One of the nation's largest single-family home rental companies has agreed to pay about $20 million to settle allegations that it carried out unpermitted renovations across its California portfolio.
Invitation Homes, which owns 12,000 homes in the state, will pay $8 million to Los Angeles and 34 other cities, $8 million to Blackbird Special Ventures, the San Diego company that filed the lawsuit, plus $4 million in attorneys' fees, under a settlement filed in federal court Monday.
Blackbird, owned by La Jolla entrepreneur Neil Centuria, sued Invitation Homes in 2020, alleging that the home-rental company bought properties and systematically renovated them without permits, including extensive demolition, electrical and plumbing repairs and building pools. California law gives third parties a financial incentive to sue on the state's behalf. Blackbird said it discovered the permits were needed through automated technology that analyzed a sample of before-and-after images of Invitation Homes' rental properties.
Vince McKnight, an attorney with Sanford Heisler Sharp who is representing Blackbird, said the practice burdens the city with permit fees and puts tenants at risk of living in poor conditions.
“If they're doing construction without permits, there's no inspection and no way to know if it's up to code,” McKnight said. “You don't know if your tenants are in safe homes.”
Invitation Homes has not admitted to any wrongdoing in the matter and continued to deny the allegations in a statement. The company said settling the lawsuit was “in the best interests of all stakeholders and will allow the company to better focus on its core business.”
Under the proposed terms, each city would receive a portion of the $8 million based on the number of affiliated homes the company owns in their jurisdiction: Los Angeles would get $1.5 million, while Sacramento would get $967,000.
The lawsuit marks the second major legal settlement involving Invitation Homes in California this year. In January, the company He agreed to pay $3.7 million. to settle Attorney General Rob Bonta's allegations that the company violated California's rent gouging laws.
Invitation Homes owns 84,000 properties across the U.S. Properties in California accounted for 17% of the company's $632 million in rental revenue for the three months ended March 31, the company said. Latest quarterly financial report filed with the U.S. Securities and Exchange CommissionThe average monthly rent for Invitation Homes properties in Southern California is $3,047, the highest in the company's national portfolio, according to the report.
