Sure it’s illegal, that’s not the valid question. The issue is “Is the LL committing an act of ‘rent skimming'” ?
For more accurate definition of ‘rent skimming’.
So, have they owned it less than a year? If in fact they did take ownership in 11/07, then, yes, it is ‘rent skimming’.
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Civil Code 890
890. (a)
(1) “Rent skimming” means using revenue received from the rental of a parcel of residential real property at any time during the first year period after acquiring that property without first applying the revenue or an equivalent amount to the payments due on all mortgages and deeds of trust encumbering that property.
(2) For purposes of this section, “rent skimming” also means receiving revenue from the rental of a parcel of residential real property where the person receiving that revenue, without the consent of the owner or owner’s agent, asserted possession or ownership of the residential property, whether under a false claim of title, by trespass, or any other unauthorized means, rented the property to another, and collected rents from the other person for the rental of the property. This paragraph does not apply to any tenant, subtenant, lessee, sublessee, or assignee, nor to any other hirer having a lawful occupancy interest in the residential dwelling.