REIT's Fees Challenged in Florida Lawsuit

CHICAGO-A class action lawsuit has been filed in Florida against Equity Residential, the largest US multifamily rental REIT, over the company’s “lease fulfillment fee.” Equity Residential is accused of charging tenants in Florida up to three months rent to terminate leases early, and as much as two months rent if they failed to give 60 days notice of their intention not to renew their lease.

The REIT also is accused with violating Florida law by failing to provide tenants with copies of their leases and engaging in questionable collection tactics. Equity Residential owns 34,353 units in the Sunshine State, where it receives 13.5% of its net operating income.

Equity Residential officials were unavailable for comment on the lawuit, filed by Babbitt, Johnson, Osborne & LeClainche, P.A. and attorney Rod Tennyson, both based in West Palm Beach, FL. The suit asks the REIT change their lease termination practices as well as returning fees paid by tenants.

“Hard-nosed tactics may help make this landlord a successful corporate conglomerate, but they are illegal in the state of Florida,” says Rod Tennyson in a statement. “Tenants in this state who terminate early are required to only pay rent for the days the property goes unrented. You shouldn’t have to pay any extra penalty.”

Tennyson drafted Florida’s Deceptive and Unfair Trade Practices Act.

Equity Residential owns 8,726 units in the South Florida market, which accounted for 4.6% of the REIT’s net operating income in the third quarter, making it its fifth-strongest market. However, Equity Residential’s 7,450 units in the Orlando market generated 3.1% of its net operating income; 7,432 units in North Florida generated 2.8% of net operating income; and 6,100 units in the Tampa Bay area produced 2.3% of net operating income.