Four More Rent-Controlled Homes Gone: Tenants Settle With Investor Who Admits To Real Estate Fraud

The three remaining tenants of 2405 Anza St. — who were involved in an Ellis eviction battle The Appeal reported on last fall — have accepted a settlement offer from Craig Lipton, the real estate investor who has admitted to real estate conspiracy.

As reported last October, real estate investor Craig Lipton and his associates Keith Goodman and Craig Mallery purchased the 90-year-old, four unit residential apartment building with the plan to flip the property for at least $1,599,000 million. If that plan failed, they told the tenants that they would be evicted, and the building would be converted into a tenancy-in-common.

According to Paragon Real Estate Group, residents of the rent controlled one bedroom, one bath units (two of which include parking spaces) pay between $716 and $1,478 a month in rent. Buyers can expect as much as $2,900 in rent for each unit, Paragon suggests.

As of last October, one tenant told The Appeal that Lipton and his associates had been pressuring tenants to leave from the moment the property changed hands. While Lipton told The Appeal that he offered tenants “double” what is required by the Ellis Act to relocate, the tenant, speaking anonymously, confirmed that Lipton’s offer was above what was required, but not by enough to make a departure economically feasible. As a result, the tenants unanimously rejected Lipton’s offer as “substantially inadequate.”

However, it appears a lot can change in two months. Since then, a settlement has been reached, and all the tenants of 2405 Anza will be moving on by the end of 2014.

Two of the tenants, one a single man, the other a single father, will be required to leave by March 31, 2014. The remaining pair — an elderly couple who have been living at the location for 36 years — will have to move out by the end of December 2014, according to one of the tenants.

The anonymous tenant declined to discuss the deal any further, only saying that an agreement was reached in mid-December.

Lipton declined to comment in detail as well. But, he did confirm that a settlement was reached, and that no official Ellis eviction notice was filed. According to a document Lipton sent The Appeal in November, the settlement included a greater cash payout than the amount required by the Ellis act, which requires $5,210.91 per tenant, and an additional $3473.93 for each senior.

The Appeal was unable to confirm whether that document accurately reflected the deal reached with the tenants in December.

As you might recall, Lipton is the same real estate speculator who pled guilty to participating in a “conspiracy to rig bids” to obtain real estate at public real estate foreclosure auctions in San Francisco, according to federal court documents. The purpose of the conspiracy was to “suppress and restrain competition to obtain title” of real estate within the city — essentially buying properties for less than their fair market value.

The charges included violating the Sherman Antitrust Act and Mail Fraud, carrying maximum sentences of 10 and 30 years respectively, as well as fines. “I have accepted responsibility for my involvement in the illegal activities at the steps [where foreclosure auctions are done in the city]…my name has been tarnished over a few thousand dollars,” Lipton told The Appeal.

Despite the fact that Ellis evictions are very difficult to beat, the tenants at Anza used Lipton’s legal issues as way to draw attention to their plight. “BLDG OWNED BY CONVICTED REAL ESTATE FELON THREATENING ELLIS ACT EVICTION OF TENANTS” read one of the signs posted in the property’s window last fall.

All-caps signs weren’t the only strategy tenants pursued: according to San Francisco Board of Appeals documents, the tenants put a stop to construction Lipton had begun — the building is destined to become a tenancy-in-common — by lodging a formal appeal of the building permits the developer acquired from the city.

“Whatever repairs the owner may be contemplating,” the tenants wrote in their appeal letter, “Amount in our estimate, to a covert attempt to remodel the units while the tenants are still living here, while at the same time, inducing them to leave.”

Once an appeal to a building permit is filed, the permit is put on hold, and all construction must stop until a hearing is held over the dispute. Although the tenants ultimately settled with Lipton before arguing before the Appeals Board, the strategy may well have delayed Lipton’s plans, and provided additional leverage for the tenants to reach a favorable agreement.

The Anza tenants’ plight reflect a growing trend in San Francisco’s Richmond District — which is fast emerging as an Ellis eviction battleground. Combined, the Inner and Outer Richmond have one of the highest Ellis eviction rates in the city, District One Supervisor Eric Mar told The Appeal.

“This is the tip of the iceberg,” he said, and added that his office is hearing numerous anecdotes from residents, who worry about displacement and eviction. The startlingly high level of Ellis evictions threaten to tear apart a neighborhood populated by multi-generational Asian, Jewish, Irish, and Russian families, as they have in other neighborhoods.

“I see the eviction crisis as the most important priority in our district at the moment,” Mar said. The supervisor also mentioned several initiatives aimed at curbing speculation, and bringing new housing on line. Also, Mar said, the city wide Tenants’ Convention last Saturday is another encouraging development, giving him hope that residents are learning how to fight back.

But, for the tenants of 2405 Anza St. the battle against eviction and displacement is over. At least for now.

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  • cedichou

    Headline is catchy, but a tad misleading. The investor does admit to real estate fraud, but to a different case and for different buildings than the one in question here. “tenants settle with investor who admits to fraud” seems to connect both cases.

