Getting ripped off by a property management firm. Help!
November 7, 2007 8:04 AM   Subscribe

Ontario property management firm charging "service fees" just to apply for an apartment rental? This has got to be illegal.

So here's the story: My girlfriend and I saw a nice apartment, went to see it, and decided to fil out an application form to find out the landlord would rent it to us. Problem: The landlord is a TransGlobe, a large property management firm. They demanded first and last month's rent (the latter in a certified cheque) before they'd process an application form to decide if they'd rent to us. Two days after making the application, we informed the rental agent that we'd changed our mind and had found another apartment, and could we please have our cheques back. Now the fun begins.

The property rental person "has to talk to her manager", and after more phone calls her manager says "sure, we'll return your money, less a $150 service fee". Why? because "we cash your cheque as soon as we approve you for tenancy".

What service? What to do? We never signed a lease, and we never moved into the apartment. In fact, this all happened within a few days of the current apartment's tenants giving two months' notice... so the apartment has never even been vacant.

Does this mean that this is a small claims court matter, or the Landlord and Tenant Board? I notice that the LTB website says, "The rent deposit must be used for the rent for the last month before the tenancy ends. It cannot be used for anything else, such as to pay for damages."

I'm not paying that $150. I'll take them to small claims court, phone their CEO, or write op-ed articles for newspapers if I have to.

Any legal eagles or other experienced negotiators have suggestions for how to proceed in talking with these jerks? My girlfriend has had enough and passed on the manager's contact information to me, so I have an opportunity to start fresh.
posted by anthill to Law & Government (20 answers total)
I can't offer anything as far as legal remedies, but my roommates and I were in a similar situation. We applied to rent an apartment from a large apartment management company, and had to pay a hefty service fee along with that application. Before we heard back about that application, we found an apartment we preferred and were accepted as tenants. Unfortunately, that meant the loss of the "service fee" which would have otherwise been applied toward our rent deposit. I wouldn't be so sure that what has happened to you is illegal, especially since you backed out of the application process, rather than being denied as tenants. By all accounts, this is pretty standard in the world of these massive management companies.
posted by undercoverhuwaaah at 8:17 AM on November 7, 2007

Response by poster: Just to clarify: I may have missed some fine print, but there was no mention of a "service fee" in the application.

I'd rather not go for legal remedies, advice on negotiating tactics would be equally helpful.
posted by anthill at 8:28 AM on November 7, 2007

on the application form did it mention this service fee? if it did, you're screwed. if it didn't, and it wasn't ever mentioned to you, you can contest on grounds of nondisclosure.
posted by citystalk at 8:29 AM on November 7, 2007

At least in the US, there are application fees which are normally used to pay to check the credit reports of the applicants. It's nominally $20-$30, not $150, though.
posted by zsazsa at 8:30 AM on November 7, 2007

Okay, first things first.

Sit down with your gf and make a time line documenting every contact you've had with the agency, its representatives, etc., including phone conversations and in-person meetings. You may not need it, but it could also come in handy.

Do you have a copy of the application? If so study the fine print. You may have agreed to this crazy scheme without even knowing it.

If you don't have a copy of your signed application request one from the firm.

At this point I'd set down with a copy of the LTB and note all of the instances where you think that you have a claim for the full refund. The language you cited is good.

That said, if you agreed in the application to pay some sort of service fee or processing fee (for credit checks or whatever) then you're probably screwed here. But if not...

You can work the phone angle, but be sure to get everyone's full name and their business title as you speak with them. When speaking with the manger ask him for his work mailing address (this will throw him off) and say that if you can't resolve this dispute over the phone then you'll continue in writing. (If you do resort to letter writing, send everything certified so they have to sign for it.)

Always be polite and maintain a professional tone. You can appeal to their sense of decency, but because they work in apartment management you'll find they have none. So you'll have to appeal to their wallet and time (because in their mind time is money.) You can offer to meet them half way, perhaps paying $20 for their time (which seems reasonable as they probably spent less than an hour devoted to your application - and I'm sure the person who processed it is an hourly wage worker.)

If they send you a refund check, do not cash it unless you're happy with the amount. Cashing it will be seen as a agreement between you and the company by a court.

If you're going to make the case that you never agreed to any charge then that's a start, but your footing is slightly weak because you forked over the deposit. They are going say, "Well, if you didn't want the apartment why did you give us the deposit." They are going to claim some sort of loss of service because you've reneged on your commitment to rent the apartment. You should be prepared with a response.

In the end, a modest processing fee isn't absurd. But $150 is ridiculous.

Keep in mind that if this mess goes on long enough (goes to court) you maybe able to tack on interest on your money and some sort of fee for your time.

Good luck. Please stick it to them. Property management firms are evil.
posted by wfrgms at 8:37 AM on November 7, 2007

I agree with the above answers: you should really try to get that $150 back. It would mean so much if those were American dollars, but this is 150 Canadian dollars you're talking about, so it's well worth fighting for.
posted by koeselitz at 8:46 AM on November 7, 2007 [4 favorites]

I don't know about Ontario, but this is 100% illegal in BC, as per Section 15 of the Residential Tenancy Act.

