Ann Arbor Landlords Charging Renters Over $6,000 to Get in Line for Apartments

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What does it cost to get in line for an apartment in Ann Arbor with no guarantee it will become available in the next year?

In two cases cited by the Ann Arbor Tenants Union, landlords have charged fees well over $6,000.

That includes $6,745 charged by Campus Management Inc. and $6,887.50 charged by Prime Student Housing, according to landlord-tenant agreements the tenant rights organization has publicly circulated while calling for banning waitlist fees.

City Council Member Travis Radina, D-3rd Ward, said he now plans to bring forward an ordinance to ban them.

“The onslaught of increasingly excessive waitlist fees and other — often hidden — rental junk fees is a maddening example of predatory profiteering by some landlords who seem hellbent on taking advantage of the approximately 55% of Ann Arbor residents who rent,” Radina said.

The fees in some cases aren’t refundable, Radina and the Tenants Union note.

“There is no justifiable reason for a non-refundable waitlist fee — especially some of the exorbitant and extreme examples we’ve heard about throughout the city,” Radina said.

Chris Heaton, property manager and co-owner of Campus Management, defended the fees, though he doesn’t consider them waitlist fees, but rather “options to lease.”

“If their desired housing is available because of non-renewal, and they sign a lease with us, all payments are credited to their account,” he said. “Along the way, we make sure to observe all timelines imposed by local ordinances.”

Ann Arbor’s rental housing market has long been highly competitive with limited supply and strong demand driven in large part by the University of Michigan student population.

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In the example of a Campus Management “option agreement” from fall 2023, the opening paragraph acknowledges a prospective tenant can only exercise their option to lease an apartment once the current tenants’ right to renew expires within the timeframe established under city ordinance.

Additionally, fees are not refunded if the desired apartment becomes available and the person entering the option agreement decides for any reason not to sign a lease, it states, giving them 72 hours starting at 12:01 a.m. March 14 to sign a lease if the apartment becomes available.

If they fail to act, Campus Management will keep their money as “liquidated damages,” the agreement states.

The example of a Prime Student Housing option agreement with a $6,887.50 fee includes similar language, including allowing renters to pick their first and second choices for apartments.

 

Zackariah Farah, chair of the city’s Renters Commission and a member of the Tenants Union, said his group is aware of another landlord charging prospective tenants a $500 “reservation fee” to join an apartment waitlist.

Since current tenants have the right to renew leases, anyone who pays a reservation fee or option fee is second in line and thus there functionally is a waitlist, Farah argued.

“If you wanted to dine at a restaurant but weren’t first in line for a table, you would say that you were on a waitlist,” he said. “The difference is that restaurants don’t charge you thousands of dollars in fees to be on the list.”

 

Some of the waitlist contracts are for a particular apartment or any similar apartment, Farah noted.

 

“The most important thing to remember here is that the prospective tenants who sign these contracts have absolutely no guarantee of receiving a lease,” he said. “Whether landlords choose to call these options fees, reservation fees or waitlist fees, they are all wrong and should be banned.”

The fees also are prohibitively expensive for many renters and are unnecessary, Farah said, adding the Tenants Union believes landlords should immediately refund the fees, the city and state governments should ban them and renters should file consumer complaints with the state attorney general’s office.

Radina, who expects to bring a new ordinance to the council table soon to “crack down on greed in our rental market,” said landlords have been empowered for too long to take advantage of tenants to increase their profits and it must end.

He also believes in rent transparency, he said, arguing prospective tenants should have the right to know their full housing costs up front.

“That’s why I support banning not only waitlist fees, but all rental junk fees which are driving up housing costs, making financial planning impossible, and making Ann Arbor less affordable for students, families and middle-class workers,” he said, indicating he’s working with the city attorney’s office on it.

source: MLive