Corporate Landlord Will Pay $3.7 Million To Settle California Lawsuit Over Illegal Rent Hikes In Single-Family Homes

A publicly traded company that owns thousands of single-family homes across California will pay $3.7 million to settle a lawsuit alleging widespread violations of a state law limiting annual rent increases.

Invitation Homes describes itself as the nation’s largest single-family home rental company, with more than 80,000 properties in its portfolio.

California Attorney General Rob Bonta alleges that from 2019 through 2022, Invitation Homes raised rents above legal limits for tenants in 1,900 homes across the state, including in Los Angeles County.

“California has laws in place to protect tenants from sudden, large rent increases, and landlords need to be diligent in ensuring that they abide by those laws,” Bonta said in a press release announcing the settlement on Monday.

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Bonta said the settlement “should serve as a reminder to landlords in California to familiarize themselves with the law and protections put in place to keep homes accessible to Californians.”

State law bans rent increases above 10% 

As part of the settlement, Invitation Homes will pay $2 million in civil penalties, and compensate affected tenants to the tune of nearly $1.7 million.

A state investigation concluded that Invitation Homes repeatedly violated the California Tenant Protection of 2019, which bans rent hikes exceeding regional inflation levels plus an additional 5%.

In recent years, the law has allowed landlords to raise rents on Southern California tenants by as much as 10%. The current limit in Los Angeles and Orange counties is 8.8%.

Investigators with the California Department of Justice found that Invitation Homes identified and fixed some of the alleged violations before becoming aware of the investigation.

In an email to LAist, an Invitation Homes spokesperson said the company was pleased to resolve the matter under mutually favorable terms.

“We continue to stand proud of our overall business, and in this case, our transparency, timely cooperation, and active engagement with the Department,” the spokesperson said. “We remain committed to serving our residents with the highest levels of service and care.”

Renters face large, at times illegal increases during pandemic 

Since the COVID-19 pandemic began, renters across Southern California have contended with large — and in many cases, illegal — rent hikes. LAist reported last year on the rising number of tenant complaints about unlawful rent increases filed in the city of L.A.

In recent years, local lawmakers have responded to upward pressure on housing costs by passing new rent control ordinances in cities such as Bell Gardens and Cudahy. Voters in Pasadena approved a ballot measure to implement rent control in 2022.

Local forms of rent control generally do not apply to single-family homes. But the statewide Tenant Protection Act does, as long as those homes are owned by a corporation and were built more than 15 years ago.