Company accused of defrauding Southern California cities out of millions in construction fees – Press Telegram

A whistleblower is suing the nation’s largest single-family homeowner, alleging he cheated cities in Los Angeles, Riverside and San Bernardino counties out of millions by systematically dodging building permit fees and raises property taxes.

Blackbird Special Project, LLC, owned by La Jolla contractor Neil Senturia, filed a lawsuit against Dallas-based Invitation Homes in 2020. The civil suit was unsealed by a San Diego judge at the end of Last year.

The lawsuit alleges Invitation Homes obtained building permits for less than 7% of the more than 6,700 single-family homes it owns in San Diego, Sacramento, Los Angeles, Moreno Valley, Riverside, Compton, Temecula, Palmdale, Lancaster , San Bernardino, Vallejo, Fontana, Murrieta, Fairfield, Perris, Yucaipa, Corona and Rialto.

All 18 cities are listed as plaintiffs in the lawsuit filed in San Diego County Superior Court.

“The vast majority of Invitation Homes renovations required permits – including for the demolition and construction of sections of single-family homes, the installation and demolition of swimming pools and the significant modification of electrical work – but permits did not not been obtained,” the civil complaint states. “Once the single-family homes were renovated without the required permits, Invitation Homes rented them out to tenants who were unaware of the unauthorized and potentially dangerous renovations.”

“Unsubstantiated allegations”

Officials at Invitation Homes declined to discuss the lawsuit.

“While we cannot comment on pending litigation, we believe the allegations are without merit and we intend to vigorously defend the company,” a company spokesperson said Tuesday.

Len Simon, a San Diego attorney representing the plaintiffs, is confident in the accuracy of the allegations. “We believe the case is solid and we look forward to pursuing it,” he said in an email.

Simple business model

Invitation Homes began buying properties across the United States after the 2007-08 financial crisis and now owns more than 12,000 homes in California, spending about $25,000 on renovations per home, according to the complaint.

“Invitation Homes’ business model was simple,” the suit explains. “He bought thousands of single-family homes that were devalued by the financial crisis, remodeled them, then rented them out at a higher value. He chose to ignore permit requirements to avoid permit fees. and to get properties on the rental market as quickly as possible…to avoid property tax increases.

As a result, Invitation Homes defrauded California cities of millions of dollars, according to the complaint.

Blackbird, in conjunction with Deckard Technologies Inc., used proprietary software employing artificial intelligence and machine learning to confirm the alleged fraudulent activity.

The software scoured various rental listing websites to find homes owned by Invitation Homes, then accessed county and city databases to determine which permits were pulled for each property.

Blackbird’s “lookback” technology was also able to access images of homes from multiple listing services to compare them with rental listing images after renovations, the suit says.

The lawsuit includes 14 before-and-after photos of homes — most of them in Riverside County — believed to have been purchased by Invitation Homes and renovated without obtaining the necessary permits.

Tenants at risk

In the Moreno Valley, where about 20% of homeowners have obtained renovation permits since 2012, Invitation Homes obtained permits for less than 4% of its 526 properties in the city, the lawsuit says.

The complaint alleges that Invitation Homes evaded safety oversight by city building inspectors, potentially putting thousands of tenants at risk.

“Permits are required for structural renovations, electrical work and other major renovations because mistakes in such work expose residents to physical and financial harm,” the lawsuit states. “Thus, permits are among the most important building requirements under California and municipal law.”

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Bernard P. Love