Attorney General Neronha files lawsuit against national real estate management corporation for charging renters illegal application fees and discriminatory behavior

Attorney General Neronha files lawsuit against national real estate management corporation for charging renters illegal application fees and discriminatory behavior

Published on Wednesday, December 11, 2024

Attorney General Peter F. Neronha announced today the filing of a lawsuit against A.R. Building Company, Inc. (ARBC), a national real estate management corporation with properties in Cumberland, East Providence, North Kingstown, and North Smithfield, alleging they violated Rhode Island's Unfair and Deceptive Trade Practices Act (DTPA).

As alleged in the complaint, filed in Providence County Superior Court, ARBC assessed illegal application fees, sometimes more than once for the same prospective tenant, as well as designed and implemented an arduous application process for those seeking reasonable accommodations for disabilities. The Attorney General is seeking civil penalties and injunctive relief, including requiring ARBC to stop charging excessive application fees, stop its discriminatory application processes, and return unlawfully charged fees to consumers.

"It's news to no one that we are in the midst of a severe housing crisis in Rhode Island, and those who implement illegal barriers to finding a home must be held accountable," said Attorney General Neronha. "In the last 18 months alone, we have brought complaints against landlords for exposing children to lead paint, residential solar companies for deceiving consumers, real estate brokers for ruthless bait and switch schemes that rip away family homes, and now against a real estate management company for charging expensive and illegal rental application fees and discriminating against those seeking reasonable accommodations from finding a place to hang their hat."

"When a person or entity deceives, harms, or takes advantage of consumers, that's where we come in," Attorney General Neronha continued. "A fair marketplace demands that all parties follow the law, and when it comes to housing, Rhode Islanders are struggling enough as it is. We must prioritize making it easier, not harder, for people to obtain safe, affordable housing, and that's why my Office will continue to seek out and hold accountable bad actors who place profits over the basic rights of Rhode Islanders."

Consumers who believe they may have been victims of unfair or discriminatory housing practices are encouraged to contact the Attorney General's Office by calling 401-274-4400 or completing an online complaint form.

Application Fees

As alleged in the complaint, ARBC charges all its prospective tenants application fees; overcharges its prospective tenants for screening fees; charged prospective tenants for screening fees while failing to provide them with a way to submit their own screening documents to avoid fees; and charged prospective tenants screening fees while failing to provide them with copies of the screening documents, all of which are prohibited by law.

For example, as alleged in the complaint, a prospective tenant submitted two applications to ARBC's property at Dowling Village in North Smithfield in early 2024. Dowling Village would not let the prospective tenant submit her first application unless she paid $250 for an administrative fee and $30 for a screening fee, ignoring newly-enacted state law, that prohibits the assessment of rental application fees and limits what a landlord can assess prospective renters for a background check. Without explaining the purpose of these fees or providing copies of the screening documents to the prospective tenant, Dowling Village rejected her application because they claimed she did not make enough money and would need a co-signer.

As alleged in the complaint, the same prospective tenant submitted a second application to Dowling Village about one week later, this time with a co-signer. For the second application, Dowling Village again charged the prospective tenant $250 for an administrative fee and $30 for a screening fee, a total of $280, offering no further explanation of the fees. When the prospective tenant requested a fee waiver, citing her previous application approximately one week earlier, she was denied. Dowling Village rejected her second application, citing credit reasons.

As further alleged, ARBC overcharged a different potential tenant that applied to ARBC's Kettle Point property in East Providence in Summer 2024. In addition to charging the potential tenant $300 in fees to apply, Kettle Point also required that both the potential tenant's partner and the tenant's co-signer each pay a $50 screening fee even though neither person intended to live in the unit. In this case, none of the individuals who submitted fees for the application received copies of any background check or credit report.

Discriminatory Screening Procedures

As alleged in the complaint, the defendants subjected applicants with disabilities to a different, more onerous application process than applicants without disabilities. Specifically, applicants requesting reasonable accommodation for a service or support animal (SSA) were met with significant barriers to completing the application process and getting approval for rental. Rhode Island's Fair Housing Practices Actprohibits landlords from making any inquiries concerning the disability of prospective tenants, advertising rental housing in a way that indicates preference or discrimination based on disability, discriminating against any individual in the rental process because of a disability or accommodation, or delaying the process of applications for rental housing based upon disability.

In this case, as alleged, ARBC's websites for its Rhode Island Properties hinder the application process of those with disabilities or SSAs. After an applicant clicks the "apply now" button, ARBC has a written inquiry into whether the applicant has a disability and a need for an SSA. If an applicant clicks yes, they are directed to complete a 9-page accommodation request and instructed to stop the online application process and instead contact the leasing office to complete their rental application. Additionally, as alleged, ARBC will not hold a unit for prospective tenants with disabilities or SSAs until after verifying and approving a reasonable accommodation request, causing a significant delay for applicants with disabilities.

Deceptive Trade Practices Act

In 2021, Attorney General Neronha worked with the General Assembly to pass legislation that restored the authority of the Office of the Attorney General to protect Rhode Island consumers against violations of the DTPA. Other efforts led by the Attorney General under the newly-strengthened DTPA include a lawsuit against a residential solar company for allegedly scamming Rhode Islanders, a suit against a contractorfor alleged unlawful behavior, halting a Certificate of Good Standing scheme, as well as other investigations.

This most recent lawsuit is the second time in less than a month that the Attorney General filed suit to protect housing consumers. Last month, the Office filed a lawsuitagainst local real estate broker, Kyle Seyboth, and associated defendants, alleging they violated the DTPA by deceiving homeowners with limited English proficiency, executing a "foreclosure rescue" scheme where the homeowners believed they were refinancing their mortgage when in fact they were executing paperwork for the sale of their home for significantly less than market value.

And just last year, the Office suedPioneer Investments, LLC. for failing to comply with numerous state rental, lead hazard, and consumer protection laws that placed the health and safety of hundreds of renters at risk and which constituted unfair market practices.

Special Assistant Attorney General Jordan Mickman, Chief of the Civil Rights Unit and Special Assistant Attorneys General Leonard Giarrano and Kyla Duffy handled the matter on behalf of the Office of the Attorney General.

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