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I rented a house in Ca. two weeks ago. My landlord was arrested

and charged with fraud in...
I rented a house in Ca. two weeks ago. My landlord was arrested and charged with fraud in excess of $300,000 this past week. A judge froze all of his assets. Should I continue paying rent ( considering he is holding a large security deposit ) ?
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Answered in 6 minutes by:
8/1/2012
socrateaser
socrateaser, Attorney
Category: Landlord-Tenant
Satisfied Customers: 39,362
Experience: Retired (mostly)
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That's interesting. Can you tell me more about the underlying offense? What is the defendant accused of actually doing?
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Customer reply replied 5 years ago
He is a doctor, he is accused of defrauding medicare. Prosecutor stated he is a flight risk because he is from egypt and has extensive international travel. Security deposit was over $ 10,000
Thanks. I was wondering if it was a "rent skimming" case (Civil Code 890-894), which would give you different rights as a tenant, than would apply to other types of criminal actions. It's not, so I shall dispense with that consideration.

Legally, you have no right to simply stop paying rent. If the prosecutor has obtained an order from the court to turnover the landlord's passport, then he's not going anywhere. Though, there is certainly a risk that he will file for bankruptcy or simply squander all of your deposit.

The court having frozen the landlord's assets has also probably frozen your security deposit. California law makes the security deposit the highest priority debt, except for child and spousal support. However, if the doctor is being prosecuted in federal court, then California law will not protect you. Which means that your deposit is at risk, in my opinion. You may want to ask the prosecutor if he/she would ask the court for an order to segregate your deposit from the doctor's other assets so as to protect them from being used for any purpose other than as security for your rent. I think that's a reasonable request. If the DA or U.S. Attorney won't help, you could file a civil action and ask the court to make the order under the legal theory that your deposit may be unfairly forfeit to the government (frankly, it's probably not worth the money to hire a lawyer to do this, but I'm trying to be thorough with the options).

Other than that, you have a choice: you can just stop paying and wait and see if the doctor is so busy with his troubles that he forgets about your rent payments. Then, if you manage to use up your $10,000, you could start paying again and hope that the landlord doesn't bring an unlawful detainer action against you.

But, once again, from a pure legal standpoint, you don't have grounds to simply stop paying rent. So, you'll have to make the judgment call. I certainly wouldn't blame you were you to stop paying, because there's a pretty good chance that you will lose that $10K, unless the DA/U.S. Attorney agrees to help you out.

Hope this helps.

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socrateaser
socrateaser, Attorney
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Satisfied Customers: 39,362
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