How to Avoid and Get Out of Reap - Los Angeles Housing Department!
"What the City of Los Angeles Does NOT want YOU to Know About REAP"
This is taken from my Special Report of the same title.
What is REAP?
In 2021, far too many residential income property owners in Los Angeles find themselves in battle with the Los Angeles Housing & Community Investment Department (“HCID”). It can be property as small as a duplex, or as large as a 1,000 unit apartment building. When property owners fail to comply with a citation issued by HCID, or doesn't do it soon enough, they can find themselves in REAP - the Rent Escrow Account Program. Only badddd things happen, so you want to avoid or get out of REAP as soon as possible, so this does not happen to you:
- Loss of Monthly Income (up to 50%)
- $50/unit monthly charge (while in REAP)
- $201.50 charge for each LAHD inspection (and there will be a number of them)
- Notice of REAP recorded against your property's title, which may restrict a refinance or sale of the property.
The longer you stay in REAP, the larger the financial drain. It is about ten times more difficult to get out of REAP as opposed to a typical building citation Order to Comply.
The Case Manager now not only looks for the cited violations, but ALL deficiencies on the property. No one's property typically passes on the first or second rounds. Additional sign offs will most likely be required from Building & Safety, Department of Health Services, Community Outreach and/or The Fire Department.
You have to comply, and the sooner the better – but you'll be surprised at what you may do, versus what you must do – and WHEN you have to do it!
What is The Purpose of REAP?
To put this into perspective, let's look at a little history. Straight from the HCID website:
It is the mission of the Los Angeles Housing Department Code Enforcement Division to identify and facilitate the abatement of physical conditions and characteristics of substandard and unsanitary residential buildings and dwelling unitswhich render them unfit or unsafe for human occupancy and habitation, and which conditions and characteristics are such as to be detrimental to or jeopardize the health, safety and welfare of their occupants and of the public.
The existence of such substandard buildings and dwelling units threatens the physical, social and economic stability of sound residential buildings and areas, and of their supporting neighborhood facilities and institutions; necessitates disproportionate expenditures of public funds for remedial action; impairs the efficient and economical exercise of governmental powers and functions; and destroys the amenity of residential areas and neighborhoods and of the community as a whole.
So, the city wants to make sure its supply of housing is safe and fit for use by its residents. (Unless you're cynical and figure that especially in these tough economic times, its just a huge money-maker for a cash strapped city. But I digress.) How does this affect you - the property owner?
How Does REAP Work?
Poorly; that's how REAP works! I mentioned the Case Manager, above. The Case Manager is charged with knowing about the department's policies, the law, procedures and methods, especially for inspectors in the field. It is the job of the inspectors to . . . inspect - residential units in multi-family dwellings, on a four-year cycle to ensure the safety and habitability of all occupied rental dwelling units once every three years or so, as per the city's Systematic Code Enforcement Program (“SCEP”).
Once a property has been cited, generally for unauthorized construction, and specifically for any number of reasons consistent with either Los Angeles' building and safety, fire, and health codes, or certain California codes, the information goes into the computer for ease of use by city personnel. The property owner gets a Notice from the city to Comply or Abate. For most owners, they have 30 days to do so. If, however, the city deems the problem to be dangerous or hazardous, it can order a shorter period of compliance. The SCEP task force schedules a second inspection to ensure that the corrective work has been performed.
A property owner fails a SCEP Inspection when repairs are not completed within the time period specified on the Notice and Order to Comply, or Notice and Order of Abatement. You will be summoned to an administrative hearing called a General Manager's Hearing. You can go by yourself, or with a qualified professional representing you. There you will have to explain the reason(s) for non-compliance, what progress (if any) you are making to comply, and specify the date the repairs will be completed. If you still fail to comply, your case file will be sent on to the City Attorney for criminal prosecution. This may result in jail time, a fine, or both. The property may also be subject to inclusion in the dreaded Rent Escrow Account Program.
Theoretically, REAP is an enforcement tool for the city, to try to get residential income property owners to maintain their properties in compliance with all city codes, and when cited for a code violation, to fix the problem making it once again, code compliant.
Once the property goes into REAP, an owner must act immediately. Regrettably, most owners don't know this. An owner can request a “General Manager REAP Hearing” to appeal acceptance of a unit or building into REAP. There are certain procedural requirements to be followed, and most important, it MUST BE APPEALED WITHIN 15 CALENDAR DAYS of the city's Notice of Acceptance into REAP, or the property is automatically placed in REAP. Note that the appeal of the General Manager's Decision does not provide the owner more time to comply. Even if the owner appeals the acceptance into REAP but attains compliance after the General Manager's Hearing's date, the compliance date is considered late and the property will STILL be placed into REAP. However, a timely appeals stays (stops) any further REAP proceedings.
General Manager REAP Hearings are administrative hearings which are used to determine if a property meets the requirements to be placed into REAP, with a reduction in rents. Compounding this, the General Manager has the power and authority to issue a further rent reduction or to include additional units into REAP. Also, since there is also going to be a General Manager's Code Enforcement Hearing, the city tries to combine it with the REAP hearing, as a “combo” case, combining Code Enforcement issues with the REAP matter.
