Whistleblower accuses national home rental company of deceiving 18 California cities, including San Diego
A San Diego contractor has filed a whistleblower lawsuit accusing one of the nation’s largest home rental companies of deceiving 18 California cities by systematically dodging permit fees and higher tax assessments.
The legal complaint, which was filed in 2020 but sealed by a San Diego judge until late last year, claims that Texas-based Invitation Homes renovated thousands of properties without obtaining the proper permits.
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“The vast majority of IH’s 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 been obtained,” the lawsuit states.
“Once the single-family homes were renovated without the required permits, IH rented them out to tenants who were unaware of the unauthorized and potentially dangerous renovations,” he said.
The case was brought by La Jolla entrepreneur Neil Senturia, who is married to former city councilwoman Barbara Bry. He also writes a business column for The San Diego Union-Tribune.
According to the lawsuit, a property analytics company Senturia co-founded in 2018 used artificial intelligence and “machine learning” technology to identify residential properties that were renovated without permits.
Deckard Technologies has developed proprietary software that scans public databases for anomalies that may indicate a lack of compliance with government regulations.
Invitation Homes has an extraordinarily low permit count, well below standards in each of the 18 California cities named in the lawsuit, the complaint says. He cites more than a dozen examples of homes that have been remodeled without a permit, though none of those examples are located in San Diego.
After the software uncovered what the lawsuit claims were violations of local licensing rules in all 18 cities, including San Diego, Senturia formed a new company to file and prosecute the whistleblower’s case under California misrepresentation law.
Blackbird Special Project LLC filed the case, known as the qui tam lawsuit, in 2020.
Under the False Claims Act, qui tam complaints can be filed by private complainants, called relators, when companies are suspected of misleading government agencies.
Records are filed confidentially and remain sealed until the government agrees to take up the case or allows the parent to move forward on their own.
Public bodies recover more of the damages, depending on their degree of involvement in qui tam litigation.
According to the lawsuit, Invitation Homes purchased more than 12,000 homes across California, including at least 82 homes in San Diego, and neglected to obtain the proper permits when renovating many of them.
Those homes are in Los Angeles, Sacramento, Riverside, San Bernardino, Moreno Valley, Temecula, Compton, Palmdale, Lancaster, Vallejo, Fontana, Murrieta, Fairfield, Perris, Yucaipa, Corona and Rialto, according to the complaint.
No one from Invitation Homes, whose shares are listed on the New York Stock Exchange, responded to requests for comment on the lawsuit.
On its website, Invitation Homes indicates that it is committed to offering attractive accommodation in neighborhoods close to jobs and good schools. It also presents itself as reactive to its tens of thousands of tenants.
“We offer homes updated with smart home technology in desirable neighborhoods across the country,” the website says. “A rental home you can be truly proud of. People you can trust. Services you can count on. That’s the Invitation Homes difference.
A spokeswoman for San Diego City Attorney Mara Elliott said the city has the right to intervene in the case at any time, but has so far chosen not to. .
“We have been unable to identify any instances where the City has been deprived of permit fees, and Mr. Senturia has provided no evidence that any specific City property owned by Invitation Homes has undergone renovations. requiring a permit,” Senior Public said. Information Officer Leslie Wolf Branscomb via email.
Although the city attorney’s office said there was no evidence, Branscomb said Bry should have presented the allegation that the city may have been duped by Invitation Homes.
“If there was evidence of fraud against the city in August 2020, then Bry, as a sitting member of city council, had a fiduciary responsibility to bring it to the attention of the mayor, city attorney, or of the city auditor,” Branscomb said.
“Instead, a front company used the alleged information to bring a lucrative lawsuit, which was hidden from the public for 16 months,” Elliott’s spokeswoman added. “If Senturia’s trial is successful, Bry and Senturia, a married couple, will benefit.”
Leonard Simon, an attorney representing Senturia and Bry, called the claim “nonsense” because the former adviser was unaware of what her husband was working on.
“It never occurred to Mr. Senturia or me that this national issue could be addressed or resolved by the San Diego City Council,” he said. “In regards to the city’s assertion that the ‘couple’ is likely to benefit financially, the city knows that Mr. Senturia and Ms. Bry have a prenuptial agreement and that they will not make a dollar from this case. “
As one of 18 California cities that have been named in the whistleblower’s lawsuit, San Diego — and its attorneys — reportedly learned of Senturia’s allegations against Invitation Homes after the case was filed in 2020.
Simon said the False Claims Act case is strong and is focused on homes across the state, not just those in San Diego.
“We are pleased to continue to recover money for the public and to protect public safety,” he said.
The qui tam complaint said Blackbird Special Project spent three months reviewing years of real estate data in California cities and counties dating back to 2012.
Deckard Technologies software identified thousands of properties for which permits had been withdrawn, and properties owned by Invitation Homes stood out, seeing significantly fewer permit requests than all other owners, according to the lawsuit.
In San Diego, for example, 25.1% of the nearly 60,000 properties analyzed were related to building permit applications, according to the complaint. Invitation Homes obtained permits for 15.9% of its 82 San Diego homes, according to the lawsuit.
Over 20% of Moreno Valley homeowners have applied for permits since 2012; Invitation Homes received permits for 3.6% of its 526 properties in that city, according to the lawsuit.
The complaint identifies 15 specific properties – including before and after photographs – that were purchased by Invitation Homes and renovated without a permit. Most of them are in Riverside County.
“This suggests that IH should have obtained permits for a very significant number of its homes, rather than just 3.6% of them,” the lawsuit states. “The disparity in the rate at which IH obtains permits compared to other single-family homeowners is consistent across other cities in California.”
The Dallas-based home rental company was created ten years ago by the Blackstone Group. The company grew rapidly and is now its own business.
Invitation Homes currently manages nearly 80,000 homes in 16 markets across the United States and is the premier choice for home rentals.
“From the start, we were different,” the company says online. “Our bar was set high: quality homes managed and maintained by top professionals. This is how Invitation Homes became the nation’s premier home rental company.
Invitation Homes has faced other legal challenges in recent years.
In early 2021, for example, the company was named in a draft class-action lawsuit accusing it of imposing “multiple additional fees” on tenants who were “as little as an hour late” in payment. rent.
“The penalty is unlawful, and therefore void, because it is excessive and bears no relation to the actual damages suffered by the defendant when rent or other expenses are paid late,” the lawsuit said.
The lawsuit also said the company systematically threatened evictions.
In 2020, the global nonprofit AIDS Healthcare Foundation released a report titled, “Is Invitation Homes the Worst Corporate Landlord in the US?”
The article noted allegations that the company was taking advantage of tenants and highlighted its role in the affordable housing crisis. He also cites the more than $600,000 spent by Invitation Homes to defeat Proposition 21, a rent control initiative rejected by California voters in 2020.
The Blackbird Special Project complaint was made public in November, after Blackbird’s attorneys asked Superior Court Judge Lorna Alksne to do so.
At the same time, related court records were to remain out of public view. Even after the judge’s decision, the lawsuit was not immediately made available on the court’s public record.
However, last month the city posted the lawsuit and some related communications on its website. Simon said the city appears to have violated the court order by releasing emails and other documents that he said were not meant to be made public.
“We’re asking the city to take down some of these documents, and we’re asking the court to do the same,” Simon said.
It seems unlikely that San Diego officials will remove the recordings posted online without a court order. The city attorney’s office said the documents were released in response to a valid request from the Public Records Act.
“The city has released all non-exempt public records in its possession, as required by California law in response to a Public Records Act request,” Branscomb said via email.
It remains to be seen what the Superior Court will be able to do in response to the request, given that other files remain sealed.