The Real Deal Los Angeles

Equity Residential faces class-action suit in California for “unlawful” late fees

Landlord has about 36,000 apartments in the state
December 12, 2017 08:00AM

From left: Sam Zell, Sakura Crossing Apartments and The Pegasus (Credit: Studio Scrivo, Equity Apartments)

Tenants from numerous Equity Residential rental properties in the state of California won a motion to pursue a class action lawsuit against the landlord over “unlawful” late fees.

The investigative reporting outlet Reveal reported Monday that company headed by Sam Zell faces a federal class action suit from current and former tenants at some of the company’s 150 buildings and 36,000 apartments across the state, most of which are huddled in Southern California and the San Francisco Bay Area.

Tenants allege that Equity’s practice of charging $50 or 5 percent of outstanding rent when payment is late violates California’s anti-profiteering regulations. They also allege Equity, the third-largest landlord nationwide with about 78,000 units, adopted a practice of “stacking late fees,” which means charging additional penalties for unpaid late fees on old and already-paid rent checks, which is also illegal in California. Equity’s attorneys have maintained that the fees were legal, court papers show.

“They’re making a profit off people who can least afford it, folks who are struggling to pay rent working in Silicon Valley in food and landscaping,” said Jason Tarricone, attorney Community Legal Services in East Palo Alto.

Stabilized housing, however, is only one portion of Equity’s large portfolio, as the company is well-known for developing and acquiring luxury rentals in California, such as the 322-unit Pegasus building in downtown Los Angeles and Sakura Crossing in Little Tokyo.

A report from the Center for Investigative Reporting in June found that Colony Starwood Homes made $4 million in late fees in 2016 and another $12 million in tenant clawbacks. [Reveal]Will Parker