Home-Finding Firms Face Suits, Wrath of Renters
Scores of angry renters have filed lawsuits and complaints with law enforcement agencies against home-finding businesses in Van Nuys, Burbank and Glendale, accusing them of lying about their services and refund policies.
One of the firms, Valley Management in Van Nuys, operated more than a year without a required state license, then disappeared in mid-October after promising refunds, customers told The Times.
“They’re just a dirty little business,” complained Diane J. Lind, who has filed a lawsuit against the firm. She said she was “disgusted with people who rip you off like that.”
The other companies are Properties Unlimited in Glendale and Quality Rentals in Burbank, both of which are licensed by the state. Valley Management is under investigation by the Los Angeles city attorney’s office for possible violation of state laws governing rental listing services. All three firms are being investigated by the California Department of Real Estate--the agency that regulates rental listing services, of which nearly 50 are licensed by the state.
Vickie Cardoza, operator of Quality Rentals and Properties Unlimited, defended her businesses. The service “works for a lot of people,” but “I can’t make them all happy,” Cardoza said.
“I do place many, many of my clients, and I (give) a lot of refunds, too.”
Richard S. Toohey and Michael Jackson, who operated Valley Management, could not be reached for comment. They rented a Studio City office where a new rental service, Sunwest Properties, opened for business within days of Valley Management shutting down, according to a leasing agent. Sunwest, which also is unlicensed, is a “legitimate” firm and is not connected with Valley Management, a spokesman said.
Despite different names and locations, the companies’ pitches have been virtually identical, according to a review of about 40 cases in small-claims court and interviews with two dozen customers.
Each presents itself as “a personalized rental service” that helps tenants find a home with the desired amenities, location and price. Each charges a fee, typically $150, to provide and update lists of available rentals.
All of the firms also promise refunds to customers who don’t find what they are looking for. Indeed, all of the companies are required by state law to refund all but a $25 service charge when customers do not find a suitable rental.
Dozens of customers who requested their money back said the companies failed to pay refunds after agreeing to do so, or simply refused, citing technical fine print in their service contracts, according to interviews and court records.
Most said they sought refunds because the listings proved inaccurate or worthless. They said many properties were already rented, and others were the dregs--”the most flea-bitten, roach-infested properties I’ve ever seen in my life,” as one put it.
State law prohibits the companies from listing rentals without “written or oral permission . . . from the property owner.”
Customers said some landlords drew a blank when they mentioned their rental agency.
“The first phone call (to a landlord) I made, the lady said, ‘I never heard of these people. I hope you haven’t gotten scammed,’ ” recalled Marnie Jamieson, a Valley Management customer. “I feel like a total dope, but I guess everybody else who got taken does, too.”
The companies attracted business by running classified ads for rentals that, customers said, seemed so palatial and inexpensive they were almost too good to be true. When home-seekers call, expecting to reach the landlord, they instead get a salesman for the rental service, who invites them to come in and sign up for a list of fine rentals. Many customers also said they were told the $150 fee would be applied to the security deposit or first month’s rent.
In an interview, Cardoza explained her approach to advertising. “I do not make up ads,” Cardoza said. “I make them sound good.”
Both of Cardoza’s firms and Valley Management and Sunwest also have used a confusing service contract that state officials say appears to be illegal.
Customers said they are orally informed of their refund rights. They are then presented with a contract that says in one section the home listings are being furnished for either $25 or $50. This part of the contract includes a written promise to refund payment in excess of the $25 service charge.
The other part of the contract describes the rest of the fee--either $100 or $125--as a non-refundable charge for a credit profile to be furnished to landlords. Cardoza acknowledged that these credit checks are not always done by her company and cost her only $10.
Officials with the state Department of Real Estate said the agreement is a subterfuge, meant to create the appearance of two transactions and to ensure that little or no money will ever be refunded.
“It appears to be an attempt to circumvent the law,” said Steve Ellis, chief of the real estate department’s Los Angeles office, which is conducting the investigations. Ellis said some rental services in the past have packaged the deal the same way, but that the department has ruled the practice illegal. Ellis said this provision of the companies’ contracts would not have been approved by the agency, had it been submitted for review, as he said, by law, it should have been.
Cardoza called the credit profile a separate service that should be none of the department’s business. “What do they have to do with my credit company?” she asked. “I have a right to own two businesses.”
Cardoza formed Properties Unlimited early in 1993, and the company soon became the target of numerous complaints. Its first office on Sonora Avenue in Glendale was damaged by a fire that broke out after midnight on Oct. 23, 1993. According to the police report, Cardoza told investigators that “within the past week, two separate individuals had complained about her service and demanded their money back. She refused and both individuals were upset.”
