Now she is after me for money? What do I do?
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It sounds like you are renting an illegal garage conversion. If the converted garage is illegal, then under the case of Gruzen v. Henry (1978) 84 Cal.App.3d 515, the landlord is not entitled to collect or request any rent. California law does not reward a landlord who has an illegal structure, and punishes the landlord by declaring the contract leasing that structure "void."
Typically, a landlord trying to evict a tenant from an illegal garage conversion would get restitution of the premises (an order that the tenant be removed from the illegal structure without owing rent) but not any money damages in an unlawful detainer judgment. The legal basis for such ruling is that the courts will not enforce any illegal contract.
In rent controlled areas, such as Los Angeles, where the relocation assistance has to be paid, the eviction should not be permitted if the relocation money and proper notices to remove a tenant from a dwelling to be removed from the market have not be satisfied. The relocation money is due even if the unit is illegal, under the ruling of Salazar v. Maradeaga (1992) 10 Cal.App.4th Supp. 1.
A tenant may be able to sue to recover the rent paid. However, not all judges will agree on whether a tenant is entitled to get back rent paid to the landlord, especially if there are no unhabitability issues.
In short, the landlord will be able to evict you from illegal rental dwelling based upon a 3-day notice to pay or quit, but the landlord might not be entitled to recover a money judgment for unpaid rent.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This Avvo.com posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.