Dallas-based Invitation Homes has agreed to pay a proposed $48 million settlement after the company was accused of “unlawful actions against customers,” the Federal Trade Commission announced Tuesday.
Invitation Homes, the largest landlord of single-family homes in the country, was accused of deceiving renters about lease costs, charging undisclosed junk fees, failing to inspect homes before new residents moved in and unfairly withholding security deposits.
The Federal Trade Commission said Invitation Homes will be required to clearly disclose its leasing prices, establish policies for fairly returning security deposits and stop other unlawful behavior. The proposed settlement came after the FTC filed a 52-page complaint against Invitation Homes in the U.S. District Court for the Northern District of Georgia Tuesday morning.
“Invitation Homes, the nation’s largest single-family home landlord, preyed on tenants through a variety of unfair and deceptive tactics, from saddling people with hidden fees and unjustly withholding security deposits to misleading people about eviction policies during the pandemic and even pursuing eviction proceedings after people had moved out,” said FTC Chair Lina M. Khan. “No American should pay more for rent or be kicked out of their home because of illegal tactics by corporate landlords. The FTC will continue to use all our tools to protect renters from unlawful business practices.”
The settlement must be approved by a federal judge before it can go into effect. In a statement, Invitation Homes said the agreement “contains no admission of wrongdoing.”
“Today’s agreement brings the FTC’s three-year investigation to a close and puts this matter behind the Company, which will, as always, move forward with its continuous efforts to better serve its customers and enhance its practices,” the company said.
A complaint filed by the FTC alleges that Invitation Homes advertised monthly rental rates that did not include “mandatory junk fees” that could be more than $1,700 a year. Customers paid nonrefundable fees based on the advertised rate and learned the price would be higher only after they received a copy of the lease. The fees ranged from “smart home technology” and “utility management” to air filter delivery and internet packages.
Renters could not opt out of the fees. Since 2019, Invitation Homes collected more than $18 million in application fees alone. The firm also collected “tens of millions of dollars” in junk fees from customers as part of their monthly rental payment between 2021 and June 2023, the FTC alleges.
The FTC also alleges that Invitation Homes failed to conduct inspections before renters moved in and did not provide promised 24/7 emergency maintenance.
Between 2018 and 2023, residents in 33,328 properties submitted at least one work order within the first week after they moved in.
Some were issued for plumbing and electrical, as well as heating and air conditioning services. In some cases, residents reported mold, broken appliances, rodent feces and exposed wiring. Some of these issues were known by Invitation Homes, according to the complaint.
Other renters spent days or weeks dealing with “dangerous” conditions, including no heat in the winter, no air in the summer or sewage backing up into homes.
Invitation Homes also unfairly withheld security deposits, according to the FTC complaint.
Renters were “deceptively and unfairly” charged for normal wear and tear that existed before they moved in. The FTC also alleges Invitation Homes did away with the pre-move-out inspection and instead charged residents for all repairs. The company reviewed the charges only if a resident disputed them. However, tenants were often unable to reach anyone to review their dispute.
Invitation Homes returned only 39.2% of customers’ total security deposit dollars collected between 2020 and 2022. The national average was 63.9%, according to the complaint.
The Dallas-based business is also alleged to have used unfair eviction practices, including during the COVID-19 pandemic. The FTC alleges that Invitation Homes “steered” renters away from filing the Centers for Disease Control and Prevention’s eviction protection declaration.
Instead, Inviation Homes asked tenants to complete its “hardship affidavit.” The company’s form provided no eviction protection to renters. The firm also took steps to prevent renters from learning about the CDC declaration. Call center employees regularly failed to inform customers who called about the CDC form, the complaint alleges.
Invitation Homes also began eviction proceedings against renters who the firm knew had already moved out of their homes. The proceedings resulted in some eviction filings appearing on tenant screening reports, which made it more difficult for them to rent homes in the future, the complaint alleges.
The FTC said Tuesday the proposed $48 million settlement would be used to refund customers harmed by the company’s alleged actions.
Invitation Homes will also be required to list all monthly fees in a home’s advertised rental price. The listing must also include whether the fees are mandatory or not.
The firm can no longer withhold security deposits for normal wear or tear damage or issues that were present before the renter moved in. Under the proposed agreement, Invitation Homes is required to notify consumers about programs to help people facing eviction. The Dallas-based firm is also prohibited from filing evictions against residents who moved out of the home and provided notification of their departure.
Invitation Homes is headquartered in Dallas and owns nearly 3,000 homes in the area, according to the firm’s 2023 annual report.
Sharon Cornelissen, director of housing for advocacy group Consumer Federation of America, said she hopes the settlement sets an important precedent to better regulate institutional landlords.
“Junk fees have no place in our housing market,” she said in an email. “Rooting out junk fees from housing is especially important as millions of renters can barely afford their rents, which have sharply gone up since the pandemic.”