were getting a bargain; even a lump sum buyout would only last so long in the region’s pricy rental market.
That’s when things started to get ugly. As far as Bills could tell, she had no grounds for eviction—so she took it upon herself to look for “just cause.”
According to lawsuits filed by Paul Aron, Patricia Barkley and Curtis Failor, the tenants in each of the three units, Bills started to use intimidation tactics to force the long-term tenants out of their apartments. She started by having her lawyer send them notices that were both untrue and antagonistic. For instance, she’d threaten to evict them on the basis of nonpayment of rent, when all tenants claim they paid their rent on time.
The tenants claimed that Bills would force her way into the apartments under the guise of inspecting smoke detectors or repairing leaky faucets—when in reality Bills was just probing for reasons to evict them.
She found such reason to evict Aron, or so she thought. She claimed that Aron, who has lived in the unit since 1991, made substantial changes to it without permission. Aron contends that the upgrades, such as new countertops, flooring and modern fixtures, were supervised improvements that he personally paid for after the landlord repeatedly refused.
Earlier this year, a jury ruled in favor of the tenants saying that Bills’ pursuit of eviction was done in malice. Bills has since appealed the decision. What’s more, the City responded by suing the landlord for three counts of “tenant harassment” for violating the Santa Monica Tenant Harassment Ordinance. While the outcome of these lawsuits remains unclear, one thing is for certain: the costs of these lawsuits is sure to add up.
Most of the many landlords who opt to manage their own rental units are well-intentioned, but can occasionally get in over their heads; they may not understand the rules and regulations around tenant evictions and are unaware of the expenses associated with court proceedings. In fact, in a recent Buildium survey of 500+ property owners, 42% responded that they felt very poorly-equipped to deal with evicting non-paying or uncooperative tenants; another 24% said they felt slightly poorly-equipped to do the same.
The first-of-its-kind survey also revealed that it takes property owners much longer to evict tenants, and doing so comes at a steeper cost than if property managers handled it. Whereas 15% of property managers could evict a tenant in less than a month, only 9% of property owners could do the same; 34% of property managers could complete the task in one month, compared to only 16% of property owners. By and large, it takes property owners between two months (33%) and three months (24%) to evict tenants—time that only prolongs the headache and stress of evicting uncooperative tenants.
This time also correlates to higher costs: 37% of property managers are able to evict tenants for less than $1,000 compared to just 20% of property owners. And, property owners are twice as likely as property managers to spend $5,000 or more evicting tenants.
Both building owners and property managers alike can probably agree on one thing: nobody likes to evict tenants. But the harsh reality is that sometimes it’s necessary. If and when those cases arise, the data proves that property managers are better equipped to do so.
In the case of Barbara Bills, it’s clear that this landlord was in over her head. She allowed her frustration to get the best of her and as a result, engaged in behavior that not only failed to evict her tenants, but also landed her in hot water with the city. The costs Ms. Bills will incur as a result of numerous lawsuits will certainly outweigh the costs of hiring a property manager.
City to city, state to state, eviction laws vary. A good property manager will be up-to-speed on these rules and regulations and will be best prepared to initiate an eviction and ensure it moves forward smoothly (or at least, as smoothly as possible given the nature of evictions!). Don’t fall victim to an eviction gone awry—consult with a property management firm if you’re in a situation similar to Ms. Bills.
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