Are you managing a rental property? Lessons from the FTC’s lawsuit against Greystar

Price can be one of the most important factors people consider when looking for housing. But what happens when the rental price advertised doesn’t represent the price your tenants end up paying? According to the FTC’s recent settlement with Greystar — the largest owner and operator of rental apartments in the country — the answer is: nothing good.

The FTC and the State of Colorado allege that Greystar — which advertises hundreds of thousands of rental units on its website, third-party websites, and websites for individual buildings and complexes — regularly misrepresented the total cost of renting an apartment by excluding mandatory fees from the price it advertised to consumers. This led to consumers sometimes paying hundreds of dollars more than they expected each month for undisclosed, mandatory items and services like package delivery, trash pick-up, and technology packages.

According to the complaint, consumers who saw an advertisement for a Greystar apartment often had no way of learning about these hidden fees until after they had reached the application portal or filled out an inquiry form with their personal information. And the FTC alleges that in some cases, Greystar revealed the charges only after consumers had paid an application fee or holding deposit — and then only deep into a 40- to 60-page lease agreement. If consumers discovered the existence of the fees after their application was approved and chose not to sign the lease, Greystar wouldn’t refund the hundreds of dollars in application fees or holding deposits the consumer had already paid.

To resolve allegations that Greystar’s practices violated the FTC Act, the Gramm-Leach-Bliley Act, and the Colorado Consumer Protection Act, the company will pay $24 million. Greystar is also prohibited from misrepresenting the rental price of its units and must disclose all mandatory fees before accepting payment from prospective tenants.

More than a third of Americans rent their homes. They should be able to see what their monthly costs will be up front so they can properly plan and budget for their families. If you’re a property manager, a property management software provider, own a rental property, or advertise rental properties:

• Know that advertising a rental price that excludes mandatory charges is a violation of the law. So advertise the total cost of renting your unit up front. Consumers shouldn’t have to wait until they sign a lease or get their first month’s bill to learn what it will actually cost to live in a rental.
• Do a thorough compliance check. Review your website and advertisements to confirm they honestly advertise a rental’s price, including any mandatory fees at the property. That includes working with your third-party vendors to make sure they’re accurately advertising the rental price on all their platforms.
• Know that the FTC is reviewing harmful practices in the rental housing market and will not hesitate to take action against landlords taking advantage of Americans’ housing needs by hiding mandatory fees.