S.F. Sues Couple for Illegally Renting Out Affordable Housing

The couple allegedly lives in a $2.8 million Redwood City home while renting out the unit obtained by lying on an application.

Two investment advisors unlawfully rented out a below-market unit out while living in a multimillion dollar Peninsula home, according to a city lawsuit filed Thursday.

City Attorney Dennis Herrera filed the lawsuit against Caroline Novak and Igor Lotsvin, his 22nd case of crackdowns on affordable housing fraud. Novak allegedly lied on a 1999 application to buy a below-market unit in SoMa she and Lotsvin held onto while living in a $2.8 million Redwood City home. 

The unit they own at 300 Beale St. is included in a program to provide affordable housing to first-time buyers Novak — then the owner of a San Mateo home — was not eligible for. She paid $178,500 for the studio she would illegally rent out with her husband, Lotsvin, while the city presumed she was the primary resident, according to the lawsuit.

Novak and Lotsvin also allegedly used the unit to leverage more than $1.5 million in loans to build their wealth as property owners. Since 2015, they have lived in the multimillion home in Redwood City’s Emerald Hills neighborhood.

“It’s unconscionable that this couple would cheat an eligible San Franciscan out of an affordable home, just so they can keep an investment property and a pied-à-terre,” Herrera said. “When people try to game our affordable housing system, they keep homes out of the hands of those who truly need them. We’re putting a stop to that.”

The City Attorney’s Office has investigated dozens of cases of affordable housing fraud and secured a total of $3.3 million in 21 cases. Each of those cases has returned a unit back to the city’s Inclusionary Affordable Housing Program, which has developers set aside units for low or middle-income households that can enter a lottery to become first-time homeowners.

Herrera is pushing to prevent Novak and Lotsvin from owning the unit so it can be sold to a qualified household. The couple also faces up to $2,500 per violation of California’s unfair competition laws and up to $1,000 per violation of the city’s planning code.

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