District Court Finds Amenities Fees To Be Illegal Excess Rent for Section 8 Tenants

Meredith Dixon, Law Fellow

The Eastern District of California recently decided in Terry v. Wasatch Advantage Group, No. 2:15-cv-00799 (E.D. Cal., November 23, 2022), that certain amenities fees are illegal excess rent and violate contract terms for the Section 8 Housing Choice Voucher Program.  The Court ordered the defendants, who are private property owners and managers, to repay the fees to their tenants. 

As described in our previous blog post, the Terry plaintiffs represent a certified class of California tenants who receive rental assistance through the Section 8 program and were charged amenities fees for things like washers and dryers, rental insurance, and parking. Both sides sought summary judgment on the question of whether these charges were “rent,” and if so, whether they were unlawful. Judge Mueller of the Eastern District of California granted summary judgment for the Terry plaintiffs and the certified class and denied summary judgment for the defendants.   

The Court determined that defendants treated the fees as “rent” in several ways. First, many of the defendants’ standard rental agreements and lease renewal letters described the amenities fees as part of tenants’ total monthly obligation due, and standard forms combined the approved rent with monthly amenities charges in several places. Second, the defendants required tenants to pay the amenities charges for the duration of the lease and viewed failure to pay amenities charges as a default under the lease. Third, the defendants applied tenant payments to amenities charges before their approved monthly rent charges to try to preserve defendants’ ability to evict tenants for failing to pay rent.  

We hope the order will allow advocates across the country to challenge similar practices. 

Because the fees should be considered rent, the defendants violated the Housing Assistance Payment contract between the landlord, the tenant, and the local housing authority administering the housing voucher program by exceeding the total maximum rent permissible for the units. 

Having won summary judgment on their breach of contract and Unfair Competition Law claims, the plaintiffs will now ask a jury to determine the amount of damages and Defendants’ liability under the False Claims Act and Consumer Legal Remedies Act.   

Housing advocates have seen increasing side fees as a widespread issue affecting housing costs for many renters. Such fees are particularly crushing for low-income renters reliant on federal subsidies affecting their ability to afford safe, stable housing. We hope the order will allow advocates across the country to challenge similar practices. 

We are tremendously grateful for the work of our co-counsel Goldstein, Borgen, Dardarian & Ho, Centro Legal de la Raza, and the Law Offices of Andrew Wolff for this incredible win for low-income renters.