Landlord accused of ‘fee-gouging’
New lawsuit claims Invitation Homes charges tenants unfair late penalties
A corporate California landlord is under attack, facing a new lawsuit that claims the property owner charges tenants exorbitant, illegal fees that lead to unwarranted evictions.
Invitation Homes, which manages more than 12,600 properties in California — including in Antioch, Fairfield, Oakley, Roseville, Sacramento, Vacaville and Vallejo — charges tenants unfair late penalties that can add up to hundreds of dollars, according to the lawsuit filed in federal court in the Northern District of California. The suit claims that bad behavior is the symptom of a bigger problem— the takeover of the rental market by corporations that forced small mom-and-pop landlords out of the game.
“The residential rental industry has recently un- dergone amassive transformation and consolidation out of the hands of small and family landlord businesses (who had direct ties to and relationships with their tenants), and into the large arms of private equity, hedge fund, and other Wall Street giants whose allegiances run solely to their investors, and whose motivations are driven purely by stock price and by showing and growing those allimportant quarterly earnings,” San Diego-based attorney Alex Tomasevic wrote in the complaint filed Friday. “These changes have hurt consumers.”
InvitationHomes spokeswoman Claire Parker declined to comment on the pending litigation, but said the company charges rents in line with local market rates, and boasts a customer satisfaction score of 4.3 out of five for its maintenance services.
“Invitation Homes is
proud to provide high quality homes and outstanding service to our residents around the country,” she wrote in an emailed statement. “Our residents are police, firefighters, teachers, veterans and other working individuals and families who are seeking an affordable way to live in great houses near good schools and jobs.”
But Matthew Warren of the Law Foundation of Silicon Valley, a non-profit that provides legal help for tenants, says there’s no doubt corporate landlords contribute to the difficulties local renters face in affording housing. He sees case after case of corporate landlords increasing rents regularly and at high rates, thereby displacing residents — particularly renters of color.
“They’re in the game to make money,” Warren said, “so they’re going to be raising rents and forcing tenants out as much as they can.”
Friday’s lawsuit isn’t the first accusing a corporate landlord of taking advantage of tenants. Another suit proceeding through federal court inthe Northern-District of California accuses Equity Residential, which owns or manages more than 25,000 rental units in California, of charging illegal late fees.
It all started about 10 years ago when the housing market crashed and private equity firms began snapping up foreclosed single-family homes for cheap. Corporations often don’t make good landlords, and are more likely to evict tenants, according to the Invitation Homes lawsuit. In the Atlanta area, for example, nearly one-third of Invitation Homes tenants received eviction notices in 2015, Tomasevic claims. They also are more likely to raise rents— with some tenants of corporate landlords facing increases of $1,000 permonth — and they often attempt to cut costs by refusing to do necessary and routine maintenance, according to the lawsuit.
But Tomasevic’s main complaint against Invitation Homes has to do with its late fee policy. The company charges tenants $95 if rent payments are submitted as little as one hour late, and then stacks on additional fees if tenants carry even a small unpaid balance, according to the complaint.
Plaintiff Jose Rivera rented a single-family home in Los Angeles from the defendant until February. He claims he was forced to pay the $95 late fee multiple times, including once when the InvitationHomes online payment portal was broken, forcing Rivera to mail in his rent. Invitation Homes then returned his rent check because he hadn’t included additional late fees, according to the lawsuit. The landlord threatened to evict Rivera, who ended up paying nearly $1,000 in late fees and other legal fees, the suit claims.
Those fees mean big bucks for Invitation Homes, according to the lawsuit. In a recent call with investors, a company representative boasted a 22 percent increase in earnings due to its system of automatically assessing late fees, the complaint claims.
The late fees are illegal because the amounts are not related to the damages Invitation Homes incurs when tenants pay their rent late, according to the lawsuit. The suit seeks a court order forcing Invitation Homes to refund late fees paid by tenants, and prohibiting the company fromcharging further such fees. Contact Marisa Kendall at 408-920-5009.