The San Francisco City Attorney’s Office announced that the city has filed a lawsuit against a pair of homeowners, alleging that the couple lied to illegally obtain a below-market-rate (BMR) condo nearly 20 years ago.
The suit further alleges that the two are wealthy investors who no longer live in San Francisco—and rent out their BMR condo.
“The couple unlawfully rented [the condo] out and used it as a pied-à-terre as they lived in a $2.8-million home in the exclusive Redwood City neighborhood of Emerald Hills,” said the San Francisco City Attorney’s Office in a press release.
SF Planning Department records show that defendants Caroline Novak and Igor Lotsvin bought 300 Beale #316 (a studio inside a 53-unit building) for just over $178,000 in 1999.
According to the suit, “Novak’s unlawful conduct started [...] when she lied on her initial application to obtain the BMR unit by falsely stating she did not already own real property, which disqualified her from the BMR program.”
Since then the city alleges the pair have illegally converted the home into a lucrative rental, and that neither Lotsvin nor Novak have lived in San Francisco since 2015.
“The city’s affordable housing program is not an investment scheme to be manipulated by would-be real estate moguls looking to profit off the housing crisis,” said Herrera in a public statement.
CBS SF identified Novak as an alleged BMR cheat in a 2017 report, even confronting her at her tony Redwood City home. Novak insisted she still lives at the Beale Street condo.
Real estate aggregate site Block Shopper does record a $2.25-million sale of a more than 3,000-square-foot house at 1026 Lakeview Way in Redwood City to Novak and Lotsvin in 2015.
The case, City and County of San Francisco et al. v. Caroline Novak, was filed in SF Superior Court on Thursday.
Among other penalties, Herrera says he is seeking “up to $2,500 per violation of the state’s unfair competition law and up to $1,000 per violation of the Planning Code, including every day they owned the unit”—i.e., 7,169 days as of Friday.