Corporate landlord raised tenants’ rent too much, suit says. $3.7M settlement reached

A corporate landlord raised the rent for 1,900 homes in California by too much and broke the law in doing so, according to a lawsuit filed by the state’s Department of Justice.

Now Invitation Homes, which oversees about 12,000 rental homes in California, has agreed to settle the case for more than $3.7 million, California Attorney General Rob Bonta’s office announced in a Jan. 8 news release.

From October 2019 through December 2022, tenants living in rentals owned by Invitation Homes saw their rents increase by more than what is allowed under two state laws — the California Tenant Protection Act and California’s price-gouging law, according to the lawsuit.

Some tenants’ rent rose by more than 10% after proclamations of state emergencies were issued, a complaint says. This violates the price-gouging law.

Fires, winter storms, droughts, a heat wave, Tropical Storm Kay and an earthquake in Humboldt County prompted state emergency proclamations between 2020 and 2022. No proclamations were listed for 2019 by the state governor’s Office of Emergency Services.

As part of the proposed settlement, Invitations Home has refunded or credited tenants more than $1.68 million, according to the attorney general’s office. This accounts for the extra rent that was paid and 5% interest.

The corporation will also pay $2.04 million in civil money penalties, the office announced.

“Californians are facing a housing crisis of epic proportion,” Bonta said in the news release. “California has laws in place to protect tenants from sudden, large rent increases, and landlords need to be diligent in ensuring that they abide by those laws.”

By agreeing to settle the case, Invitation Homes does not admit or deny wrongdoing, according to a stipulated judgment signed by both parties Jan. 4 and filed in Los Angeles County Superior Court.

“We are pleased to reach an expeditious and mutually favorable agreement on this matter with the California Department of Justice,” an Invitation Homes spokesperson told McClatchy News on Jan. 9. “We continue to stand proud of our overall business, and in this case, our transparency, timely cooperation, and active engagement with the Department.”

“Notably, this matter highlights the company’s proactive audits and self-directed remediation, much of which occurred prior to receiving any inquiry from the California Department of Justice,” the spokesperson said.

When Invitation Homes realized some of the issues involving rent increases, it “promptly provided remediation to affected tenants,” Bonta’s office said.

The company describes itself as the nation’s largest home leasing company and owns nearly 80,000 homes in the U.S.

More on the laws protecting California tenants

The California Tenant Protection Act was established in 2019 to protect tenants from certain rent increases.

According to the law, property owners cannot raise “the gross rental rate for a dwelling or unit more than 5% plus the percentage change in the cost of living, as defined, or 10%, whichever is lower, of the lowest gross rental rate charged for the immediately preceding 12 months, subject to specified conditions.”

As for California’s price gouging law, “cities and counties may have more stringent rent caps that landlords must follow,” the attorney general’s office said.

Invitation Homes must adjust its rental rates for Californians as part of actions it’s required to take under the proposed settlement.

Any rent increases proposed by the company must be reviewed to ensure it complies with state laws, according to the attorney general’s office.

In the U.S., California ranks second for the states with the highest average monthly rent with an average of $1,958, according to a November 2023 Forbes report citing August 2023 rental market data from Apartment List. Hawaii ranked as number one.

Rent nationwide began to skyrocket in 2021 after the first year of the COVID-19 pandemic and peaked in July 2022, CNN Business reported in June. At the time of the report, rent decreased since July 2022 but was nearly 25% higher than rent in 2019.

Had Verizon? You could be owed part of $100 million settlement. Here’s what to know

Checkers managers clocked employees out while they worked and deleted shifts, feds say

Children’s hospital fires worker who didn’t get flu shot, feds say. Now it must pay

Dads didn’t get full parental leave in Tampa, feds say. Now city will pay $300,000