Invitation Homes is a national owner with thousands of homes in the Charlotte area. It is being sued in federal court on claims that it cheated renters out of money by charging hidden fees, keeping security deposits, and unfairly evicting people, even when the COVID pandemic was at its worst.
The Federal Trade Commission sued the Dallas-based landlord on Tuesday. The landlord owns, leases, or runs about 80,000 homes in 12 states, including 5,550 homes in the Carolinas. Invitation Homes owned about 1,900 homes in Charlotte alone in 2023.
A 2022 study by the Charlotte Observer and News & Observer called Security for Sale found that corporate landlords owned tens of thousands of single-family homes across North Carolina and about a quarter of all rental homes in Mecklenburg County.
The stories showed that the companies’ business plans were made to make as much money as possible from selling people’s homes, often at the expense of renters, neighbors, and people who wanted to buy houses.
Officials from the FTC said that looking into corporate landlords and making them responsible for unfair practices is very important to them.
“This lawsuit and settlement should show the market that the FTC is paying attention to corporate landlords and making sure they don’t use unfair business practices like junk fees or try to kick out their tenants when the law says they shouldn’t be able to,” an FTC official said.
The case that was talked about was put in federal court in Georgia. The FTC wants to settle with Invitation Homes so that renters across the country can get back $48 million. The owner would also have to be clear about how to refund security deposits, set clear prices for leases, and stop doing other things.
Invitation Homes said in a news statement that it agreed to the plan. It will become law once a federal judge agrees to it.
Invitation Homes also said, “The agreement does not admit that Invitation Homes did anything wrong.”
The release said, “Invitation Homes believes that its disclosures and practices are the best in the industry.” The deal reached today ends the FTC’s three-year investigation and puts this case behind us (Invitation). The company will continue to work hard to improve its services and serve its customers better.
Undisclosed fees and unrefunded security deposits
The suit from 2019 says that Invitation Homes stole millions of dollars from renters by adding fees to the monthly rent that wasn’t listed. A few of those “mandatory junk fees” were for “smart home” technology, managing utilities, getting air filters delivered, and getting internet deals.
The suit says that renters couldn’t refuse the fees and were charged “tens of millions of dollars” between 2021 and June 2023.
The suit also says that the owner got more than $18 million in application fees that could not be returned. The lawsuit says that renters paid application or reservation fees and then found out that there were extra fees that would make their rent go up.
They also didn’t give renters their security deposits back very often, the suit says. The landlord returned about 39% of all security payments made by renters between 2020 and 2022. The suit says that the national average is around 64%.
Other unfair practices
The suit also says that homes were not inspected before tenants moved in, even though the landlord said that every home passed a “quality assurance inspection.”
The suit says that renters put in over 33,300 work order requests in the first week after moving in between 2018 and 2023. Mold, broken appliances, and exposed wires were some of the problems.
The lawsuit also claims that Invitation Homes used unfair methods to remove people, even when there were pandemic moratoriums.
The suit says that the landlords “steered” renters away from filing declarations with the Centers for Disease Control and Prevention and “falsely” told renters that their “only options were to pay rent, accept a balance forgiveness and move out, or go through the eviction process.”
How would renters get money?
If the judge agrees with the deal, Invitation Homes will give more than $48 million to the FTC. This money will then be given to renters who were “harmed” by the landlord.
The FTC said that the refund process would take a few months after it was approved by a judge. Renters who are qualified would be contacted directly by the FTC. It’s not clear how much, if any, renters in North Carolina would get.
People who think they have been scammed by a landlord or a business can also report it to the FTC online, according to FTC officials.
As part of the settlement, landlords must not keep rent deposits for normal wear and tear, be clear about real rental prices and required fees, and let tenants know what their choices are if they are about to be evicted.
Renters sued Invitation Homes before
Bryan Majka has been in a fight with Invitation Homes before.
Majka fought for North Carolina in a class action lawsuit against the real estate company in 2021. The case was settled last year for $7.5 million.
The case, which included more than 10,000 people from across the country, said that Invitation Homes often charged renters $95 for being late on their rent and an extra $75 or more for “legal” fees. The lawsuit says that renters were told they would be evicted if they didn’t pay the fees.
He told The Charlotte Observer that he didn’t know about the new case against Invitation Homes. He wasn’t shocked, though.
He said, “I wish I could say that I’m surprised, but I’m not at all surprised by it.” “They did everything quickly and cheaply.”
In 2017, Majka and his wife moved into a house in Concord that was owned by Invitation Homes. Majka said that over the next three years, they were charged a $95 late fee six to twelve times, even though they paid on time each time.
They were paid back about half of the time.
She also said that when their dishwasher broke, Invitation Homes brought them a new one on their front porch. Then the business told the couple it would be six weeks before it could be put in.
Majka said, “My wife and I looked at each other and said we’re done.”
The number of complaints against business landlords has grown over the past few years, according to the Security for Sale investigation. At least 80 reports about institutional-investor landlords were sent to the state attorney general and the Real Estate Commission between 2017 and early 2022.
Fifteen of them were made against Invitation Homes.
It’s not clear if the FTC is looking into other business landlords, but officials have said that protecting working families is one of their top priorities.