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Landlord, Rent Board Battle Over "Ellised" Santa Monica Building

 

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By Jorge Casuso

July 11, 2018 -- A Santa Monica landlord and the City's Rent Control Board are waging a heated battle over a vacant five-unit apartment building withdrawn from the rental market two and a half years ago.

Maged Guirguis, who owns the building at 1128 23rd Street, evicted the three existing tenants in December 2015 under the 1986 Ellis Act, which allows landlords to get out of the rental business.

Under a 2003 amendment to the law, owners cannot receive a market rate increase for five years after the property was withdrawn.

The Rent Board says Guirguis refused to give the former tenants -- who according to the Board's site paid between $962 and $1,307 per month -- the right to re-rent their units at the old rental rates.

Instead, Guirguis sent the tenants checks for the maximum punitive damages for which he would be liable if they had sued, J. Stephen Lewis, the Board's general counsel, wrote in a staff report to the Rent Board.

Guirguis, he said, was "effectively purporting to buy his way out of complying with the law."

Earlier this year, the Board successfully filed for an injunction barring Guirguis from re-renting the three formerly occupied units.

The Board and the City's Planning Department also have not signed off on occupancy permits for the two vacant units in the building, which have a maximum allowable rent of $3,572 per month.

The landlord's attorney, Rosario Perry, filed a claim that is on Thursday's Rent Board agenda asserting that the Rent Board "seeks to stop my client from using any and all of his property."

"The reason that staff is not signing off on the permit is because it hopes to intimidate Guirguis into agreeing with the Board's legal position in the lawsuit," Perry wrote in a letter to the Board Tuesday.

Perry estimates that prohibiting Guirguis from renting the three formerly occupied units would amount to a loss of $220,000 in income over three years.

Prohibiting the property owner from renting the two vacant units could amount to another $300,00 to $520,000. (If a tenant vacates the units, the property owner can charge market rates).

"What happens when the next property owner comes back into business, with say a 10 unit building," Perry wrote in his letter. "Is the Board going to risk a million dollar judgment?"

In his staff report Lewis recommended that the Board reject Guirguis' claim for damages.

 


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