Rent Escrow Account Program (REAP) Information for Landlords/Property Owners

QUESTION:    Why are properties placed into
REAP?

ANSWER:       Properties are placed into REAP for the following:

1.     The building or unit(s) was subject to one or
more Notices To Comply, or Notice Of Substandard Conditions.

2.     The period allowed by the Notice for
compliance, including any extensions, expired without compliance.

3.  The cited violations affect
the health and safety of the occupants.

The REAL ANSWER:     Properties are placed into REAP for the following:

1.   Substandard conditions can include a missing smoke detector battery, a hole in a window screen, or a crack in the caulk around a sink.  Any two of these issues can land you in REAP.  An inspector can find an excuse to put almost any unit into REAP on a given day. The compliance period can  be incredibly short, and because the notice is sent via US Mail, you may often receive it after the period is over.   Your tenant’s inability to maintain a clean apartment counts as a health and safety violation.

QUESTION:      What are the results of a property being placed into
REAP?

ANSWER:

1.     Tenants are given a rent reduction as a result
of the cited code violations at the property.

2.     An Escrow Account is opened and the tenants in
the affected units are given the option to pay their reduced monthly rent
into the escrow account, or to the landlord.

3.     A Notice of REAP is recorded and filed against
the property’s title with the County Recorder’s Office. This recording
may restrict the refinancing or sale of the property.

4.     The assessment of a $50 administrative fee per
unit in REAP, per month is charged during the time the property is
subject to REAP.

5.  To clear the title of the
REAP Notice, the property must be removed from the program and all fees
due LAHD must be paid. Once both these elements are satisfied, REAP
prepares a termination document that is filed on the property’s title
with the County Recorder’s Office.

The REAL ANSWER:

1.   Tenants are given a minimum rent reduction of 25% for an
issue as small as a crack in the caulk around a sink

2.     An Escrow Account is opened and the tenants can
choose to pay the remaining 75% of their rent to the city, or pay nothing
at all.  The city does not care if they actually pay, and it is the
housing provider’s responsibility to verify that the tenant actually
paid, which is very difficult.  If they did not pay, there is no
late fee, and it is the housing provider’s responsibility to pursue the
tenant for the funds.

3.     A Notice of REAP is recorded and filed against
the property’s title with the County Recorder’s Office. This recording
will restrict the refinancing or sale of the property, preventing the
housing provider from securing funds to make major repairs. It can also
be used by the IRS to refuse the housing provider any of his or her
deductions.

4.     The assessment of a $50 administrative fee per
unit in REAP, per month is charged during the time the property is
subject to REAP.  There are, however, no administrative services
that are provided for this fee.

5.  There is no known way to
remove the Notice of REAP, other than hiring an expensive attorney.

QUESTION:     How do I know if my tenants are paying into the
escrow account?

ANSWER:     The Department mails a tenant payment history document to the last known Registered Address. If you are properly registered, you will receive a monthly
summary report only if your tenants are paying their rents to
LAHD. If you are not correctly registered, you will not receive the
report. If you believe you should be receiving this report and are
currently not, please contact the REAP Section at (213) 808-8500.

The REAL ANSWER:       The Department mails no payment history.
They will not tell you how to “properly” or “correctly” register
yourself.

QUESTION:    How do I get the money from the escrow account?

ANSWER:   When the property is formally removed from the program the Department may release the funds held in escrow. However, please note the Ordinance requires that LAHD determine if any fees are owed the Department and collect the fees prior to releasing the remaining funds to the owner of record. Furthermore, the owner must submit a W9 form in order for the funds to be released. LAHD mails a W9 to the owner of record when the case formally closes.  

 The owner of record may apply to have funds released from the escrow account for repairs or to pay for utilities. If the owner of record has already submitted an application, you can check on the status of your application by contacting the REAP Section at (213) 808-8500

The REAL ANSWER:   When the property is  formally removed from the program the Department may release the funds held in escrow. However, they do not have to, and they never do unless you hire an attorney.

  The owner of record may  apply to have funds released from the escrow account for repairs or to pay for utilities, but the LAHD is unlikely to respond.

QUESTION:     How do I remove the property from REAP?

