Single-family landlord Invitation Homes misled consumers over cost of a home, the FTC alleges

CANOGA PARK, CA-FEBRUARY 8, 2013: Officials from Invitation Homes, tour a home on Casaba Ave. in Canoga Park that the company recently bought, fixed up and turned into a rental property. Invitation Homes is a subsidiary of the hedge fund Blackstone. (Mel Melcon/Los Angeles Times). Original caption: Left to right-Mark Beisswanger, (now former) Chief Operating Officer of Invitation Homes, Cassandra Bujarski, principal, Sard Verbinnen & Co, and Eric Elder, Vice President of Marketing and Communications, Invitation Homes, tour a home on Casaba Ave. in Canoga Park that the company recently bought, fixed up and turned into a rental property. Invitation Homes is a subsidiary of the hedge fund Blackstone. (Mel Melcon/Los Angeles Times)
An Invitation Homes rental in 2013. (Mel Melcon / Los Angeles Times)

Invitation Homes, the nation's largest single-family landlord, has agreed to pay $48 million to settle a handful of allegations, including that it illegally charged undisclosed junk fees, withheld tenant security deposits and engaged in unfair eviction practices.

The settlement was announced Tuesday by the Federal Trade Commission. Among the main allegations made by the FTC was that Invitation Homes deceived tenants over the total cost of renting one of its homes.

The company, which owns or manages more than 100,000 homes nationwide, including more than 11,000 in California, did not include mandatory "junk" fees when advertising its rental rates, according to the FTC.

These fees — for things such as smart home technology and utility management — at times raised the cost of rent by more than $1,700 a year and were disclosed only when consumers went to sign their lease, the FTC alleged.

By that time, the agency said consumers were in a bind because they had already paid a nonrefundable application fee of up to $55. They also may have forked over $500 to reserve a specific home, which they would get back only if they signed the lease.

Sometimes, consumers weren't made aware of the junk fees until after they signed the lease and moved in, authorities said.

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In addition to junk fees, the FTC alleged Invitation Homes rented out homes that were often in disrepair and systematically withheld security deposits for items that were not the tenant's responsibility.

Invitation Homes also engaged in several unfair eviction practices, the agency said. Among them, the company told struggling tenants during the pandemic that their only options were to pay, move out or face eviction and failed to inform them of federal eviction protections available at the time, the FTC alleged.

“No American should pay more for rent or be kicked out of their home because of illegal tactics by corporate landlords," FTC Chair Lina Khan said in a statement. "The FTC will continue to use all our tools to protect renters from unlawful business practices.”

In a news release, Invitation Homes said it made no admission of wrongdoing as part of the settlement and described its disclosures and practices as "industry leading."

"Today’s agreement brings the FTC’s three-year investigation to a close and puts this matter behind the Company, which will, as always, move forward with its continuous efforts to better serve its customers and enhance its practices," Invitation Homes said in a statement.

The company, which started buying thousands of homes in the wake of the Great Recession, has reached multiple settlements this year.

In July, it agreed to pay nearly $20 million to resolve allegations that it made unpermitted renovations across its portfolio in California. In January, it agreed to pay several million to settle allegations that it violated the state's rent cap law.

Under the settlement announced Tuesday, which still must be approved by a judge, consumers would receive refunds and Invitation Homes will be required to include all mandatory monthly fees in its advertised rent.

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This story originally appeared in Los Angeles Times.