It is beyond the scope of this report to go into the General Manager administrative hearings at length. Be advised that the hearing cannot be postponed or rescheduled. For Code Enforcement- REAP cases, the hearing is held to determine (1) which penalties, if any, should be assessed against the property owner due to non‑compliance with the Notice to Comply or Abate, and (2) whether the property meets the requirements to have been placed into the REAP. Just know this; the deck is stacked against the property owner. There a host of legal and other issues that arise at the hearings, and one more thing; tenants can and frequently do attend these hearings - and can testify is they so choose. Remember, if you do not know your rights, you have no rights. So my recommendation is to either have a representative attend WITH you, or at least speak with one beforehand.
Following the General Manager hearings, you have the right to appeal the decision. This is another highly technical area. However, the appeal may be rejected for various reasons. Please read the information in the “Right to Appeal this Decision” section of the General Manager's decision and the bottom portion of the appeal form for more information. There is a non-refundable $150 filling fee for the appeal which must be timely received. The appeal process is another step in asserting and protecting your rights.
How Do You Get Out of REAP?
Besides knowing how to avoid REAP, property owners want to know how to get their properties OUT of REAP. Be forewarned: it's a time-consuming and therefore expensive process. To get out of REAP requires:
- Repair ALL cited violations, plus any other violations, cited or not at the property.
- Work with REAP administrators.
- Have your property ready for all site visits from anyone connected with the REAP process.
- Work with the non-profit group assigned to your case to ensure compliance.
- Once a report is issued, take further steps as necessary. A negative report means further work is required. A positive report means calling your case manager for a final inspection and sign-off.
- HOWEVER, total compliance is required, which means all order must be complied with, such as Building & Safety, Department of Health Services, and/or the Fire Department.
- Your current DWP bill must be paid.
There's still another hurdle. After all of the above, the REAP administrators must recommend to the LA City Council to remove your property from the REAP program. After that, the City Council must vote to adopt removal of your property from REAP. Then they will issue a 30 day notice formally closing the escrow account and restoring the rents to their original levels.
Even after you meet all the hurdles, no one from the city will do anything without you pushing for everything that you want and are allowed by law.
How Long Will The Removal Process Take?
Theoretically, once a positive report is issued and compliance attained, REAP could have the case before City Council in 2 to 3 weeks. However, that rarely happens; it usually takes a lot longer. The good news is, you're your property is removed from REAP, the administrators are required to mail you a 30 day notice, in which they formally close the escrow account and restoring the rents to their original level. So the time to remove a case is a minimum of 6 to 7 weeks and a maximum of “pick a number.”
How Do You Clear Your Title Once in REAP?
After your property is removed by the Los Angeles City Council, the owner is responsible for paying all REAP Administration Fees, Inspection Fees, SCEP fees, Legal preparation Fees, the 2 pre‑paid annual inspection fees. Once these fees are paid, REAP will prepare a termination document and send the paper work to the County Recorders Office. Cases where tenants made deposits into the escrow account will be used to cover the costs of these fees. If there are not enough funds to cover the costs, the owner is required to pay the balance.
Call me, Andy Baker, for a free,
25 minute REAP Reality Check Call
Where we'll get on the phone and:
1. Clarify where you are in the REAP process
2. Look at your code citation / Order to Comply and REAP notices and make sure you understand exactly what you have to do to avoid falling into REAP or get out
3. Discuss which type of hearing you're scheduled to appear at and what you need to prepare for it (if you have a hearing date)
4. Go over the steps for making an appeal (if you're thinking of making one)
5. Look at options for what you need to do next from both a construction and legal point of view
6. Go over the timeline for getting things done on time so you can keep the situation from getting worse
7. Answer any questions you might have about any of this
By the end of the call, you'll have a much better idea of what's going on, what you need to do, how quickly you need to do it, and a few steps to take to start getting this resolved.
You'll also feel a sense of relief because you finally know the truth, and even if you have lots to do you'll have a better road map than before we talked.
And when we're done, if you want, I'll show you a few ways I can help you (if I think I can) and we can discuss how we could work together.
Here's what a few clients say about my help:
“Andy provided personalized attention to all matters of concern to us in removing my property from the LA Housing Department's Rent Escrow Account Program (REAP). I want to thank you again for your excellent job. I am sure this was not possible without you."
- Kam A, Apartment Owner, Woodland Hills, CA (last name withheld upon request)
“Andy provided me with all the legal information to get my guest house in full compliance with Building & Safety [and] legal issues will be avoided in the future. He also helped me evict a problem tenant from a guest house. He handed the distribution of relocation assistance funds through his escrow account to the tenant. He also handled the LA Housing Department. He kept me informed of my legal rights and accomplished all of his fiduciary duties with the highest level of care throughout the process. Andy knows the eviction laws and the building codes inside and out. I highly recommend Andy Baker and his services.”
- Nicholas Martinez, Homeowner, Van Nuys, CA
Here are two ways to schedule your
Free, 25-Minute REAP Reality Check Call
1. Call me, Andy Baker, now at 818-620-6023
I answer my own phone. If you get the voicemail. just leave your name and number and the city your property is located along with a brief message of what you're calling about, a good time to call you back and I will call you back.
2. You can also reach me by email at: [email protected]
In your email please tell me your name, a little bit about your situation and I will write back to you.
Whether or not we work together, this call can save you thousands of dollars plus lots of time and aggravation.
I look forward to talking with you soon
The Code Compliance Lawyer
22287 Mulholland Hwy, No. 131
Calabasas, CA 91302
Tel. (818) 620-6023
I help people stay out of REAP, or if they're already in, get OUT!