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In a landmark move, the Federal Trade Commission (FTC) has taken action against Invitation Homes, the nation's largest single-family home landlord, for deceiving renters and charging unfair fees.
With over 80,000 homes under management, including thousands in North Carolina, Invitation Homes' unlawful practices have sparked a critical conversation about transparency, fairness, and ethical property management.
As a licensed real estate professional in North Carolina, this case offers an opportunity to reflect on how agents can provide superior service and avoid the pitfalls that led to Invitation Homes’ $48 million settlement. Here are the key takeaways and ways agents can set themselves apart in the industry:
1. Advertise True Costs from the Start
The FTC case highlights how Invitation Homes misled renters by advertising rental prices that didn’t reflect mandatory fees. Hidden fees for services like “smart home” technology or air filter delivery added as much as $1,700 annually to renters’ costs, causing confusion and frustration.
As an agent, it's essential to be upfront about all costs. When advertising a property, disclose all associated fees—whether they are for utilities, management services, or maintenance. Transparency builds trust, and renters appreciate knowing the full financial picture before signing a lease. It’s a simple but powerful way to build long-term client relationships.
2. Prioritize Property Condition and Maintenance
One of the most alarming accusations against Invitation Homes was their failure to inspect homes before new tenants moved in. Many renters arrived at properties only to find mold, broken appliances, or worse. Even their promise of "24/7 emergency maintenance" fell short, with many tenants reporting no heat in winter or flooded homes going unaddressed for days.
As a real estate agent, ensuring that properties are move-in ready and that any maintenance issues are addressed promptly should be a top priority. Whether you're representing landlords or tenants, advocating for clean, safe, and habitable housing will set you apart. Make sure your clients understand the importance of proactive maintenance and address concerns swiftly.
3. Fair Security Deposit Handling
According to the FTC, Invitation Homes unfairly withheld security deposits, charging tenants for normal wear and tear, pre-existing damages, and even renovations. This practice damaged renter relationships and violated trust.
In North Carolina, there are specific laws governing security deposits, including what can and cannot be deducted. Agents should familiarize themselves with these regulations and educate landlords on fair practices. Additionally, conducting thorough move-in and move-out inspections with proper documentation protects both landlords and tenants. Fair and transparent deposit handling is key to maintaining a positive reputation in the real estate community.
4. Be Compassionate and Fair in Eviction Practices
Invitation Homes faced harsh criticism for pursuing evictions unfairly, including starting eviction proceedings even after tenants had moved out and failing to inform renters of their rights during the pandemic.
While evictions are sometimes necessary, they should always be a last resort. Agents can help clients explore alternatives, such as payment plans, before resorting to eviction. If an eviction must occur, ensure it's handled lawfully and with sensitivity. Tenants are more likely to comply with legal proceedings when they feel they've been treated fairly and given reasonable opportunities to rectify the situation.
5. Stay Informed on Legal Requirements
The FTC's actions against Invitation Homes underscore the importance of understanding the legal landscape. For real estate agents in North Carolina, this includes knowing state-specific landlord-tenant laws, security deposit regulations, and eviction procedures. Agents who stay informed and provide guidance based on current laws demonstrate professionalism and help their clients avoid legal pitfalls.
The $48 million settlement reached by Invitation Homes serves as a reminder of the financial and reputational damage that can result from deceptive business practices. As part of the settlement, Invitation Homes has agreed to refund millions of dollars in fees and security deposits to former and current tenants—offering compensation for the harm caused by their unlawful actions. This settlement not only addresses past wrongs but also sets new standards for transparency, accountability, and tenant rights moving forward.
What do you think about corporate landlords? Let us know in the comments, or share it with a colleague in an upcoming CE Class!
References
Federal Trade Commission. "FTC Takes Action Against Invitation Homes for Deceiving Renters, Charging Junk Fees, Withholding Security Deposits, and Employing Unfair Eviction Practices." Federal Trade Commission, September 24, 2024.