Due Diligence on the Landlord: Some Tips

Most tenants don’t need to research the landlord because their relationship is business: the tenant writes the check and the landlord provides properly maintained housing. Every tenancy starts uneventfully and most continue so. But sometimes complications arise and disputes can find the courthouse. When the going gets rough it pays to do some due diligence!

This guide comes from the routine steps we take every day to research a landlord. We google; we scour city permits and city license records; we look at California Secretary of State entity registrations to find the actual (beneficial) owner of a property. We have found illegal units and identified short-term leasing schemes across properties tied by ownership this way. Inevitably the truth is hiding in plain sight if we know where to look.

Case Study: Hamid (Hank) Dayani

An an example of how we do the diligence is landlord Hank Dayani. He came to our attention for filing a Superior Court lawsuit in 2017 to block the rental unit registry. For the purpose of legal standing, his complaint identified him as an owner of two fourplexes in Beverly Hills.

Search for Dayani Properties & Info

First we googled. We found the name Dayani associated with two properties (151 and 153 South Maple Drive).

Next we google the property address(es). An online real estate listing may show if the building is for sale (beware!) or if it was recently sold (double beware!). The search may turn up some good-to-know information like whether the property was recently remodeled (was there a permit pulled?). There may be other useful information in the listing description. For example one listing for 9683 Olympic actually warned of a rented unit that might not be legal. Sometimes a listing will show the buyers and sellers in preceding transactions which is useful in reviewing the chain of ownership. It can show an inter-generational sale within the family for example.

We may check the tax assessor’s record.The county’s parcel search is one of the more valuable tools because it gives an overview of the parcel such as number of units, recent sale, current valuation for tax purposes, actual taxes paid and assessors identifier (AIN. (See this Dayani example.) Sometimes the landlord we’re researching is actually renting a condominium. Condos are generally — but not always! — exempt from rent stabilization. Condo properties are denoted by multiple AINs in the assessor’s parcel record one per unit.

Identify the business doing the apartment leasing. Search the city’s business license database by address by choosing ‘business address’ in the drop-down menu. Enter the street number and street name (for example ‘151 Maple’ but a directional like north, south or west is not necessary). The license shows only the operator name and license number. Searching one of Dayani’s properties shows ‘Luxor Properties Inc’ as the operator.

151 S Maple business license address
City of Beverly Hills search of business licenses.

Leasing units in the name of the individual owner is common with mom-and-pop operators (and even family trusts). But professional operators will hold each property in an individual limited liability company and perhaps lease through that entity. That is the case with 151 and 153 South Maple. When two adjacent properties are under common ownership it starts to point to a business plan: property speculation! [Update: Dayani sold those properties and the adjacent corner property in early 2020.]

Search for other property leasing companies under the same name. Under ‘Luxor’ we found two more: 9225 Charleville and 332 South Elm.

151 S Maple business license name
Searching the city business license database by operator name.

The Charleville property is a 5-unit corner at Maple. It is adjacent to 153 South Maple, in fact. If two properties suggests a longer-term business plan, then three contiguous parcels is a definite sign of a speculator-in-waiting. That’s no mom-and-pop!

Turn to city records to identify the property owner. Visit the CitySmart property database. Enter the street number and street name in the search bar then click on any correct search return. The landlord appears on the upper right. (This step is recommended in addition to the business license because sometimes the landlord listed on each differs. Having both will be helpful in a web search.)151 S Maple citysmart search return
151 S Maple citysmart owner name

151 & 153 South Maple in citysmart
Dayani’s tenants will know the operator as Luxor Properties and may have never heard the name Dayani. But there it is in the city’s online record.

The owner is often different than the operator shown on the business license. It may be an individual, a trust, or a limited liability company or a corporation (which obscures individual owners). In this case it’s a family trust. It appears on both Dayani properties.

Search property title records. Another way we identify property ownership, and specifically ownership of multiple properties, is we crosscheck entity names on property titles. We have a list of about a thousand RSO properties in Beverly Hills and sort them by mailing address. That shows which properties may be held in common (even when entity names differ). It’s another useful way to connect the dots!

Dayani properties sorted by titles street address
Property titles provide a wealth of information including mailing address.

Identify the Beneficial Owner(s)

More often these days we see owners using opaque structures like an LLC or a corporation. Who’s behind the entity? That’s why we look for the name of the beneficial owner(s) — those who reap the rewards. With corporations it goes to shareholders; with LLCs it passes through to individuals.

First we search for whomever may be behind an LLC or Corporation. It means some digging! But it is often rewarded with a tasty truffle like the name and address of an owner that may not be connected publicly with the property, or indicated as controlling the leasing business at that address.

Use the Citysmart permit database. It is a bit complicated to use so follow these steps:

1. Enter the street number and street name in the search bar at the top. Then click on the top search return, which is probably labeled ‘land.’ That takes us to the master property record. Scroll down for a permits list.