ANSWER:     Satisfy the following requirements:

1.     Obtain a Advisory Report from your assigned
Outreach Contractor.

2.     Attain a Sign Off on all outstanding orders
from your LAHD inspector (Case Manager). Once the first two elements are
satisfied, REAP will determine if there are no pending orders with:

  • Los Angeles Department Building & Safety
  •  Los Angeles County Department of Health Services
  •  Los Angeles Fire Department.
  •  Lastly, there may not exist a delinquent balance with Department of Water & Power.

If there is an open issue with one or more of the above agencies, REAP will notify the owner of record of which agency needs to be contacted to resolve the matter.

Once the above criteria is satisfied, REAP will recommend to the
LA City Council to remove the property from the REAP program. Upon
removal, LAHD will issue a 30 day notice closing the escrow account and
restoring the rents.

The REAL ANSWER:      Satisfy the following requirements:

  1. Obtain an Advisory Report from your assigned Outreach
    Contractor, although they will not issue such a report.

2.     Attain a Sign Off on all outstanding orders
from your LAHD inspector (Case Manager). However, when the inspector
returns, all the tenant has to do is remove the smoke detector battery
again to cause a failed inspection.  You will be charged a few
hundred dollars for this failed inspection.  If you refuse, you will
receive a 250% late fee.  The tenant can continue removing this
battery, or screen, or whatever, forever.  Once the first two
elements are satisfied, REAP will determine if there are no pending
orders with:

  •  Los Angeles Department Building & Safety
  •  Los Angeles County Department of Health
    Services
  •  Los Angeles Fire Department.
  •  Lastly, there may not exist a delinquent balance with Department of Water & Power.  Your current bill will count as a delinquent balance.

If there is an open issue with one or more of the above agencies,
REAP will notify the owner of record of which agency needs to be
contacted to resolve the matter.  If there is not, they will attempt
to wait until one occurs.

Once the above criteria is satisfied, REAP will recommend to the
LA City Council to remove the property from the REAP program. This will
never occur until you hire a lawyer.  Upon removal, LAHD will issue
a 30 day notice closing the escrow account and restoring the rents, if
you hire a lawyer and force them to do it.

QUESTION:    I have received a sign-off of compliance from LAHD
inspection and a resolved advisory report from the outreach contractor.
Why is my property still in REAP?

ANSWER:     Your property may remain in REAP for one of the following reasons:

·   The property has other outstanding orders from
additional city and county agencies. LAHD will notify the owner in
writing if there are outstanding orders on your property.

·
You may have a delinquent
balance with the Department of Water & Power (DWP). LAHD will notify
the owner in writing if there is an outstanding DWP balance.

The REAL ANSWER:    Your property may remain in REAP for one of the
following reasons:

·   The property has other outstanding orders from
additional city and county agencies. LAHD will not notify the owner in
writing if there are outstanding orders on your property.

·   You may have a delinquent balance with the
Department of Water & Power (DWP). LAHD will not notify the owner in
writing if there is an outstanding DWP balance.

·   You have not hired a lawyer
and forced them to.

QUESTION:   When can I start collecting my full rents?

ANSWER:    The owner of record and
tenants will be notified by mail that the property has be removed from
the program. The notice specifies the escrow account close date, and that
the rents will be restored 30 days from the date of the notice. You may
begin collecting full rents the first month after the REAP Escrow Account
is closed. For example: If the escrow account closed on July 17, 2008,
and rents are due on the first of the month, the owner may begin
collecting the full rent beginning August 1, 2008.

 

The REAL ANSWER:    The owner of record and tenants will be
notified by mail that the property has been removed from the program, if
you get a lawyer to force them to.  You may begin collecting full
rents the first month after the REAP Escrow Account is closed. For
example: If the escrow account closed on July 17, 2008, and rents are due
on the first of the month, the owner may begin collecting the full rent
six or seven months later, if you have an attorney.

QUESTION:    How do I remove the REAP recording on title?

ANSWER:    Termination of the REAP
recording, filed with the County Recorder’s Office, is contingent on the
following requirements:

1.     The case must be removed from the REAP program
and the escrow account is closed.

2.     Satisfactory payment of all outstanding fees,
penalties and costs to LAHD.

Once the fees are paid, REAP will prepare a termination document
and deliver the notice to the County Recorder’s Office.

 

The REAL ANSWER:   You cannot, without an attorney to force them
to.

 

We appreciate any other information you may have on this matter!
please Email us

Contacts Page