Major Bay Area Landlord Hit w/ Numerous Foreclosure Actions Now Accused Of Stiffing Former Tenants On Security Deposit Refunds, Lease Buy-Out Payments

In San Francisco, California, the San Francisco Examiner reports:

• Rental security deposits held by one of The City’s largest residential landlords were funneled into an array of bank accounts and plundered, potentially affecting thousands of tenants, according to lawsuits. Several lawsuits, including a class action, have been filed in recent weeks against CitiApartments or associated companies by former tenants who claim security deposits were not returned. “What we suspect is that the money has made it into somebody’s pocket,” said attorney Brian Devine, who is representing former tenants in the class-action lawsuit.(1)

• CitiApartments is already the target of a city-backed lawsuit that alleges the firm harassed tenants to persuade them to move out of rent-controlled units so prices could be increased to market rate. In court, they have denied those charges. CitiApartments and associated companies, including the Lembi Group, Skyline Realty, Trophy Properties and Ritz Apartments, amassed a portfolio of properties in San Francisco that was estimated as of last year to include 307 buildings.

• The company appears to have overborrowed from banks by overestimating or overstating the number of tenants it could convince to vacate rent-controlled units, according to Scott Weaver, an attorney representing a group of tenants who allege CitiApartments companies withheld payments offered to vacate their units. Of the properties owned by CitiApartments and associated companies, 51 were foreclosed upon by the international bank UBS and more than 60 additional buildings are currently in foreclosure proceedings, San Francisco Superior Court filings show.

For more, see Lawsuit alleges CitiApartments drained tenant deposit accounts.

(1) In addition, the story states that roughly 5,500 units remain in the control of CitiApartments companies, according to attorneys, and the average security deposit appears to be between $2,000 and $2,500. That means more than $10 million in deposits belonging to San Francisco tenants could be in jeopardy.