FBI Searches Property Management Company in Rent Price-Fixing Investigation

posted on : June 25, 2024 0 Comment

By John Triplett

The FBI searched property management company Cortland Management’s headquarters in Atlanta in an unannounced search on Wednesday, May 22, according to several reports, as part of a multifamily rent price-fixing investigation.

National apartment developer Cortland Management’s Atlanta office was searched by the FBI under a limited search warrant, a representative for Cortland confirmed. The warrant was connected to an investigation by the Department of Justice (DOJ) into potential antitrust violations in the multifamily housing industry, according to a statement from Cortland.

The FBI property management search is part of a criminal antitrust investigation by the DOJ into allegations that Cortland and other property management companies have been involved in a conspiracy to artificially inflate apartment rents.

“We are cooperating fully with that investigation, and we understand that neither Cortland nor any of our employees are ‘targets’ of that investigation,” Cortland said in a statement. “Due to the ongoing litigation, we cannot comment further at this time.”

The FBI property management search took place May 22, according to MLex, which first reported the news.

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Cortland builds and manages apartment projects in most major markets across the United States, with a nearly $21B portfolio as of September, according to its website. Courtland manages 85,000 rental units across 13 states, including Arizona.

Cortland joins several other large real estate property management companies under investigation for creating a rental monopoly. The investigation is tied to RealPage, a co-defendant and consulting firm whose software has been used to determine the maximum amount rent could be raised, then doing so in tandem in a manner Arizona Attorney General Kris Mayes has characterized as monopolistic.

“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable-housing crisis,” said Mayes. “This conspiracy stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas.”

Multiple tenants across the country have sued RealPage, claiming the tech company’s apartment software helped landlords collude to inflate rents. The lawsuits from around the country were consolidated in federal court in Nashville.

The Justice Department wrote that in the past, collusion has happened with “a formal handshake in a clandestine meeting,” they wrote. “Algorithms are the new frontier, and, given the amount of information an algorithm can access and digest, this new frontier poses an even greater anticompetitive threat than the last.”

A ProPublica investigation last year found that Texas-based software provider RealPage used rent-setting algorithms to recommend rents to landlords across the country to maximize profits — a practice that experts said may violate antitrust laws.

RealPage has denied the allegations.

“Antitrust enforcers have struggled to apply decades-old laws to new technologies such as RealPage’s rent-setting software, which have changed the way competitors interact with one another and with customers,” ProPublica says.