After less than a year and a half in business and 21 small-claims suits, Cardoza closed Properties Unlimited in June and reopened in Burbank as Quality Rentals.
Cardoza blamed her problems in Glendale on some of her sales staff. “They were promising (customers) that the money was going to be used to go to their security deposits, but they weren’t telling me this,” Cardoza said.
“I was giving back refunds left and right to people,” Cardoza said.
Although in business just five months, Cardoza’s new firm, Quality Rentals, has also been the target of eight lawsuits. Cardoza again cited problems with staff.
“I must be a bad judge of character,” she said.
Toohey and Jackson worked for Properties Unlimited before opening Valley Management in mid-1993 in an office building in the 7200 block of Sepulveda Boulevard. This company, too, had many unhappy customers, among whom Seth Solomon stands out.
When he signed up with Valley Management in October, 1993, Solomon said the salesman told him that properties customarily were left open for customer inspection, including a house in Toluca Lake that seemed particularly appealing.
Solomon said he drove to the house, found a door unlocked, and was looking around inside when a man leaped from hiding and began to beat him. In an interview and a lawsuit, Solomon said he was punched and pushed outside and slammed against his car with such force it left a dent--as he struggled all the while to explain why he was there.
“He (the assailant) thought I was trying to rob the house or something,” Solomon said. “The only reason I went in was the door was opened like (Valley Management) told me.”
Solomon’s attacker finally allowed him to call the company to straighten out the mess. Solomon said he asked for his money back, saying that, “if this happens on the first house I went to . . . I’m not going to use your service.”
To his amazement, Solomon said, the company refused to return his fee. “I didn’t want a lawsuit,” but also “didn’t want it to happen to somebody else,” Solomon said.
So Solomon last January sued Valley Management for $25,000. In response to the suit, which is pending, Toohey and Valley Management said the attack--if it did occur--was due to Solomon’s failure “to exercise ordinary care.”
Another dissatisfied customer, Bill Schiffman, signed up with Valley Management in September. “They were just doing a booming business,” Schiffman recalled. “I saw a lot of people that looked like they didn’t have a lot of money going in there. . . . I saw families with children going in there.”
Schiffman said he found the service to be considerably less than advertised. A house that sounded great from the listings turned out to be a dump. Another, he said, still had blood on the floor from a recent robbery.
So Schiffman found a house on his own and requested a refund. Like a number of others who spoke to The Times, Schiffman said he was told his money would be mailed to him in October. In October, the firm shut down.
Calling to check on their refunds and discovering the company’s phones were disconnected, enraged customers descended on the office in droves, only to find Valley Management was gone. Some called the office building’s management firm--which itself has sued Valley Management for unpaid rent.
“I must have gotten 300 calls--honest,” an executive with the management firm said.
At the same time Valley Management closed, Sunwest Properties opened in Studio City. Some customers, suspecting Sunwest and Valley Management were one and the same, went to the Sunwest office in the 13200 block of Ventura Boulevard, but were told there was no link.
A Sunwest official said the same thing to The Times. A man who introduced himself as Sunwest owner Ron Pass said the firm had “nothing to do with Valley Management.”
“I want happy customers. I try to run a legitimate business,” he said.
Pass said he knew nothing of Jackson and Toohey, except that “these are the people who owned the other company, from what I’ve been informed.”
But Lynn LaRocque, a leasing agent for the office building in the 13200 block of Ventura Boulevard, said she had rented the office occupied by Sunwest to Jackson and Toohey, not Pass.
“These are the only two gentlemen I ever worked with,” LaRocque said. “The name Ron Pass means nothing to me.”
A comparison of the Sunwest and Valley Management contracts shows their wording is identical--including the same grammatical and typographical errors.
Tips for Prospective Renters
Rental listing services charge fees for lists of available houses and apartments. Due to consumer complaints about some of these firms, home-hunters considering the use of rental listing services should take a couple of precautions first.
Under state law, rental listing services must be licensed with the California Department of Real Estate. Operators are required either to obtain a license to run a prepaid rental listing service, or to operate under the supervision of a licensed real estate broker.
Before signing up, consumers should ask to see the license, and should be wary of any firm that can’t produce one. Information on the license status of rental listing agencies can also be obtained by calling the Department of Real Estate at (213) 897-3399.
Customers should not rely solely on oral promises by rental service staff, but also should read carefully service contracts before signing. Those contracts should clearly spell out refund policies, including a state requirement that the agency refund all fees in excess of $25 if the customer is unable to find a suitable rental or finds one on his own.
In particular, officials say, consumers should beware of two- or three-part contracts assigning a portion of the fee to a credit check. They say such contracts have been used to trick consumers and circumvent refund requirements.
