An antitrust class-action lawsuit is charging 18 property management companies and Yardi Systems of rent price fixing by colluding to increase the cost of rent in cities across the country, according to a release from the law firm that filed the suit.
The lawsuit says the property management companies used Yardi’s centralized, automated pricing software, “RENTmaximizer,” to raise costs in lockstep while maintaining occupancy. This is similar to another lawsuit filed against RealPage.
“Through Yardi’s complex software, otherwise-competing rental companies teamed up to outsource pricing decisions to Yardi, artificially eliminating any competition between them,” attorneys say in the release.
The lawsuit cites two confidential witnesses and former employees of defendant companies who divulge details of the organized scheme.
The lawsuit was filed in the U.S. District Court for the Western District of Washington and accuses the conspirators of “colluding to coordinate pricing through the usage of a centralized, automated pricing software, ‘RENTmaximizer,’ created by Yardi Systems in 2011.” By 2013, the software was used to price 8 million residential units. The new lawsuit falls on the heels of the law firm’s class action against RealPage alleging similar rent price-fixing tactics.
The new class action names as defendants or co-conspirators the following property management companies using Yardi’s RENTmaximizer and “Revenue IQ” revenue management software:
- Alco Management Inc.
- Bridge Property Management LLC
- Calibrate Property Management LLC
- Clear Property Management LLC
- Creekwood Property Corporation (Tonti Properties)
- Dalton Management Inc.
- HNN Associates LLC
- Jones Lang Lasalle Incorporated (JLL)
- KRE Group Inc.
- LeFever Matson, Manco Abbott Inc.
- Legacy Partners Inc.
- McWhinney Property Management LLC
- Manco Abbott Inc.
- Morguard Corporation
- Pillar Properties LLC
- Summit Management Services Inc.
- Towne Properties
- Tribridge Residential LLC.
“Our antitrust legal team has uncovered what we believe to be a clear gaming of the system through controlled, lockstep algorithmic increases to fix the cost of rent — one that has affected millions of renters,” said Steve Berman, managing partner and co-founder of Hagens Berman, in the release. “Housing is a basic human need. What these companies have done is both legally and morally bankrupt.”
In a related case, late last year 17 Democratic members of the U.S. House of Representatives sent a letter to the Department of Justice and the Federal Trade Commission asking the agencies to investigate another property management company, RealPage, and it’s rent-setting software, according to ProPublica.
RealPage has said the data fed into its pricing tool is anonymized and aggregated. It said the company “uses aggregated market data from a variety of sources in a legally compliant manner.”
ProPublica is reporting that RealPage, a Texas-based real estate tech company, is facing a new barrage of questions about whether its software is helping landlords coordinate rental pricing in violation of antitrust laws.
In an Oct. 15 story, ProPublica detailed how RealPage’s pricing algorithm uses competitor data to suggest new prices daily for available apartments. ProPublica raised concerns that the software, sold by RealPage, is potentially pushing rent prices above competitive levels, facilitating price fixing or both.
Read the full lawsuit complaint here.
