[RPPTL LandTen] Consumer Lawyer/Insurance regulation lawyer question

[Leonard Cabral]

Hi Harry.
All property manages must be licensed realtors. My first impression is that it must violate the real estate licensing statute.
Leonard P. Cabral, Esq.

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From: Harry Heist<mailto:harry at evict.com>
Sent: Monday, June 29, 2020 4:51 PM
To: 'RPPTL Landlord Tenant Committee'<mailto:landten at lists.flabarrpptl.org>; 'RPPTL Landlord Tennant Committee'<mailto:landtencl at lists.flabarrpptl.org>
Subject: [RPPTL LandTen] Consumer Lawyer/Insurance regulation lawyer question

Here are 2 more spreading fast.

Please take the time to read this when you can as it is becoming very common.


  1.   Tenant is not required to pay a Security Deposit and they are given an optional “method”.  Tenant pays a set FEE to the Property magager, more or less than 1/12 of what would have been the deposit each month as a NONREFUNDABLE FEE and even continues this upon renewals!!  Property manager guarantees the property owner an amount equal to what the deposit would have normally been if the tenant damages the place or owes rent (from property manager’s pocket) and sometimes even an additional month of rent if the tenant defaults.  Property manager pockets the money each month as a FEE. Owner is not even aware of the scheme.

No damages, property manager makes out like a bandit.  Is this legal???  The tenant is paying for the privilege/convenience of not having to pay a security deposit BUT is not using a licensed product.

THIS IS A FORM OF INSURANCE IS IT NOT? The tenant though is not being “insured”, but the owner is and the property manager is pocketing a large sum of money.
This particular scheme preys on people who do not have a security deposit to pay.

The property manager is arguing with me that this is NOT insurance as the OWNER is not paying the “premium”.

In this situation, a tenant actually could end up paying far more in nonrefundable FEES than if he had paid a normal security deposit and people are eating this up!

Next one:


  1.  Property manager charges a pet fee or pet rent to tenant. Property manager pockets this pet fee or pet rent.  If there is pet damage, property manager will pay up to $XXX for pet damage.   THIS IS CLEARLY AN INSURANCE PRODUCT IS IT NOT?   No pet damage, property manager makes out like a bandit.  Pet damage? Property manager has a limit as to what they will cover.

I am trying to explain why both of these could be insurance, violate the security deposit statute, illegal or an unfair and deceptive trade practice but can’t seem to wrap my head around exactly why.

Now, there ARE licensed insurance companies that provide this type of service.   Obligo, Rhino, Leaselock and SureDeposit are but a few.

THESE above are all done in house and are a HUGE profit center now for some property managers and cost far more than the licensed products.

Any real expects out there before some huge class actions start?

I am willing to pay for solid advice.

Trust me on this.  Your single family home managers are beginning to do it and it is increasing their profits dramatically.

The whole fiduciary duty thing is also disturbing.  If a property manager has a choice between accepting a tenant who will pay the standard security deposit OR one who wants to pay a nonrefundable FEE each month to the property manager, who are they going to pick?

Harry

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