What is Rent Escrow Account Program, and How Does it Affect Single and Multi-Family Residences?

If you are a Single Family, Multi Family Home (e.g., Duplex, Triplex, Duplex, and Apartment Complex), and you are an Administrator, Executor, Fiduciary, Landlord, Trustee, and or Successor Trustee located in the City of Los Angeles, it’s imperative to know what and how the Rent Escrow Account Program affects the property. Rent Escrow Account Program (REAP) is under the direct supervision of the Los Angeles Housing Department (LAHD). The program was created to inspect and verify properties are habitable and are up to current health and safety codes. 

How Are Los Angeles Properties Placed into REAP? 

A property is accepted into REAP when LAHD has issued citations for Housing Code violations to the owner of the property, but the owner has failed to make the necessary repairs in the allotted time. If a property is accepted into REAP, there may be a General Manager’s Hearing, in which the landlord may contest the property’s acceptance. During the appeal of the REAP placement decision, it will be impossible for the renter to pay their rent using the escrow account until there is a final decision on the appeal. Once the decision to place a property into REAP is made final, the escrow account will become usable. 

Is the Tenant Notified of the Property Being Accepted into REAP? 

When a property falls under the purview of REAP, the tenant will receive a notice in the mail. This notice will provide renters with information regarding the nature of the violation, as well as the details on the amount of rent reduction and how to pay the rent through the escrow account. In certain circumstances, it may be necessary for an outreach contractor who represents REAP to visit the property and provide the renter with additional information on the details of the situation. 

What Can Release of REAP Escrow Funds Be Used For? 

Once the funds are deposited into the escrow account, the landlord can only access the money via an application process to ensure that the landlord is using the funds for an acceptable reason.

LAHD only allows landlords to use escrow funds for specific reasons, including: 

· Expenses sustained by renters due to uninhabitable conditions, 

· Voluntary relocation expenses, 

· Performing repairs, 

· Court judgments, 

· Paying for utilities, or 

· Other essential services

 LAHD specifies that a landlord cannot use requested funds to pay for property taxes, mortgage payments, or repairs on other properties. 

Follow Me

Get new content delivered directly to your inbox.