NorCal Landlord To Thousands Settles Rent-Gouging Case For $3.7M

The nation’s largest home-leasing company and California’s attorney general have reached a $3.7 million settlement resolving allegations that the landlord to thousands in the state broke tenant protection and price-gouging laws by illegally raising rents on about 1,900 residences.

Invitation Homes has agreed to pay $2.04 million in civil penalties and has refunded or credited tenants more than $1.68 million, reflecting the amount it collected above state rent caps plus 5 percent interest, according to Attorney General Rob Bonta’s office.

“Californians are facing a housing crisis of epic proportion," Bonta said in a 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.”

A state justice department investigation found a limited percentage of rent increases by Invitation Homes between late 2019 and 2022 violated the California Tenant Protection Act and Penal Code Section 396, according to Bonta’s office.

The company owns and manages about 12,000 rentals across California — 4,351 in Northern California and 7,605 in Southern California, according to its 2023 third-quarter report.

Invitation Homes, which specializes in renting single-family houses, identified some of the issues through its own reviews and “promptly provided remediation to affected tenants,” according to Bonta’s office.

“We are pleased to reach an expeditious and mutually favorable agreement on this matter with the California Department of Justice,” an Invitation Homes spokesperson said in a prepared statement.

“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.”

Under the proposed settlement, the company must restore lawful rental rates for all California tenants, perform quarterly audits on processes designed to ensure rent increases comply with state and local laws, and submit annual compliance reports to the justice department for five years, according to Bonta’s office.

Co-authored by Bonta during his time as a state assemblymember, the Tenant Protection Act prevents landlords from raising rent annually for most occupants by over 5 percent plus the percentage change in the annual cost of living or 10 percent total, whichever is lower, the news release said. Landlords are also prohibited under Section 396 from increasing rent by more than 10 percent during and in the aftermath of a state or local emergency.

“When landlords violate the Tenant Protection Act, tenants don't often have someone to call with the authority and the will to protect them,” California renters’ rights organization Tenants Together posted on social media. “Cities and counties must follow @AGRobBonta's lead and pursue meaningful enforcement at the local level.”

As of 2023’s third quarter, Invitation Homes properties in Northern California had an average monthly rent of $2,654. Its Southern California properties had an average monthly rent of $2,982. Year over year, the company’s average monthly rent for applicable properties rose 4 percent in Northern California and 5.1 percent in Southern California.