Op-Ed: California's Great Landlord Shakedown

How Legalized Extortion Is Killing the Rental Housing Market

By Daniel Yukelson, Chief Executive and Executive Director, Apartment Association of Greater Los Angeles

If you own a small rental property in California, you are a target. Not because you've done anything wrong. Because you exist, and Sacramento has decided you have deep pockets worth shaking.

A growing cottage industry of plaintiff attorneys has found every loophole in California's tenant protection statutes and weaponized them. The beauty of the model is you don't have to win to make big bucks. Just make a written demand, make it expensive, and sit back and wait for the check. No real substantiation needed, just a threat.

That's not justice. It's a racket happening every day across Southern California. And it is the result of California's implied warranty of habitability. Nobody wants tenants living in dangerous conditions, but the litigation around it has practically turned routine maintenance disputes into winning lottery tickets.

The plaintiff firms openly advertise their take. One law firm, Tobener Ravenscroft, a self-proclaimed largest tenant law firm in California, claims a 99% success rate and more than $100 million recovered for more than 20,000 tenants. Bay Area firm Greenstein & McDonald, on the other hand, advertises $83 million in verdicts and settlements, including individual habitability cases generating settlements of $825,000 and even $1.25 million. A Los Angeles firm has even boasted one tenant verdict above $1.3 million. Those are just the public numbers.

The legal fee structure drives this entire system. Tenant attorneys typically work on 30% to 40% contingency fees, and in many cities, tenants also receive taxpayer-funded "right to counsel" attorneys who may still collect contingency fees on top of that. Tenants pay nothing to file a claim and face little risk for making false allegations.

Then come the magic words: attorneys' fees. On a successful habitability claim, the landlord pays the plaintiff's legal bill on top of damages. That asymmetry fuels the entire model. A tenant lawyer can sink $40,000 into a case knowing the losing landlord reimburses it.

But here's the math for those of us on the ground. You own a six-unit building. A tenant has a recurring leak. You call a plumber. Plumbers in Los Angeles don't sit by the phone. The tenant's attorney decides you're stalling, sends a demand letter listing twelve violations, and asks for $75,000. You settle for $25,000 or spend $50,000 fighting with no guarantee of recovering a dime. Most owners write the check.

The plaintiff law firms don't hide their playbook. One advertises on its own website that "after filing, landlords typically agree to settle, especially upon realizing tenants have strong evidence and attorney representation." Translation: send the demand, watch the landlord write the check, count it as a win.

The same doctrine becomes a different weapon during evictions. When a tenant stops paying rent and the landlord files an unlawful detainer, habitability is the most powerful affirmative defense in the tenant playbook. In other words, in these instances, owners are left unaware of an alleged habitability issue until their tenant has stopped paying their rent. That's when habitability claims come out in the open and are used as an eviction defense tactic that slows down case progress, adds months of uncollected rent, and leaves little choice for an owner but to settle. A tenant's complaint doesn't have to win on the merits. It just needs to slow things down with jury demands, demurrers, and continuances. Unlawful detainers in California now routinely run six months, plus another one to three for the sheriffs' lockout.

Then, let's say you prevail. Well, good luck collecting the judgment. The tenant who couldn't pay rent for six months isn't going to pay a judgment. You're out the rent, the legal fees, and the cost of repairs.

Sacramento keeps adding to the pile. Assembly Bill 628, passed in 2024, makes the absence of a working stove or refrigerator a habitability violation. A broken burner buys a non-paying tenant extra months in court. Unincorporated Los Angeles County now imposes an 82-degree maximum indoor temperature mandate for all habitable rooms, with Los Angeles and Santa Monica weighing similar rules. Older buildings will need to install air conditioning and require major electrical upgrades to comply. Once installed, a tenant looking to skip rent only must open a window, raise the blinds, or leave the system off for the health inspector.

Every dollar a small landlord bleeds in settlements, legal fees, and uncollectable rent comes from somewhere. It comes from rent. A landlord who paid $75,000 to settle a habitability claim or ate six months of unpaid rent plus $25,000 in legal fees recalibrates the math. For the next turnover, the rents go up. Otherwise, the property gets sold to an operator that can absorb it. Either way, the tenant who was supposed to be protected pays more.

In the 2026 session, Assembly Member Josh Lowenthal (D, Long Beach) introduced Assembly Bills 2503 and 649, which would have given owners time to cure alleged habitability violations and ADA claims before liability attached. Both were shelved. Real reform means mandatory fee-shifting, damages tied to actual harm, and unlawful detainer procedures that don't reward paper-thin habitability defenses with months of free rent.

Until that happens, California's small landlords will keep running the same calculation. Pay the demand or pay the lawyer. And the litigation industry will keep cashing the checks.

Daniel Yukelson is currently the Chief Executive and Executive Director of the Apartment Association of Greater Los Angeles (AAGLA). As a Certified Public Accountant, Yukelson began his career at Ernst & Young, the global accounting firm, and since then has served in senior financial roles, principally as Chief Financial Officer for various public, private, and start-up companies. Prior to joining AAGLA, Yukelson served for 12 years as Chief Financial Officer for Premiere Radio Networks, now a subsidiary of iHeartMedia, and then 3 years as Chief Financial Officer for Oasis West Realty, the owner of the Beverly Hilton and Waldorf Astoria Beverly Hills, where he was involved with the development and construction of the Waldorf. Yukelson also served for 6 years as a Planning Commissioner and for 3 years as a Public Works Commissioner for the City of Beverly Hills.