State Attorney General Rob Bonta alleges Wedgewood used harassing tactics against residents, including shutting off the power.
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"These alleged unlawful tactics included depriving lawful tenants of their right to continue living on the property under a pre-existing lease or for at least 90 days after foreclosure, as required by law," he said.
On its website, Wedgewood says it is looking to buy houses in the Valley.
"Enforcement actions like this one are critical to making these laws meaningful since most tenants facing eviction or unfair rent increases or harassment, they don't have an attorney to help them and it's particularly important to enforce protection when the property owner's a corporation," says Madeline Howard.
Help is available for families having trouble making rent or mortgage payments.
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Bonta launched a Housing Strike Force in November to help enforce tenant's rights and offer eviction protection resources.
"This is one of its actions," he said. "There will be others and we will be very active in both protecting our tenants and ensuring that entities throughout the state of California are following the law."
The judgment is subject to court approval. $2.7 million would go to residents who were unlawfully evicted.
The attorney general encourages people to send any complaints or tips they may have.