Leasing Lifestyle: Class Action – Ten years ago, the market crashed and 9 million families lost their homes through foreclosure, short-sale, or surrender to a lender. Since then, national and global private equity firms have snatched up tens of thousands of single-family homes at hugely discounted prices (sometimes subsidized by the government and taxpayers), which they have then turned into rental properties. In short, the residential rental industry has recently undergone a massive 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 all-important quarterly earnings.
These changes have hurt consumers. The Wall Street landlords evict tenants at an astonishingly higher rate than other single-family landlords. For instance, in the Atlanta area, where Defendant Invitation Homes also operates, nearly one-third of all Invitation Homes (f.k.a. Starwood Waypoint) tenants received eviction notices in 2015. Rent increases follow the same trend, with Wall Street tenants facing, sometimes, $1,000/month increases. The Wall Street landlords, furthermore, often systematically refuse to do necessary and even routine maintenance on homes because those costs eat into their crucial bottom line. Finally, and as is the focus in this case, the Wall Street landlords resort to illegal fee-gouging, such as deploying grossly inflated “late” rent penalties, and penalties that stack on top of penalties that, themselves, cause a tenant to fall behind (even when they are paying their actual rent), leading to their eviction.
Defendant Invitation Homes Inc. (NYSE: INVH) is the largest player in this newly transformed rental market. Publicly-traded Invitation Homes now owns, leases, and manages more than 82,000 rental homes across the country. They have a uniform late rent penalty policy and practice across all of their residential rental properties. Their policy and practice is to charge tenants initial fees of $95 for the late payment of rent, even if Defendants receive the rent as little as one hour late (past the grace period) and even though Defendant incurs no actual damage as a result.
Moreover, Defendant’s policy and practice is to stack penalties where possible, e.g. to charge tenants additional late fees of $95, or more, if tenants carry any accrued balance of unpaid late fees or other charges, even when the tenants timely pay the monthly rent itself, and regardless of whether the outstanding balance is minimal.
Defendant’s late fees are an illegal penalty under the laws of every state that Defendant operates in. The penalty is illegal, and thus, void, because it is excessive and bears no relation to any actual damages incurred by Defendants when rent or other fees are paid late. See, e.g., Cal. Civ. Code § 1671(d); Restatement (Second) of Contracts § 356(1) (Am. Law Inst. 1981); U.C.C. (“UCC”) § 2-718(1). Defendant’s policy and practice of charging excessive penalties uniformly violates the California Civil Code, the California Unfair Competition Law (“UCL”), and the contract and consumer protection provisions of every state in which Defendant operates in. Plaintiff, a former Invitation Homes tenant, brings this action to challenge Defendant’s excessive penalty policy on behalf of himself and all other similarly situated tenants.
Full Class Action Complaint below…