A startup company that connects landlords and renters through a rent bidding system on its website has sued the City of Seattle in federal court over a city moratorium that bans rent bidding.
The lawsuit was filed in U.S. District Court for the Western District of Washington by Rentberry, a San Francisco startup. The suit was filed suit through the Pacific Legal Foundation arguing the city moratorium prohibits free speech rights of Rentberry, as well as the landlords and renters who would like to use such sites to communicate.
“The explicit purpose of the moratorium is to suspend all rent-bidding services while the city investigates if they comply with the first-in-time rule and other city regulations,” according to a release from the Pacific Legal Foundation.
“The city also wants to study the possible effects of these services on the housing market before allowing landlords and renters to use them. The ordinance allows the city council to extend the moratorium for another year if city officials request more time to complete the study.
“Thanks to the moratorium, Seattle renters and landlords cannot use this cost-effective means of meeting housing needs,” the PLF said in the release.
Rent bidding like eBay for apartments
“We basically offer the same type of market-based pricing as eBay, only in the rental markets, Rentberry CEO and co-founder Alex Lubinsky said in a release. “Restricting Rentberry really just hurts tenants and landlords, promotes under-the-table bidding wars, and at the end of the day leaves even fewer housing options which are more expensive. This is not something I think the government of Seattle wants.”
The mayor signed the ordinance on March 30 after the Seattle City Council in an 8-0 vote put a moratorium on the use of rent bidding apps for rental housing in Seattle until the council could study the impact of the technology.
“Innovation in technology has been a key component of what makes Seattle such a great city, adding to our economic diversity. At the same time, we must have the opportunity to learn about new platforms, such as these ‘rent bidding’ platforms, and ensure that they live up to the equity and housing access values of our city,” Councilmember Teresa Mosqueda said in the release at the time the moratorium was passed.
Mosqueda’s legislation puts a one-year moratorium on the technology’s operation in Seattle while the City’s Office of Housing, in conjunction with Office of Civil Rights and Department of Construction and Inspections, evaluates the potential impacts of the rent auctioning applications, specifically how they abide by equitable access to housing laws
As a result, Rentberry “has abandoned plans to expand in Seattle, depriving the city of this innovative, cost-effective way to establish and maintain landlord-tenant relationships,” the company said in a release.
According to the lawsuit, “Rentberry facilitates communications between landlords and renters regarding lease terms, including rent, deposits, and lease duration, through its online bidding process.
“Rentberry’s bidding platform is designed to facilitate communication of price information in real time, to ensure that landlords price their properties optimally in both hot and slow markets, while potential tenants enjoy complete visibility on competing offers and the ability to seamlessly negotiate rental terms online.
“As well as lease terms, including rent, deposits, and lease duration, Rentberry also facilitates communication on a wide variety of topics related to housing between landlords and renters regarding maintenance requests, housing references, search engine functions, and reviews. Many of these communications do not propose a commercial transaction,” according to the lawsuit.
Rentberry has said in a release that, “One of the revolutionary blockchain technologies the team is working on this year is the Rentberry Auctioning Technology. The Auctioning Technology’s core purpose is to ensure that landlords price their properties optimally in both hot and slow markets, while potential tenants are afforded complete visibility on competing offers and offered the ability to seamlessly negotiate rental terms online. It acts as a pricing oracle that allows tenants to bid, sign legal rental documents, and settle payments using BERRY tokens, all in one place.