Dallas Property Management Company Could Pay $48 Million for Defrauding Tenants

Dallas-based property management company Invitation Homes has agreed to pay $48 million in restitution for misleading tenants and using unfair eviction practices, the Federal Trade Commission announced Tuesday.

The compensation money will go to tenants targeted by the company’s “illegal behavior,” the FTC said. It’s the first enforcement action by the agency’s agency-wide Tenant Task Force since it was created earlier this year to examine unfair and deceptive practices toward tenants.

The settlement must still be approved by a federal judge.

In a statement, Invitation Homes said the settlement ends a three-year investigation into the company.

“Invitation Homes believes its disclosures and practices are industry-leading, both among its professional peers and among the millions of small, single-family rental homeowners,” the company said.

Invitation Homes is the nation’s largest single-family homeowner, with more than 80,000 homes nationwide. Nearly 3,000 of its rental properties are in North Texas.

Farrar said Invitation Homes used unnecessary fees to “inflate” rent, including non-refundable application fees, “utility management” fees or “smart home” fees that could add up over the course of a year.

“It is an illegal business practice not to disclose this information in advance,” he said.

Farrar added that Invitation Homes had “shoddy” inspection and maintenance practices.

“Invitation Homes promised tenants that the home would be ready to move in when they arrived,” he said. “But instead, residents routinely found homes in a state of disrepair, with exposed electrical wiring, mold and broken appliances.”

The company also promised 24/7 service. However, some services would be interrupted and may not be restored for several days.

Invitation Homes also withheld security deposits and evicted residents after removing them from eviction protections, the agency said.

In addition to the $48 million settlement, Invitation Homes was prohibited from misleading its customers and withholding certain security deposits. The company must also inform its customers about programs for people facing eviction.

The FTC may continue to investigate Invitation Homes to ensure compliance with the rules. However, customers will also help protect and enforce the FTC’s agreement, Farrar said.

“If we learn from consumers that these practices are continuing, it would constitute a violation of our agreement and could result in additional sanctions,” he said.

The FTC’s action against Invitation Homes is one that the agency believes will send a signal to the market — particularly to rental homes owned by corporate landlords — that illegal practices carry stiff penalties, Farrar added.

“And we know, as this country’s nearly 110-year-old consumer protection watchdog agency, that the marketplace takes those signals seriously,” he said.

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