Herrera secures $245,000 settlement from Lem-Ray Properties for discriminating against low-income tenants

Lem-Ray and Chuck Post have been forced to halt their illegal practice of refusing to accept Section 8 vouchers

City Attorney Dennis Herrera

SAN FRANCISCO (Nov. 1, 2019) — City Attorney Dennis Herrera announced today he has secured $245,000 from Lem-Ray Properties to settle a lawsuit alleging the company illegally discriminated against low-income tenants by refusing to accept government housing vouchers. Lem-Ray also agreed to court oversight to ensure that it not only follows the law, but also affirmatively advertises that it accepts Section 8 vouchers.

“San Francisco’s laws are clear, and they protect low-income renters from systematic discrimination,” Herrera said. “We’re going to make sure the law is followed. Section 8 housing vouchers are an essential tool for many renters to secure housing in our city. It’s unacceptable for landlords like Lem-Ray Properties to disregard the law and effectively push out working class residents. We’re in a severe housing crisis, and it’s critical that we protect programs that offer renters a fighting chance to stay in San Francisco.”

The settlement is the resolution of a 2015 civil complaint that Herrera brought that demanded Lem-Ray Properties, an affiliate of the Lembi real estate empire, and broker Chuck Post halt the illegal practice of refusing to accept Section 8 vouchers from low-income rental applicants. Lem-Ray refused to accept these vouchers at its rental properties, and posted rental advertisements on the internet stating that policy, at 81 Ninth Street and 935 Geary Street.

Section 8 vouchers — so named for Section 8 of the Federal Housing Act, and also known as the Housing Choice Voucher Program — are administered locally by the San Francisco Housing Authority. The program allows low-income families to secure housing in the private rental market by requiring qualifying renters to pay 30% of their income toward rent, with Section 8 vouchers covering the remainder. The vouchers impose no additional direct costs on landlords, and landlords’ blanket refusal to accept them violates local law.

Case Background

Under San Francisco law, property owners and real estate agents are prohibited from refusing to accept federal, state, or local housing subsidies as a form of rental payment, or to indicate in rental advertisements that housing subsidies will not be accepted as payment.

Herrera brought this case on Oct. 21, 2015 against defendants Lem-Ray Properties, an affiliate of the once-high-flying Lembi real estate empire, and broker Chuck Post.

Post and Lem-Ray both violated the local law, according to Herrera’s 2015 complaint, together with provisions of the California Unfair Competition Law that prohibit unfair and unlawful business practices. Defendants also violated a 2011 injunction that required them to adhere to local laws and the state law on unfair competition.

In May 2016, Superior Court Judge Ronald E. Quidachay ordered the defendants to comply with the law and accept applicants from prospective tenants who rely on the federal housing vouchers. In issuing the preliminary injunction, Judge Quidachay found that Herrera is likely to prevail in the overall case.

The defendants appealed, but the Court of Appeal in April 2018 issued a unanimous, published opinion upholding the lower court’s ruling.  Lem-Ray’s petition to the California Supreme Court to review the case was denied in July 2018.

Lem-Ray is among the entities associated with the Lembi family’s once expansive CitiApartments-Skyline Realty empire, which Herrera sued in 2006 for an array of lawless business and tenant harassment practices involving at least 30 properties. The defendant is among the landlords memorably dubbed “the Scumlords” in an award-winning 2006 exposé by investigative reporter G.W. Schulz. Schulz won first-place honors from the California Newspaper Publishers Association in 2007 for his San Francisco Bay Guardian series on tenant mistreatment by the Lembis, who at the time were among the largest residential property owners in the city. Post is a real estate broker whose ApartmentsinSF.com website and other online rental postings had brazenly flouted local law by advertising that Section 8 vouchers would not be accepted as payment for Lem-Ray’s residential apartments.

The case is: City and County of San Francisco and People of the State of California v. Chuck M. Post, Lem-Ray Properties I DE, LLC et al., San Francisco Superior Court case number CGC-15-548551, filed Oct. 21, 2015. More information can be found on our website: www.sfcityattorney.org