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Lawsuit Against 9 Real Estate Companies for Rent Hike Scam in Arizona; Software Company also Sued

Lawsuit Against 9 Real Estate Companies for Rent Hike Scam in Arizona; Software Company also Sued

Phoenix, AZ: A complaint filed by Attorney General Kris Mayes’ office alleges that nine prominent landlords and a software business collaborated in a price-fixing scheme that resulted in significant apartment rent increases in Arizona’s two largest metro areas.

The lawsuit claims that RealPage, Inc., a Texas-based software company that assists landlords in gathering data on the rental market and determining prices, colluded with multi-family landlords to increase expenses.

Mayes stated that the corporations had significantly contributed to Arizona’s affordable housing dilemma.

Mayes stated that they deceived residents into paying higher rent during a period of high inflation and severe affordable housing crisis in Arizona.

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In 2021, rental prices in the Metro Phoenix area had a 30% surge, the largest increase nationwide. Several tenants experienced significant rent hikes when renewing leases in 2022, but this year, renters are benefiting from a tiny decrease in median monthly rates.

Mayes’ office stated that RealPage collects confidential information on pricing and occupancy from rival companies that provide apartment leases and instructs cooperating competitors on “which units to rent and at what price.”

The lawsuit states that in the past, apartment managers would compete to fill apartments and determine rental prices. The lawsuit claims that corporations could benefit from significant rate hikes at the cost of renters by delegating pricing choices to RealPage, which employed an algorithm to determine the pricing.

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Mayes’ case filed in Maricopa County Superior Court states that RealPage refers to this method as ‘Revenue Management’ or ‘RM,’ but the State and antitrust scholars label it as price fixing. The lawsuit, referencing ProPublica’s research, alleges that RealPage instructed rental companies to conceal their use of the program.

Rentals in the Phoenix area determined by the RealPage algorithm were found to be 12% higher than rentals of other units, according to the analysis conducted by the Attorney General’s Office. The lawsuit claims that rates in Tucson were 13% higher.

The “cartel” operation breaches the Arizona Uniform State Antitrust Act and the Arizona Consumer Fraud Act, as stated in the lawsuit.

RealPage and landlords have faced multiple lawsuits in various states. Twenty-one federal cases were consolidated in Nashville, Tennessee, while another case was filed in Washington, D.C. last year. Mayes stated that the lawsuit in Washington, D.C. served as the inspiration for her own case.

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RealPage refuted the accusations in both instances but did not provide a response to a comment request on Wednesday. The majority of the landlords included in Mayes’ lawsuit did not reply to a request for comment.

The action filed by Mayes aims to get an injunction to halt the practice and designate a monitor to oversee the implementation of any court directives. The individual is pursuing civil penalties under state law and announced during a press conference her intention to request a court to impose a monetary penalty that might benefit renters affected by the plan.

The Democratic attorney general expressed a desire for reimbursement of the rent that should not have been paid due to the existence of the scheme. Mayes stated that the conspiracy had been occurring since at least 2016 and might affect hundreds of thousands of renters.

The individuals identified in the Arizona case as landlords are:

  • Apartment Management Consultants, L.L.C., of Utah
  • Avenue5 Residential, L.L.C., of Washington
  • BH Management Services, L.L.C., of Iowa
  • Camden Property Trust, of Texas
  • Crow Holdings, L.P / Trammell Crow Residential, of Texas
  • Greystar Management Services, L.P., of South Carolina
  • HSL Properties, Inc., of Tucson
  • RPM Living, L.L.C, of Texas
  • Weidner Property Management, L.L.C., of Washington

Apartment Management Consultants refuted Mayes’ charges. The company stated that it had no direct involvement with the software and intended to request to be removed from the lawsuit.

AMC oversees 18,000 apartments over around 85 properties in Arizona, as stated by the corporation, with only one utilizing RealPage RM software. The decision to utilize the program was made only by the property owner in close collaboration with the RealPage sales team. AMC was not involved in the arrangement, according to the corporation.

Richie Taylor, a representative for Mayes, stated that the office possessed documentation showing that AMC had previous agreements with RealPage. Taylor also mentioned that AMC was a defendant in a different class action litigation now taking place in Tennessee.

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