Two women moving out of Form 15, an apartment building on Market Street in downtown San Diego, found a $550 painting charge on their move-out bill.
Alexis Norman and Nicolette Cochran called the property owner, Essex, to ask about it, and the company couldn't find any paperwork showing the unit was painted, a lawsuit says . Additionally, Essex billed them for a carpet cleaning , even though their floors were concrete.
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Now the former landlord, Essex Property Trust (NYSE:ESS), is involved in a $19.25 million settlement for them and other former residents. The San Mateo, California-based company owns apartments in California and the Seattle area. The payout also cancels $8.7 million in move-out charges Essex says former tenants still owe it.
Essex denies the allegations. An attorney for the company told Times of San Diego it settled because dragging out the case would be risky and expensive. Essex has not responded to Moneywise's request for comment by publication time.
The deal isn't final yet. Norman and Cochran, who both lived at Essex complexes in San Diego County , sued the company in September 2022 . Their lawyers will ask a judge for preliminary approval on Nov. 13.
Jimmie Davis Parker, a San Diego attorney who co-represented the tenants , told Times of San Diego the deal would reach more than 200,000 former Essex tenants.
"Challenging an improper deduction individually can cost more than the amount at stake, giving powerful landlords an unfair advantage," he said.
What Essex is accused of charging tenants for
In California, repair and cleaning charges over $125 generally must be supported by documentation, like a contractor's bill.
Instead, many Essex tenants received purchase orders the company prepared itself, the complaint alleges. The lawsuit also claims Essex sometimes billed tenants more than its contractors charged.
One former tenant was charged close to $2,000 for new carpet. When he tracked down what the contractor actually billed, it was $907.
The tenants' lawyers also say they learned during the case that some vendors gave Essex discounts that weren't reflected in tenants' bills. Hogue and Belong, a San Diego tenant and employment law firm , is leading the lawsuit . Co-founder Jeffrey Hogue says he believes Essex has stopped doing that since his team uncovered it.
What the settlement means for former Essex tenants
If a judge approves the deal, former tenants will have to file a claim to get paid. Their cut depends on how much Essex took out of your deposit for the charges the deal covers. Money nobody claims goes to legal aid groups for renters in San Diego, Los Angeles and the Bay Area.
They won't have to do anything to get the debt forgiven . Essex has agreed to drop any move-out balances it says former tenants owe from September 27, 2018, through December 31, 2023, and to ask the credit bureaus to fix any damage they did to credit.
Essex also agreed to give departing tenants copies of the actual vendor bills , pass along contractor discounts and train staff on state deposit law.
Most will hear from a settlement administrator by email and regular mail if a judge gives the deal preliminary approval.
How to protect your deposit in California
Since April 1, 2025, California landlords have been required to provide photos to back up cleaning and repair charges. Under AB 2801, they must photograph the unit after you move out, but before any work they plan to bill you for. They must then take photos again after the work is completed.
If your lease started July 1, 2025, or later, they must also take move-in photos .
Your landlord has a grace period of just 21 days after you move out to send an itemized list of deductions and return the rest of your deposit. Even if the charges are $125 or less, you can ask for the supporting documentation within 14 days of receiving the itemized list.
You can also ask for an inspection up to two weeks before you leave, giving you a chance to fix any problems first.
If a landlord keeps your deposit in bad faith, a court can award you up to twice the deposit as a penalty. Small claims court handles cases up to $12,500, and lawyers generally can't represent either side , so you'll have to make your case yourself.
Before you hand back the keys, walk through every room with your phone recording, floors included. If a bill ever shows up for carpet you never had, the video is your proof.
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This article originally appeared on Moneywise.com under the title: Landlord to pay $19.25M to tenants over withheld deposits — one was charged for rug cleaning but had concrete floors
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
