NY Attorney General Cancels $200K+ in Illegal Rent & Recovers $65K For Deceived Tenants

Landlord Denied Buffalo, NY College Students Housing And Then Claimed They Owed Thousands in Rent, Referring Them to Predatory Debt Collectors.

NY-Attorney-General-Cancels-200K-in-Illegal-Rent-Recovers-65K-For-Deceived-TenantIn a textbook case of everything a New York landlord should not do, New York State Attorney General Letitia James cancelled more than $200,000 in illegal housing debt for dozens of Buffalo college students  and recouped another $65,958.45 in restitution for hundreds of more students. This was part of an agreement with Monarch 716,an off-campus private student housing provider that deceived hundreds of students since 2019.  A  $50,000 civil penalty was also imposed. The agreement prohibits Monarch 716 from repeating any of its predatory practices in the future.

An investigation by the Office of the Attorney General (OAG) found that Monarch 716 routinely coaxed students into signing leases, then demanded thousands of dollars in rent while denying students access to those apartments. Monarch 716 deceived  tenants while threatening to send them to debt collectors and ruining their credit. After viewing an apartment, Monarch would claim that the tenant owed thousands of dollars without ever doing its due diligence to see if the tenant even qualified for the apartment. Tenants who never even occupied a Monarch 716 apartment were asked to pay thousands of dollars in rent.

Monarch 716 engaged in serious predatory behavior that violated tenants’ rights and made students feel threatened. Monarch 716, also known as Monarch, is a private, off-campus student housing provider — owned by 100 Forest Ave LLC and managed by XFD Real Estate Partners — that primarily markets to students at SUNY Buffalo State College. OAG found that the company routinely collected interested students’ information, cajoled them into signing leases even though they did not first determine if they met Monarch’s qualifications (and often later determined that they did not qualify), denied students access to housing, and finally claimed students owed thousands in rent. Monarch would then often refer students to debt collectors.

The OAG investigation also revealed that Monarch 716 illegally charged students excess rent and fees, including:

  • Advising students they could get out of their lease if they found another student to take it over, but then unlawfully charged them a $300 “delegation” fee;
  • Allowing students to prepay rent in advance if they believed they did not meet certain qualification criteria, a violation of NY  rent laws;
  • International students were allowed to prepay rent, sometimes several months’ worth or the entire term of the rental agreement; and
  • Charging certain students excessive late fees for each month of rent that was not paid in a timely manner and posted red notices on their doors.

Monarch was found to be in violation of them following laws, many of which were enacted by the NY Housing Stability & Protection Act of 2019:

  • NY RPL § 238-a(1)(a) provides that “no landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks.” Monarch charged a $300 lease delegation fee in violation of RPL § 238-a(1)(a).
  • NY RPL § 238-a(2) limits late fees on residential rent to the lesser of $50 or 5% of one month’s rent. Tenants were charged  a late fee of $50 even when 5% of their rent would have been a lower amount, in violation of RPL § 238-a.
  • NY RPAPL § 702 provides that the term “rent” in a summary proceeding relating to a residential dwelling is limited to the amount charged for use and occupancy, and cannot include any additional fees, charges or penalties such as late fees. Monarch purported to add late fees to rent in violation of RPAPL § 702.
  • NY RPL § 227-f provides that “[n]o landlord of a residential premises shall refuse to rent . . . to a potential tenant on the basis that the potential tenant was involved in a past or pending landlord-tenant action or summary proceeding . . .” Monarch automatically denied applications from prospective tenants whose application or background screening showed an entry for “evictions, filings and public records,” meaning any tenant involvement in a landlord tenant action or summary proceeding, in direct violation of RPL § 227-f.
  • NY RPL § 227-e provides that a residential landlord has a duty to mitigate damages if a tenant breaches their lease and if the premises are re-rented at “fair market value or at the rate agreed to during the term of the tenancy, the new tenant’s lease shall, once in effect, terminate the previous tenant’s lease and mitigate damages otherwise recoverable . . .” If a tenant breached their lease by vacating before the end of their lease term, Monarch would not mitigate damages owed by such tenant even if the tenant’s unit was re-rented. Monarch would only release tenants from their financial liability if all units at Monarch were 100% leased in violation of RPL § 227-e.
  • NY RPL § 234 provides that in the event a residential lease includes a unilateral attorneys’ fees clause in favor of the landlord, “there shall be implied in such lease a covenant by the landlord to pay to the tenant the reasonable attorneys’ fees and/or expenses incurred by the tenant as the result of the failure of the landlord to perform any covenant or agreement on its part to be performed under the lease,” and “[a]ny waiver of this section shall be void as against public policy.” Monarch’s lease included a unilateral attorneys’ fees clause in favor of Monarch.
  • NY GOL § 7-108 provides that for “all dwelling units in residential premises . . . [n]o deposit or advance shall exceed the amount of one month’s rent under such contract.” Respondents routinely charged tenants multiple months of rent in advance in violation of GOL § 7-108. Monarch’s Rental Agreement claims that a tenant owes the full term of rent immediately upon signing, and that monthly payments are offered only as a “convenience.” in violation of GOL § 7-108.
  • NY Executive Law § 296(5)(a) (“Human Rights Law”) prohibits discrimination in the leasing of housing based on lawful source of income. Monarch has failed to consider lawful sources of income other than earned income, such as student financial aid, when determining a prospective tenant’s ability to qualify to reside at Monarch.
  • NY GBL Article 25 is New York’s Fair Credit Reporting Act. The law requires that: whenever a residential rental or lease is denied . . . either wholly or partly because of information contained in a consumer report, the user of the report shall: (1) advise the consumer against whom such adverse action has been taken of such action, (2) supply the name and address of the consumer reporting agency making the report, and (3) inform the consumer of his right to inspect and receive a copy of such report by contacting the consumer reporting agency. GBL § 380-i. Monarch routinely used consumer reports to screen prospective tenants and their guarantors. Monarch failed to make required disclosures to prospective tenants who were denied a residential rental based on use of information contained in a consumer report in violation of GBL Article 25.
  • NY GBL § 350 provides that “False advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state is hereby declared unlawful.” Paid reviews or testimonials that do not disclose that such reviews are compensated are a form of false advertising prohibited by GBL § 350. Monarch solicited paid reviews on Google reviews without disclosing that such reviews were compensated, in violation of GBL § 350.
  • Monarch attempted to collect on inaccurate debts and placed such debts for collection. Attempting to collect on inaccurate debts and placing such debts for collection is a fraudulent practice prohibited by Executive Law § 63(12). Monarch also placed such inaccurate debts with a third-party debt collector who in turn reported such inaccurate information to consumer reporting agencies, in violation of GBL Article 25.
  • Monarch’s practice of holding a prospective tenant responsible for all rent due under a Rental Agreement, while denying them the ability to move into an apartment, constituted a fraudulent and deceptive business practice in violation of NY GBL § 349 and NY Executive Law § 63(12).

Contact Rochester Landlord Attorneys Justin R. Friedman and Robert Friedman at 716.542.5444 for advice on evictions, leases and proper screening of tenants.