Attorney General Lockyer Files Legal Action Against Arnel Management Company to Provide Refunds to Renters in Orange County

(SANTA ANA, Calif.) – Attorney General Bill Lockyer today settled a $1.5 million consumer protection complaint against Arnel Management Company for wrongfully denying the return of security deposits to thousands of tenants in Orange County. Both the complaint and stipulated judgment were approved today by the Orange County Superior Court.

"Over $1 million is set aside for refunds to renters who were charged improperly for cleaning and repair costs when they moved," Lockyer said. "Seeking to prevent recurring problems, the settlement requires Arnel to explain its security deposit rules clearly to current tenants and the company must take steps to have renters present for the moving-out inspection."

Under the settlement, Arnel Management Company will pay $1.1 million for refunds to tenants who vacated rental units between March 1, 1997 and September 28, 2001. Arnel also will pay $200,000 in civil penalties and $150,000 in investigation and prosecution costs. In entering into the stipulated judgment, Arnel admitted no wrong-doing.

The consumer protection action was brought over alleged illegal withholding of security deposits and other violations of California's landlord-tenant law. The complaint alleged that many tenants were charged for ordinary wear and tear, were charged unreasonable clean-up and repair costs and had entire security deposits deducted regardless of the condition of the apartment.

Former Arnel tenants will be notified about the process for applying for refunds. These notices will be sent in languages likely to be understood by the former tenants, including English, Spanish and Vietnamese. The consumer refunds will be administered by a claims administrator designated by the Attorney General. Former tenants would be eligible for these refunds if they had not previously settled with Arnel regarding their security deposits, and the tenants did not vacate the premises owing Arnel more in back rent, unpaid utilities or similar charges than Arnel kept from the security deposit.

If funds remain after all claims have been processed, the settlement allows the Attorney General to ask for court permission to use the funds on housing-related programs such as assisting homeless Orange County residents find and obtain housing, or assisting low-income Orange County residents with housing problems.

For current tenants, Arnel must provide a clear written notice on requirements for obtaining full refunds of security deposits, including what is meant by "ordinary wear and tear" and the maximum charges possible for cleaning and repair costs.