Santa Monica Sues Real Estate Company for Converting Rental Homes into Vacation Rentals

City of Santa Monica files complaint against NMS Properties Corporation

By Sam Catanzaro

Santa Monica is suing a real estate company for converting a rent-controlled home into allegedly illegal vacation rental.

In a lawsuit filed on September 28, 2021, the Santa Monica Rent Control Board and the City of Santa Monica alleged that NMS Properties, Inc. and its affiliates have been and continue to violate the state Ellis Act and local rental control regulations since 2018. as well as laws to protect long-term tenants and to maintain the city’s affordable housing stock. The lawsuit alleges that the owners and administrators of the 1242 10th Street rental, including WMNS Communities, LLC and NMS Properties, Inc, are stable, long-term renters in a building that is now being used for illegal vacation rentals and other illegal rental activities.

The lawsuit alleges that the defendant owners purchased the properties at 1238 and 1242 10th Streets in 2015 and began renovations to upgrade the units with modern kitchen appliances, in-unit washers / dryers, smart technologies, and more for future market rents . In addition, the lawsuit alleges that the dangerous conditions created by the extensive construction work have driven many tenants out of the building.

The lawsuit further alleges that when the last three tenants on 1242 10th Street refused to move out or be bought out, the owners relied on the Ellis Act to remove them from their rent-controlled units, but the apartment rental business did not as required.

“The purpose of the Ellis Act is to enable landlords who intend to get out of the rental business to evict tenants who would otherwise have a right to stay in their homes. It is not intended to bypass the rental price brake by evicting long-term tenants in order to obtain higher rental prices in line with the market, ”said Alison Regan, general counsel of the Santa Monica Rent Control Board.

The complaint alleges that after relying on the Ellis Act, the owners placed ads on sites such as apartments.com, westsiderentals.com and mysuite.com promoting the units as fully furnished and available for rent. According to an investigator from the Rental Control Committee who visited the property in December 2018, a month after the units were deemed withdrawn from the rental market, the units had “recently been refurbished and made available for occupancy.”

“The board of directors and the city claim that the owners and managers committed additional illegal acts to cover up the unauthorized and illicit rental activities, including lying by the city staff, submitting false and misleading claims to the city, and using the Units to house unauthorized and illegal shorts – Temporary rental activity. The city has also alleged, on behalf of the people of California, that the defendants committed unlawful, fraudulent, and fraudulent acts and practices that violate unfair competition law. Plaintiffs are seeking a wide range of remedies, including monetary and injunctive relief, ”the city said in a press release announcing the lawsuit.

NMS Properties was not immediately available to comment on the lawsuit.

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