Johnson v. Milestone Financial CA3

BACKGROUND

Arletha, who was 94 years old at the time of the arbitration in this case, has four children: Janice, Charletta, Kevin, and Daniel. Arletha owned several rental properties in Sacramento and Vallejo. At the time of her husband’s death in 2013, none of the properties were encumbered with debt. Arletha’s son Kevin became involved in two cannabis-related companies and needed funds for the businesses. Kevin approached Arletha about obtaining loans on her properties to provide him funding for the businesses, and she agreed , while being clear he would be required to pay off the loans. The loans relevant to this action were obtained from Milestone in 2016 and 2017. The loans were hard money loans. As explained in the arbitration panel’s final award, “[t]he hard money lending industry serves a relatively small cohort of borrowers, those whose credit or income either cannot qualify for conventional loans, or those whose exigent need for loan funds makes the longer wait-time to complete conventional loan processes unworkable. Hard money lenders like Milestone work only with borrowers who are represented by brokers. Hard money lenders make loans for commercial purposes and…