On August 21, 2025, the Court of Appeal in Los Angeles held that a landlord who collected rent from a tenant, greater than the amount actually owed, was liable civilly for treble damages plus attorney fees. Penal Code §496(a) makes it a felony to receive or hold stolen property. §484 includes within the definition of stealing, theft by false pretenses. Under §496(c), the tenant was allowed to sue There was no criminal case. The tenant overpaid for eleven months, rather than risk being evicted. Prior to trial, the landlord returned the overpaid rent plus seven percent per annum interest. The Court of Appeal still held that the tenant was entitled to treble damages plus his legal fees.
We are seeing this alleged in ordinary civil cases. Two persons own a building. One of them collects the rents and does not distribute a share of the net profit to the other owner. We are seeing this in cases where descendants of a deceased owner fail to share profits. This can happen where a company is buying a home, repairing and upgrading it, and then selling for a profit, and fails to correctly share the profits with investors.
This law can be applied in almost any business where one of the owners is controlling the distribution of profits to the other owner. The good faith belief by the managing owners that the expenses were appropriate is irrelevant, if they are found to be wrong. In the Los Angeles case above, a jury found for the tenant, the judge overruled the jury, and the Court of Appeal reversed, restoring the jury’s decision. Reasonable persons can disagree, and one of them still be liable
If you have investors or co-owners, think twice about what expenses you charge to the company or the property. If a dispute arises about distributions or expenses, think about getting a third party to look at it, like your lawyer. Treble damages plus attorney fees can turn a marginal claim a plaintiff might walk away from into a claim worth fighting for.