Bonta announces $3.5 million judgement against property flipper over eviction policy

(The Center Square) – California Attorney General Rob Bonta announced a $3.5 million judgment against Redondo Beach-based real estate investment company Wedgewood on Wednesday after the company was alleged to have unlawfully evicted tenants from foreclosed properties.

The judgment, subject to court approval, would require the real estate company to pay $2.75 million in restitution to unlawfully evicted tenants, $250,000 in civil penalties and $500,000 to support programs that benefit California tenants or combat homelessness, according to the attorney general.

“Too many Californians live on the precipice of eviction, worried that they and their family might someday be kicked out of their home,” Bonta said in a statement. “While we have strong protections in place for tenants of this state, there are still those companies who would skirt the law to turn a profit. As the People’s Attorney, I am committed to using all the tools in my toolbox to advance housing access, affordability, and equity in California. Today’s judgment is a step forward.”

According to Bonta, Wedgewood regularly purchases foreclosed residences, refurbishes them and re-sells properties in a process popularly referred to as “flipping.” But to make a profit, Wedgewood has to move fast to remove existing tenants before putting the house up for sale, either through eviction or “cash-for-keys” exchanges where occupants are paid to vacate, according to the attorney general.

While Wedgewood can legally evict lawful tenants from purchased properties, the process can take several months – a timeline that did not align with Wedgwood’s business model, which centered around moving properties off its books in a matter of days or weeks, according to the attorney general.

To do this, Wedgewood allegedly utilized unlawful tactics, including depriving existing tenants the right to stay on a property for 90-days after foreclosure under an existing lease, pressuring tenants into “disadvantageous” cash-for-key agreements and pressuring tenants to leave the property by depriving occupants of utility services, according to a complaint filed by Bonta.

As a result, Bonta’s judgment will require the company to reform its business model to ensure tenants are protected under law through several injunctive terms. The requirements include requiring the company to document and comply with state and local law for all cash-for-keys negotiations, providing proper notice to tenants before eviction and providing regular reports to the attorney general documenting compliance.

In a statement, Wedgewood said after a five-year investigation that focused on actions before 2016, “Wedgewood and the CA Attorney General have come to a mutually agreed-upon settlement which includes no admission or finding of any liability and denies all allegations asserted.”

“Wedgewood was 100% cooperative and transparent with the investigation,” the statement continued. “Ultimately, Wedgewood made the business decision to reach a settlement and move forward with our ongoing commitment to revitalize and recirculate residential properties back into California’s housing supply, creating thousands of homeownership opportunities across the state.”

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