2. For old permits view the ‘archived documents’ top section. (Note the three dots at the top right. Click on it to view only the archived permits.) Newer permits are in the section below, labeled ‘activities/permits.’

3. Search the permits (particularly building permits, skip electrical and plumbing) for who looks like the beneficial owner. We find this permit with Hank Dayani’s name on it.

151 S Maple citysmart building permit

If we can’t find a permit with the beneficial owner(s) name, and the owner is an LLC or a corporation, then we can dig into state records.

Dig into LLCs and Corporations at the California Secretary of State. This can be done online. Search either the LLC or the corporation for the entity name. (Be sure to try variations of the name if the search comes back empty.)

151 S Maple California Secretary of State entity search
California Secretary of State makes public registration documents for entities including LLCs and corporations.
Luxor Inc SOS search return
Secretary of State record for Luxor Properties, Inc. Dayani has also registered Luxor Properties LLC, according to the agency, probably for management of 151 & 153 South Maple.

Then click through to the linked entity registration forms. Skim all of the forms for signs of a beneficial owner, like a ‘member’ or an officer.

Luxor Inc SOS record registration forms detail
Click through to the registration forms. Skim them all!
Luxor Inc stock corporation form
Sean and brother Hank Dayani are indicated as officers and likely beneficial owners of Luxor Properties Inc.

If the name associated with the entity is someone appointed for the purpose of receiving legal documents only, we have to dig deeper. Look across all of the filed forms (from registration to recent updates) and google the street addresses. What comes up? Often the name of an entity closely related to the beneficial owner(s).

However sometimes we must do additional sleuthing!

Use Corporation Wiki to connect the dots on beneficial owners and related entities. Corporation Wiki visualizes connections between individuals, LLCs and corporations from information in public filings. It’s not 100% complete but it is very helpful. For example, a tenant who thinks she’s leasing from a minnow landlord may be surprised to see his web of ownership vehicles and conclude instead that he’s a whale! And those additional leads will may yield useful information too.

Hank Dayani entity network visualized
Corporation Wiki’s map of related entities can be quite handy searching an entity or a beneficial owner.

Here a new entity pops up on the map: 511 Doheny Road LLC. So we go back to the Secretary of State to take a look at those forms.

511 Doheny Road LLC registration
The Secretary of State forms often include breadcrumbs that lead back to a beneficial owner or help to connect the dots among a web of real estate rental properties that we might not otherwise know.

The web of entities also led us to Dayco and other deb-collection firms in which Sean and Hank are partners. So we search these new ownership entities for connections, beneficial owners, or any information that can provide some intel on the landlord: court cases, disputes, ancillary businesses, whatever. A real mom-and-pop may have a slight presence online; and a professional management outfit may not turn up much interesting either. But the small-to-medium sized master of a budding property empire will have a paper trail.

Search Superior Court case records. Visit the Superior Court for Los Angeles County search page to see the litigation history breadcrumb trail. Landlords have services that blacklist litigious tenants, but tenants have no such service to identify litigious landlords. We have to do a manual search. Visit the case search page then:

  1. Scroll down to ‘Civil, Family Law and Probate cases’ and click on the button ‘search for entities or individuals by party name.’
  2. Scroll down the advisory pages on fees and click ‘continue.’
  3. On the login page you can optionally create an account (it costs a small fee to return actual court records) or ‘continue as guest.’
  4. On the ‘Search for Case Number by Name’ page enter the relevant search terms (first and last name or entity name).
Luxor court search return
Refine the search or continue on to pay the search fee and see all court records for Luxor Properties.

In our experience with the LA Superior Court search page, no positive search result will trigger an ask for $4.75 to continue the search. A positive result will say “The system has found ____ records that match the search criteria” and allow an opportunity to refine the search. Either way the court will charge for the search that can produce a document.

File a public records request with the city. Visit the public records webpage and download the form. A code enforcement record can be very valuable when we need to pore over the history of a rental property. Correspondence with an individual or an ownership entity is likewise useful for discovery in preparation for a legal case or small claims court.151 S Maple Public Records Act request example

Don’t be intimidated by the public records request; it’s not just for journalists or watchdogs! City Hall is obligated to provide public records to any requestor for a small fee. Pro tip: document copying charges do not apply if you want to only ‘inspect’ the records (not take them with you). Specific that on the request form!

We can’t emphasize how valuable is amateur sleuthing of this kind. It will reveal names of beneficial owners, partners, related entities, cases against tenants and business partners, and even civil actions by municipalities. All of these help to round-out the picture of a landlord who might otherwise hide behind obscurity. We found one landlord’s equine farm holdings simply because she complained to a city about her water rates. Her horses may be well-fed but her longtime rental property in Beverly Hills is in need of care and feeding.

Update: the lawsuit filed by Hank Dayani to block the registration of rental units was dismissed in March of 2019.