The Legal Team at Virginia REALTORS® wants to make our property managers aware of some recent guidance from the Federal Trade Commission regarding advertising properties for rent. On December 2nd, the chairman of the Federal Trade Commission (or FTC) issued a statement that the current administration views predatory conduct in advertising rental properties with “special suspicion.” Following that, the FTC released guidance on December 8th directed to property managers, property management software providers, and anyone else who owns or advertises a rental property. Based on two recent settlements with nationwide property managers, the guidance advises that going forward:
- The total cost of renting a unit must be advertised clearly and conspicuously up front. This means that your monthly base rent along with any mandatory fees should be listed in your advertisements so that the consumer can see the total monthly rent before beginning an application (and definitely before signing a lease).
- You should do a compliance check of your advertising (both on your own website and on any third-party sites) to ensure that you are complying with this guidance
- The FTC is reviewing harmful practices in the rental housing market and will not hesitate to take action against landlords.
So, what should you do? For now, you should review your advertising to determine if you are clearly stating the total monthly leasing amount up front. The total monthly leasing amount is the base rent plus any regularly occurring monthly fees. For example, if the base rent was $100, but tenants had to also pay a monthly trash fee ($10), utility fee ($20), laundry fee ($10), and parking fee ($20), then the total monthly rent would be $100+10+20+10+20 = $160.
If you are listing the properties on your local MLS or any other website, we advise you to list the total monthly rent (including any mandatory recurring fees) as the “List Price,” then include a breakdown of those fees in the public comments section. You can also reference any one-time fees for which the tenant would be responsible in the comments. While this guidance currently only appears to be directed only at residential leases, those of you working with commercial leases might want to review your advertising practices as well.
It is important to note that Virginia law 54.1-1204.1 already requires an itemized list of fees starting on the first page of the lease. While you must still follow that law, based on this new FTC guidance, this information also needs to be in your advertisements. In fact, the FTC states that finding out about additional monthly fees at the time of lease is not acceptable. These fees must be disclosed earlier, allowing tenants to see the total rent amount prior to beginning the application process (including paying the application fee).
As we continue to receive updates, we will provide additional information, so please stay tuned to your email and our social media channels. If you have any questions, you can always contact us on our Legal Hotline. Thanks, and happy holidays to all.
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