ShaWayne Hodges, a single mother of five in Vancouver, Washington, found herself facing an unexpected $250 charge from her property management company, Zenith Properties NW. The reason? Her grass had turned brown during a summer heat wave.
This fee, along with numerous others, quickly accumulated to around $3,000, a staggering amount for a low-income tenant relying on a housing choice voucher to afford her rent.
Northwest Justice Project attorney Carl Snodgrass, who represents Ms. Hodges, notes that such fees are part of a growing trend in the rental industry known as "junk fees." They can include charges for everything from posting a notice on a tenant’s door to sorting mail, and often far exceed the actual cost of the services provided.
“Junk fees can be used to retaliate against tenants, discriminate, pressure them to move out—or simply raise landlord revenue,” Snodgrass says.
Furthermore, junk fees can saddle renters with debt, which can have far-reaching consequences including collection actions, wage garnishment, and damage to their credit scores, which in turn can make it much harder to find housing in the future.
Growing burden for tenants
In the midst of an affordable housing crisis, such fees are a significant burden for tenants, particularly those with low incomes. But these fees are often buried in lease agreements or tacked on unexpectedly.
Snodgrass notes that it appears Zenith Properties may be using fees to make up for being unable to raise the rent due to Ms. Hodge’s Section 8 status (which provides for a government voucher that partially covers her rent). When the Housing Authority rejected Zenith’s proposed rent increase, the property company started charging a range of excessive fees.
The Biden-Harris administration recognized junk fees in rental housing as a national problem in 2023. It called on fee transparency by landlords and rental platforms like Zillow, and for states to take legislative action against junk fees.
These efforts face strong opposition from landlord and rental associations, who argue that regulations will increase costs for housing providers and ultimately reduce the housing supply. Much of this outcry is from the biggest landlords: private equity firms. According to a ProPublica analysis, private equity is now the dominant form of financial backing among the 35 largest owners of multifamily buildings nationally.
Snodgrass observes that as private equity firms increasingly dominate the rental market, the problem of junk fees is growing worse. Backed by teams of private lawyers, these firms often employ aggressive strategies to maximize profits, including the liberal use of junk fees.
However, Snodgrass and other legal aid attorneys are stepping up to protect tenants' rights and challenge these predatory practices.
The Legal Landscape and Role of Legal Aid
Unlike some other states, Washington currently lacks any statewide regulations on most types of rental fees. This gives free reign to landlords and property management companies to charge excessive fees for various reasons.
"Right now, that's part of the problem," Snodgrass explains. "There's nothing in the Residential Landlord Tenant Act (RLTA) that regulates these types of fees. It's technically compliant with current law for a landlord to charge a $1 million late fee, so long as they wait until the fifth day after rent is due."
This lack of regulation creates a significant hurdle for tenants seeking to challenge these fees. However, Snodgrass is exploring various legal strategies to challenge junk fees:
- RLTA Violations: They argue that some junk fees may violate specific provisions of the RLTA, such as prohibitions on certain types of lease clauses.
- Illegal Penalties: Drawing on contract law, they contend that many junk fees constitute illegal penalties that are not reasonable approximations of actual damages.
- Consumer Protection Act (CPA) Violations: In cases where fees are not explicitly covered by the RLTA, attorneys are exploring whether they might constitute unfair or deceptive practices under the CPA.
The complexity of these cases underscores the critical importance of legal aid attorneys. They are uniquely positioned to take on these cases, both because they can provide free representation and because they are willing to make novel legal arguments in an evolving area of law.
"Most private lawyers wouldn't take a case like Ms. Hodges’ because it just wouldn't be financially feasible," Snodgrass explains. "And even if they could, the uncharted legal territory means there are few private lawyers willing to take it up."
As the battle over junk fees continues, civil legal aid attorneys like Snodgrass remain on the front lines with their tenant clients, fighting to protect tenants' rights and challenge unfair practices. Their work provides crucial assistance to individuals and helps shape the legal landscape around rental housing.
Meanwhile, Ms. Hodges has taken a new job that requires her to move to a new location—and Zenith has listed her house for $2,495 per month on Zillow, $600 more than Hodges' current rate.