Equity Residential faces class-action suit over rental application fees

Firm accused of overcharging prospective tenants for background checks.

Equity Residential faces class-action suit over rental application fees
Radius Koreatown Apartments at 680 S Berendo St (Equity Apartments, Stock. Photo Illustrustration by Priyanka Modi.)

Equity Residential, the Chicago-based apartment investor that’s been shedding some “less desirable” units among its 35,000 California assets, faces another West Coast lawsuit.

The firm, sued in 2017 over dubious late fees, now faces claims it charged five times what it cost for background checks on prospective tenants and violated California law by failing to provide receipts and copies of its investigative consumer reports.

It amounts to “unlawful conduct,” according to a complaint filed in Los Angeles Superior Court. The $50 it charged for each application “exceeds Equity’s out-of-pocket costs of gathering information concerning each Plaintiff.” Equity’s costs for each background check came to just $8.50 per application, according to the suit.

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The plaintiffs include 135,000 people who applied for housing in Equity’s California properties over the past four years. They’re seeking $10,000 in damages for each violation and reimbursement for overcharges and also want an injunction to require Equity Residential to provide prospective tenants with a copy of their consumer reports within three days.

Equity Residential was sued for similar claims in 2017, when tenants sued over the company’s practice of charging late fees, set at $50 or 5 percent of the outstanding rent. The firm was accused of stacking late fees, a practice in which additional penalties were imposed on rent checks that were old or already paid, in violation of California’s anti-profiteering regulations. That case is still pending.

The firm has recently been diversifying its portfolio by shedding “less desirable or regulatory challenged assets” in California. In August, it sold a 450-unit apartment portfolio in Hermosa Beach for $275 million. In its latest quarterly report from October, the firm disclosed that its California portfolio totaled 34,587 units in California. This includes 15,739 apartments in Los Angeles and 12,114 units in San Francisco.

Shareef Farag, the counsel for Equity Residential, didn’t respond to a request for comment.

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