Rent-Controlled Units Allegedly Become Short-Term Rentals

The City of Santa Monica is pursuing legal action against a group of local landlords.

In a new lawsuit filed in Los Angeles County Superior Court, city attorneys claim the Enayati family and related companies converted and ran rent-controlled apartments as illegal short-term rentals, making approximately $18 million in the process, Westside Current reported.

The lawsuit alleges that the landlords turned at least 62 rent-controlled units across at least 25 properties into unpermitted short-term rentals. In total, the landlords reportedly booked almost 3,000 reservations that violated the city’s Residential Leasing Requirements Ordinance.

According to city attorneys, the landlords would wait for long-term tenants to move out, list the unit online, rent it out for month-to-month stays and cover up their tracks with what the city calls a “sham” one-year lease after the booking was confirmed. Guests allegedly booked their intended stays on Airbnb and then were asked to sign leases that made the rentals look compliant with city laws even though neither tenant nor landlord intended for there to be a year-long tenancy.

The rentals were usually furnished and not used as primary residences by the tenants, both of which are illegal under the ordinance. The landlords in some cases also allegedly did not file rent-control vacancy registration forms. Santa Monica’s Residential Leasing Requirements Ordinance was passed in 2020 and requires leases to be one year or longer for unfurnished units and for tenants to use the units as their primary residence. The goal with the legislation is to keep much-needed multifamily housing off the short-term rental market.

“Preserving rent-controlled apartment homes and keeping rents down are top priorities for the city,” Jonathan Frank, deputy city attorney for the City of Santa Monica, said in a statement. “The city takes violations of its short-term rental ordinances seriously and will enforce them when needed.”

City officials are asking the county to step in and put a stop to the alleged rental violations, force the disgorgement of the roughly $18 million in profits made and hand down civil penalties of $2,500 per violation. The case is pending in Los Angeles County Superior Court.

— Chris Malone Méndez