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Tenants from Hell : Professional Deadbeats, 'Petition Mill' Scam Artists Imperil Small Rental Property Owners Unfortunate Enough to Select Them as Renters

August 08, 1993|STEPHANIE O'NEILL | SPECIAL TO THE TIMES; O'Neill is a Los Angeles free-lance writer. and

Joan Harrow of Chatsworth was not a wealthy landlord. Like many small investors, the now-retired schoolteacher was hoping to build a financial nest egg for her golden years. So back in 1980 she bought an investment townhouse and began renting it out.

"I had some wonderful tenants," she said. "A few bad ones, but nothing really severe."

All that changed in 1990 when she put the house on the market. Unable to attract a conventional buyer, Harrow agreed to a lease-option with a man who proved to be nothing less than a tenant from hell.

"I had a year of utter, unbelievable torture," Harrow, 64, said of her experience with the tenant whom she later found had put four homes into foreclosure and now appears in the process of financially terrorizing another unsuspecting landlord. "He took a year of my life and flushed it down the toilet."

The headaches of owning rental property are well-known to every landlord. But small-time rental property owners, especially those who rely on the income from their secondary property, face substantial financial risks if they choose the wrong tenant.

Among the culprits these days are savvy, professional deadbeat tenants who make a career out of defrauding landlords, a la the 1990 movie thriller "Pacific Heights." And then there's the sour economy that's helped the proliferation of so-called petition mills, which specialize in promoting rent fraud and false bankruptcies.

Each year, landlords statewide lose at least $338 million to renters who refuse to pay, according to the 1991 Unlawful Detainer Study, sponsored by the California Apartment Law Information Foundation (CALIF).

While some of the losses stem from valid tenant gripes, most are believed to be the result of unwarranted claims of renters who choose, for whatever reason, not to pay.

"They (landlords) lose houses, they lose apartment buildings, they lose commercial property," said Los Angeles landlord attorney E. Houston Touceda. "And the tenant from hell just disappears into the sunset leaving the bodies behind."

What's more, he said, honest tenants, who far outnumber the dishonest ones, end up footing the bill.

"Because the landlord has taken a $2,000 loss in Unit A, he then has to make it up in Units B, C or D, or he loses money and can't maintain the building as well," he said.

Roberto Aldape, directing attorney at the Legal Aid Foundation's Eviction Defense Center, agreed:

"One rotten apple can spoil the bag, and that's what they're doing," he said of the dishonest tenants. "They portray a negative image that's perceived by landlords to apply to all tenants."

Fred Szkolnik, a Los Angeles landlord attorney, said landlords should beware of two kinds of tenants.

The most ominous are the professional deadbeat tenants who employ well-thought-out plans to bilk landlords out of rent, often bringing them financial ruin.

But in recent years, a new cottage industry--petition mills--has proliferated in Los Angeles. Disguised as paralegal services, these mills promise tenants months of free rent in exchange for fees ranging from $300 to $3,000 and then proceed to abuse the legal protections designed to safeguard honest tenants.

"They want to buy as much time before the inevitable and do it somewhat maliciously," said Dan Fowler, president of the Apartment Owner's Assn. of Southern California. "They abuse the court and do things that they're legally entitled to do, but they do so in bad faith."

And while some tenants knowingly become involved with these mills, many others are unwitting, often non-English-speaking residents who may even have valid defenses but instead become victims of the scam operations. Instead of contesting their evictions, the mill operators merely delay them, which usually results in the tenant owing back rent.

"Many of the tenants involved really aren't bad guys," attorney Touceda said. "They're approached by these services and the tenant has no idea of the types of scams instituted on their behalf."

Judge Richard Paez, a supervising judge of the Municipal Court Civil Panel, says rental abuse is widespread. In fact, in most eviction cases that come before him and his colleagues, the tenants contesting the evictions never appear to defend themselves in court, suggesting frivolous filings.

"There's only about 20% of the cases where the tenant actually shows up," Paez said.

Even still, the landlord is often far from victory.

A standard eviction takes at least two to three months to complete. But if a tenant knowledgeable about the system sets out intentionally to scam as much free rent as possible, it can go on for a year and more.

"A person who really wants to be abusive or is desperate can do additional things," Paez said.

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