The recent surge in class action lawsuits against RealPage, Inc., a property management software company, and landlords utilizing its services has raised concerns within the real estate industry. These lawsuits allege the formation of a “cartel” that manipulates the rental property market, potentially violating federal antitrust laws. To safeguard their interests and prevent involvement in such lawsuits, real estate companies must prioritize risk management strategies. Below we provide guidance on mitigating risks and implementing proactive measures to avoid being entangled in the ongoing class action litigation.
To minimize the risk of being involved in class action lawsuits against RealPage, real estate companies should prioritize compliance with antitrust laws and fair market practices. It is crucial to ensure that business operations, including the use of property management software, adhere to legal requirements and promote fair competition. Regularly review and update internal policies and procedures to reflect current regulations and industry best practices. By maintaining a strong commitment to compliance, real estate companies can reduce the likelihood of engaging in activities that may be perceived as monopolistic or anti-competitive.
Another key aspect of risk management is conducting thorough due diligence when selecting and utilizing property management software. Before adopting any software solution, thoroughly assess its features, functionalities, and potential implications. Consider engaging legal counsel to review the terms and conditions of software agreements, ensuring they align with legal requirements and do not expose the business to unnecessary risks. Additionally, monitor industry developments and stay informed about any potential legal issues or controversies surrounding software providers. By being proactive in software selection and monitoring, real estate companies can mitigate the risk of inadvertently participating in activities that may lead to class action lawsuits.
Real estate companies should also prioritize tenant satisfaction and fair business practices. Establish transparent and consistent communication channels with tenants, ensuring that lease agreements and rental terms are clearly defined and adhered to. Avoid engaging in practices that may be perceived as price-fixing or market manipulation. Regularly assess rental pricing strategies to ensure they are based on fair market value and not influenced by anti-competitive practices. By maintaining a strong focus on tenant satisfaction and fair business practices, real estate companies can build trust and reduce the likelihood of being targeted in class action lawsuits.
To support their defense in any legal action, real estate companies should consider developing an internal formal document illustrating the process of developing rental pricing. This document should outline the factors considered, market research conducted, and the rationale behind pricing decisions. By having a well-documented and transparent process, real estate companies can demonstrate their commitment to fair market practices and potentially strengthen their defense in legal actions.
By implementing these proactive measures, real estate companies can mitigate risks, protect their interests, and maintain a strong reputation within the industry.
