Chen allegedly refuses to return the security deposit of tenant even after thousands are spent for Code Compliance.
California Congressional candidate Jay Chen, a family partner in New World Investments, LLC is embroiled in a dispute with PodShare, Inc. over the return of a $16,000 security deposit for a property on 700 E 1st Street in Los Angeles.
The property, west of the Los Angeles River on E 1st Street was leased to Elvina Beck for a Podshare location on Dec.1, 2017 for approximately $9,000 per month.
The details of the dispute suggests that Jay Chen, who was the primary partner in contact with Beck, did not maintain the property to conventional leasing standards.
The trouble began on January 16, 2020, two years after the signing of the lease, when the Los Angeles Fire Department showed up at the doorstep of the 1st Street property for a routine inspection. The Fire Department found that there were a number of code violations: no illuminated exit signs; no fire permit; and not enough smoke detectors. They also requested proof that the basement sprinklers were operational as they were not up to code. The property which has been around since 1926, did not have proper unreinforced masonry retrofits (URM) completed to comply with earthquake codes and necessary for the safety of the tenant.
The LAFD inspector, concerned by the lack of maintenance for “life safety” conditions which are essential to building occupancy, informed the Los Angeles Department of Building and Safety. The inspections resulted in nineteen code violations being cited.
According to the Los Angeles Department of Building and Safety, the building on 1st Street was classified for use as a hotel. Chen therefore was leasing “hotel” space which was ideal for Beck’s purposes, as PodShare provides pods for hostel-type living to travellers or those looking for transitional housing.
The violations listed included: no lighted exit signs; no wired smoke detectors/fire alarms; unmaintained and painted over sprinklers; no fire extinguishers; no fire permit; unpermitted water heater, lack of permits for kitchen, bathroom and sleeping areas; a couch blocking an exit door; failure to provide premises address numbers; no certificate of occupancy; failure to obtain building permits; unlicensed wiring; failure to submit plans and get required approvals, among other infractions.
Beck spent thousands of dollars refurbishing the space to accommodate her business. The violations threatened the continued use of the space. She informed Jay Chen about the situation, also letting him know that a request for the sprinkler paperwork was made, in order to show that the sprinklers were functional.
Several of the code violations were due to Chen’s alleged failure as a partner to adequately maintain the building to Los Angeles Municipal Code, but Chen was insistent it was solely Beck’s responsibility to address all of them. Unwilling to abandon the site in which she had so much invested, Beck set about salvaging her business.
Beck stayed in contact with LAFD and LA Department of Building and Safety to work towards compliance. She purchased new exit signs and got a licensed electrician to install the signs and connect new smoke detectors. According to Beck, previous electrical work was installed by Chen using an unlicensed service. In trying to secure a fire permit she found that it was Chen’s obligation as the building’s owner to request it and keep it current. He would be the only one who could obtain the permit. LA Department of Building and Safety pulled paperwork on the building, it showed that kitchen, bathroom and sleeping areas were proper uses as originally registered. Beck hired an architect to draw up the floor plan and found an expediter to advance it through plan check. Ultimately, the plan was flagged because of a missing load-bearing beam/wall which may have been removed by a previous tenant. The reinstallation of the beam/wall would fall to Chen and require him to hire an engineer and obtain related permits.
It was also discovered that Chen had allegedly failed to perform scheduled testing of the sprinklers since 2010, and not serviced the fire suppression system since 2000. The sprinklers on the premises had been painted over and had not been up to code prior to the execution of the lease.
Beck addressed all concerns including the retroactive permitting of any unpermitted alterations, at her own costs spending $15,534 to bring the facility up to code in an attempt to save her business.
The issues that first arose appear to be violations of Los Angeles Fire Codes and The California Codes of Regulation, Title 19 Division 1 on Public Safety.
The City of Los Angeles Fire code, requires that buildings have a fire protection system, and that it is maintained at all times.
Code 901.4.1 states in part, “ Fire Protection systems required by this code or the California Building Code shall be installed, repaired, operated, tested and maintained in accordance with this code.”
Other relevant Fire Codes indicated in “903.5 Sprinkler systems shall be tested and maintained in accordance with Section 901.” and “903.5.1 Sprinkler heads shall be replaced if painted, corroded, damaged or otherwise determined to be ineffective.”
Additionally the California Code of Regulations on Public Safety on Automatic Fire Extinguishing Systems requires “Records of all inspections shall be retained on the premises by the building or system owner for a period of five years after the next required inspection.”
The California Codes in Title 19 also requires that smoke detectors, fire extinguishers and sprinkler systems be “maintained in an operable condition at all times in accordance with these regulations and with their intended use.”
This appears to not have been the case when the building was leased and appears to have been the basis for the LAFD calling for further inspections of the building by the LA Department of Building and Safety. Chen claims that these requests for Fire Code compliance were the responsibility of the tenant.
The city attorney became involved and a misdemeanor complaint was filed with the Los Angeles County Superior Court in July 2020. Both parties were summoned to appear in court on August 20th. Chen’s brother hired a lawyer to represent New World Investments. Beck appeared on her own and was able to persuade the judge to forego all charges against the parties.
Since she did not have any use violations, the only hurdle left was to get the beam/wall reinstalled. All alterations she had made to get her business up and running were approved by Chen prior to being done and were ultimately permitted in accordance with her use of the space. She had come this far and expended thousands of dollars to bring the facility into compliance. However, Beck would not be allowed by the city to continue to operate without full compliance. According to Beck, Chen was dragging his feet on getting the beam/wall reinstalled.
After much back and forth Beck agreed to leave the premises at the end of January 2021. She removed her pods and returned the building to a similar condition to how she received it, but now it had a plumbing upgrade, lighted exit signs, smoke detectors and wiring, fire extinguishers and tested sprinklers. She did the final walk through with Chen and requested the return of her security deposit.
Chen allegedly decided the security deposit would not be returned. According to Chen, New World Investments was entitled to cover the sprinkler maintenance costs and lawyer’s fee per their lease agreement, and was in fact requesting an additional sum to make up the shortfall for such fees.
The lease had provisions that required Beck to inspect and review the premises for “The possible presence of hazardous materials, The zoning of the premises, The structural integrity of the premises, The condition of the roof and operating systems, Compliance with the American Disabilities Act, and The stability of the premises for Lessee’s intended use.”
The lease expressly excludes the fire sprinkler system as the tenant’s responsibility. The portion of the building leased by Beck was the only one inspected that day. Chen also allegedly failed to notify Beck in writing, as required by the lease, on the hiring of an attorney for the court summons.
Beck has moved out. The building space she rented on 1st Street is vacant.
