San Jose real estate firm settles complaint over tenant rights violations

SAN JOSE — A high-profile real estate firm in San Jose has settled a complaint filed by state justice officials that claimed the developer violated the rights of 19 of the company’s tenants, according to legal papers.

Green Valley Corp., which, according to the complaint is also known as Swenson Builders, agreed to pay hundreds of thousands of dollars in restitution to the affected tenants as well as penalties, a complaint and settlement filed in Santa Clara County Superior Court show. The complaint listed Green Valley as the defendant.

“The defendant violated the (California) Tenant Protection Act by raising rent for 19 of its tenants above the annual allowable limit,” according to a complaint that was filed by the state Attorney General’s Office. “Defendant also sent eviction notices to six of those tenants without just cause.”

The settlement obliges Green Valley to pay $391,130, which consists of $331,130 in restitution to 17 employee tenants who were impacted by the company’s actions and $60,000 in penalties.

The tenants whose rights were violated were individuals whom Green Valley employed when the unlawful actions occurred, the legal papers show. The people were renting residences that Green Valley owned, according to the complaint. The complaint was filed with the county court on June 13 and the settlement was filed on June 15.

“After receiving credible complaints in late 2021 about employee-tenant rent increases, the California Attorney General’s Office launched an investigation into Green Valley,” the state Justice Department said. “The investigation revealed that Green Valley’s rent increases violated the Tenant Protection Act’s rent-increase cap for nearly 20 employee tenants, whose rents were increased by an average of 151%.”

As of the latter part of July 2021, the maximum rent increase allowed in Santa Clara County was 9%, the court documents stated.

The California Tenant Protection Act, which state Attorney General Rob Bonta authored when he was a state assemblymember, establishes an array of restrictions on the amount and circumstances for increases in monthly rent and other situations that might violate the rights of a tenant.

“In late July 2021, Green Valley Corp. notified 19 of its employee tenants verbally or by email that their rent would be increased as of September I, 2021,” the court papers stated. “The tenants’ rates were above the 9% maximum allowable percentage rate increase.”

San Jose-based Green Valley is refunding 15 months of overpaid rent to the employee tenants who paid the unlawful increases, state justice officials said.

For the employee tenants who moved out due to rent increases or eviction notices, Green Valley will pay 15 months’ worth of the difference between their lawful rent amounts and the estimated fair market value of the new units to which they relocated.

Plus, the state justice department probe restored lawful rental rates for three employee tenants who paid the unlawful rent increases and continue to rent from Green Valley

Landlords are allowed to terminate leases and evict tenants for certain just causes spelled out in state laws.

One allowed circumstance is “withdrawal,” that is, the rented residence is being withdrawn from the rental market such as if the landlord is ceasing operations or converting an apartment to a condominium for sale.

Another allowed circumstance is if the unit is slated to undergo a “substantial remodel.” Substantial remodels include “the replacement or substantial modification of structural, electrical, plumbing, or mechanical systems requiring a government permit, or the abatement of hazardous materials.” Plus, the work can’t be accomplished safely with the tenant present. In addition, the work requires the tenant to vacate the unit for 30 or more days.

“In September 2021, Green Valley Corp. served eviction notices on six of the 19 employee tenants,” the legal complaint stated. “In two of the instances, it cited ‘withdrawal’ as the just cause, but put up the units for sale rather than removing the units from the rental market.”

Green Valley also violated the remodeling provisions, the legal filing asserts.

“In the other four instances, Green Valley Corp. cited an ‘intent to demolish or substantially remodel’ but did not undertake substantial remodeling work as that term is defined by the Tenant Protection Act,” according to the court papers.

The settlement represents the first public action by the state Justice Department in which the California agency is enforcing the Tenant Protection Act, the state Attorney General said.

“Impacted Green Valley employee tenants are getting financial relief,” Attorney General Bonta said. “In addition, they are being protected from skyrocketing rent increases and evictions without just cause, including pretextual evictions that do not meet the (Tenant Protection Act’s) requirements.”