Yardi, 18 Real Estate Firms Accused Of Rent Fixing In Class-Action Lawsuit
Yardi Systems and 18 property management companies were named in a federal class-action lawsuit accusing them of engaging in a scheme to fix apartment rents across the country.
Seattle-based law firm Hagens Berman alleged in the suit that Yardi and the property management firms used Yardi’s RENTmaximizer tool to eliminate competition by automating rent increases. The suit alleges that the use of Yardi’s tools created a cartel of organizations that leveraged the tool to raise rents across their properties while keeping vacancies low.
“Our antitrust legal team has uncovered what we believe to be a clear gaming of the system through controlled, lockstep algorithmic increases to fix the cost of rent — one that has affected millions of renters,” Steve Berman, managing partner and co-founder of Hagens Berman, said in a press release. “Housing is a basic human need. What these companies have done is both legally and morally bankrupt.”
The lawsuit alleges that the RENTmaximizer tool, which Yardi has since rebranded as Revenue IQ, effectively outsources decisions about rent increases to Yardi. The tool eliminates competition from the market by implementing price increases across a group of landlords, the suit alleges, allowing them to avoid having to court tenants through price reductions or perks like move-in deals for signing leases.
Yardi defended its Revenue IQ tool in a statement on its website Monday. The firm said Revenue IQ "regularly adjusts prices upward and downward based on supply and demand" and said the tool doesn't use confidential, competitor or nonpublic rent data when adjusting proposed asking rents.
"There is nothing illegal about revenue management, and the allegations in the complaint have no merit," Yardi's statement says. "Yardi stands behind Revenue IQ and will vigorously defend this ill-conceived lawsuit."
Some of the largest U.S. landlords were also named in the complaint, which was filed in the U.S. District Court for the Western District of Washington. The 18 property management firms include JLL, Bridge Property Management, Kushner Real Estate Group and McWhinney.
The other firms sued in the complaint were Calibrate Property Management, Clear Property Management, Dalton Management, HNN Associates, LeFever Mattson, Manco Abbott, Morguard Corp., Pillar Properties, Summit Management Services, Creekwood Property Corp., Legacy Partners, Alco Management, Towne Properties and TriBridge Residential.
Hagens Berman claims the Revenue IQ tool allowed landlords to overcharge tenants by 6% in certain ZIP codes. It cites a confidential witness from Bridge Property Management who said the tool gave landlords “an unfair advantage” because they “all know what they should be renting for.”
JLL, Bridge Property Management, Kushner Real Estate Group and McWhinney didn't respond to Bisnow’s request for comment.
“Defendant Yardi and the Operator Defendants collectively used Yardi’s ‘RENTmaximizer’ software to coordinate on setting supracompetitive pricing on multifamily properties across the nation,” the lawsuit says. “In a competitive market, these companies would compete on rental prices to attract renters — that is, they would set rents in accordance with the fundamentals of supply and demand.”
The Yardi lawsuit follows similar accusations against the property management software company RealPage after an October 2022 ProPublica investigation raised questions about whether the firm’s YieldStar software was helping landlords coordinate pricing.
The Department of Justice’s Antitrust Division opened an investigation into RealPage in November, and a wave of lawsuits followed, including a suit from Hagens Berman.
Last month, a district court for the Middle District of Tennessee allowed a group of more than 30 class-action lawsuits against RealPage to move forward after RealPage and landlords named in the suits filed a motion to dismiss the claims. The judge also ordered the plaintiffs to amend their complaint by this month.