    I would have loved to see numbers for the buy-out! Oh well. I’m hoping the elderly ones got $100k. At least, they got the 2 years of rent difference with market rate that Campos wants to impose on Ellises…

    I find this interesting as well: “Combined, the Inner and Outer Richmond have one of the highest Ellis eviction rates in the city, District One Supervisor Eric Mar told The Appeal.” This does not seem to square with the “Google-is-destroying-San-Francisco” narrative, I don’t think the outer richmond is ground zero for shuttle bus activities…

  • stanmill

    Lipton’s legal problems have nothing to do with this building. I rented for many years of my life and knew I was a tenant. I could give notice and move anytime, if I found a better place. Then years ago all of a sudden, tenants had “rights” to black mail the owner. Food is more important than a place to live and yet we don’t have food control. The largest landlord in Cal probably owns less that 2% of all units, if that. Most owners are mom and pops and yes some are rich dudes, too. Most owners work years to save money to buy an apartment building and then they have to go thru this.
    Rent control distorts the market and makes rentals scarce.

    • le_sacre

      Rent control is a tough issue to think through. But the food analogy is really inapt. If food prices started to spike because of shortage in supply, it would be trivially easy to bring in more food to meet the demand.

      I support mom&pop’s rights, but going into the landlord business shouldn’t be a frivolous thing, as housing is a huge deal in people’s lives (the hugest, by many measures). If mom&pop are upset they can’t raise the rent (to what, offset their oh-so-rapidly rising property taxes??), they should put the property on the market or should never have started renting it out in the first place. I can see the libertarian argument that people who can’t afford to live in SF anymore can always move somewhere else–except for when they can’t because they’ve built their entire lives, families, and responsibilities here. The whole purpose of government is to protect the less powerful from the more powerful, because the health of the society overall is built on the labor, demand, and vitality provided by the relatively powerless majority. It doesn’t take much compassion–or common sense–to see housing as a human right, which means that tenants’ rights must in many cases trump property-owners’.

      Do you really think, if we had no rent control, there would be enough extra vacancy available to absorb the current high demand without a huge spike in market rental rate? Seems pretty unlikely–such a system could conceivably work for long term trends, but when you have a massive influx of wealthy young renters like the past couple of tech surges here, it seems clear that a system without rent control would almost immediately price huge numbers of vulnerable tenants right out of their SF lives, to everyone’s eventual detriment. Particularly since we can’t go back in time to prevent rent control from starting and hope that would lead to huge increases in developing new housing supply.

      • stanmill

        People pay Federal taxes that go for food stamps. That means, society as a whole has decided to aid people to get food. With rent control you have an individual directly subsidizing another. Let the City propose a tax on all citizens, to pay towards rent control and see how far you get. Renters are a majority, it’s easy for them to tax others. Now listen, rent control is a shotgun, it covers all. The person whose grandfather died and left him lets say $500,000, should he get to live below what others would pay? This happens many times and people will take the extra money and buy a new car. Rent control started out to help the poor (obliviously), but now thousands with money live in rent controlled units and spend money on other material things. Think it through, rent control now is not working, it’s arbitrary and distorting. Why don’t you be fair to others who want to live in the City? Let people in rent control units live here for six months and then trade with someone in Antioch who wants to live here. See what I’m getting at. This is not a noble cause. People want good things for themselves, it’s human nature. It is self interest and I’m not really a Libertarian, but it’s true. One more thing, you said people spent their lives here, so when that unit becomes vacant to a new renter, it should become free market forever. There are so many permutations to consider with rent control. The bottom line is, it’s unfair to others who want to live here.
        It locks people out and makes newer units more expensive.

        • mmathers

          Means testing is something I’ve thought about as well. Have you reached out to your local Supervisor? I pinged Scott Weiner about it and he didn’t think it was politically viable. He also believed that it would give landlords an incentive to only rent to higher income people (which doesn’t make sense to me as higher income ppl are the ones already paying the higher rents anyway). If you feel that this is a viable solution, i would encourage you to bug your supervisor about it.

          As far as your suggestion that people split their time between here and Antioch if they can’t live in SF fulltime, well, even I see that your suggestion is probably a non-starter.


          • stanmill

            My suggestion that people share their City apartment with people in Antioch was a little sarcasm mixed with satire.
            The point was (IMHO) that people are out for themselves. people want to live in the City because they have the cafes, the museums, the bars to hang out in. Most people want this, who wants to live in Baker, California. So they favor rent control, why wouldn’t they? Someone else (NOT EVEN THE LANDLORD, BUT OTHERS WHO WOULD PAY THE RENT) is subsidizing their life style. God forbid that they can’t have their latte every morning in some hip coffee place.
            But with rent control and a cheap apartment (below the true market rent) they can have all the $5.00 coffees they want.

        • neutral_corner

          Rent control didn’t start in San Francisco to help the poor; rent control in San Francisco came about because wealthy seniors didn’t want to see more of their income go toward the increasing rents on their long-held rental homes. It wasn’t the poor who brought about rent control in San Francisco; it just feels that way.

          • stanmill

            to neutral
            I agree with you. My point is that “rent control” is not that noble. People are out for themselves, rich and poor. If people could get free food or a free vacation, they would do it. I include myself. And rent control does distort the market. I PERSONALLY know of situations where single people lived in a two bed apartment and did not move because it was cheap rent.

  • bobster1985

    The Ellis Act should not allow speculators to buy properties and flip them. There should be a 5-year minimum ownership required before an owner can apply for an Ellis Act eviction. That would stop a lot of this speculation.