Ontario's Residential Tenancies Act isn't nearly as clear, with Section 10 being the only section that addresses rental application (I think, I only browsed) and it doesn't mention application fees one way or the other. Maybe there's some kind of tenants union or organization that could help clarify.

IANAL, btw.
posted by Nelsormensch at 8:55 AM on November 7, 2007

Talk to the Tenants Association hotline 416 921 9494
posted by winston at 9:07 AM on November 7, 2007

Response by poster: Thank you all very much for the answers. I've gotten another copy of the application form, here is the legalese we agreed to:

1) The undersigned agrees that upon the Landlord's acceptance of this application/offer to lease:
a) a binding tenancy agreement shall be created between the parties;
b) the applicant(s) shall enter into a written tenancy agreement in the Landlord's usual form prior to taking possession of the premises;
c), d) [tenant's insurance, utilities, blah blah]
e) deposits will be deemed to be a last month's rent deposit upon the acceptance of this offer to lease.
2) 3) 4) [ privacy policy, landlord failure to provide apartment, back-to-back occupancy blah blah ]
5) In the event that this application is accepted by the Landlord but the applicant(s) refuses to take possession of the premises and make a tenancy agreement with the Lanlord for the term herin, the applicants agrees that the deposit may be retained by the Landlord in its entirety and that the tenant remains responsible for rental payments until the unit is re-rented. The applicants are also responsible for out of pocket expenses incurret by the Landlord in order to re-rent the premises.
6) The undersigned certifies that the supporting information in this application is current and correct ... Any omission or misstatement by the applicant(s) in the Rental Application may result in the review of your tenancy by the landlord even after occupancy has been taken. If any facts prove to be untrue, the Landlord may terminate the tenancy immediately and collect from the applicatn(s) any damages incurred, including reasonable attorney's fees resulting therefrom.

So, it looks like they claim is that I'm now a tenant, by virtue of their having accepted my application, and that our deposit is the last month's rent. Hmm.
posted by anthill at 9:24 AM on November 7, 2007

Response by poster: Just got off the phone with the Toronto Tenants Association, thanks winston. Notes:
  • This is a very common agreement
  • Technically they can charge me for January and February's rent (~$2000), since I have to give them two months' notice from the move-in date (as opposed to now, two months before the move in date)
  • This has turned into a game of chicken: if they rent out the apartment for January, I can take them to court and perhaps get the money back (since I got nothing for my $$)
She suggested I am pretty much screwed and recommended to eat the $150.
posted by anthill at 9:56 AM on November 7, 2007

If you didn't sign a lease, is there even a "move-in date" to be considered? It doesn't seem to me that you were a tenant before you canceled, but I don't know Toronto law.
posted by rhizome at 10:28 AM on November 7, 2007

I dunno, regardless of what the Tenant's Association says it sounds like bullshit. You're not a tenant because you haven't signed a lease.
posted by electroboy at 10:32 AM on November 7, 2007

Is it possible to stop payment on the certified check?
posted by electroboy at 10:33 AM on November 7, 2007

IAAL, IANYL, TINLA, If you changed your mind before they notified you your application was accepted you should be clear. If they then claim in a court that they notified you of acceptance that would be perjury and a crime. If they back date acceptance letters that is also a crime (fraud).

If you tell tham that you will happily take them to court and call and question every single possibly related employee about their process and procedures UNDER OATH AND THREAT OF GOAL IF THEY LIE as well as put them through a week of unpleasant discovery ... I bet they will give you your money back just so you go away ... but you have to sound as if you actually would do it.

posted by jannw at 10:34 AM on November 7, 2007 [1 favorite]

Yeah, if they hadn't told you that you were approved yet, then you wouldn't be considered a tenant's like saying that someone is responsible for making car payments before you even let them know that the financing has gone through.

I think if they hadn't officially notified you that the apartment was yours, there's no way you can be responsible for the first/last. Now the one-time fee may be a way they rip off people who back out/don't get approved for the apartments. I bet there is a way to get out of it but if worse comes to worse I say eat the cost and give them a shitty rating on every "rate this landlord" site you can find.
posted by SassHat at 10:36 AM on November 7, 2007

I know nothing Canadian law, but just parsing the language, it looks pretty clear that the tenancy would only form once the landlord approved your application. If the approval hadn't occurred before you cancelled it, you have a shot, and it might be worth taking to small claims. Keep in mind that the filing fee looks to be $75, so prepare yourself to not get your money back. There's probably going to be a point in the process where it ceases being worth it, and you want to be able to recognize that point.

If you do go to small claims, don't do the "I'm going to sue" threat. They're going to roll their eyes, and it's not going to bother them. If you feel like it's a worthwhile negotiation point, you can always say, "I have a completed claim sitting in front of me, and tomorrow I'm going to file it. Is my $150 really worth the salary you'll pay somebody to respond and then attend a settlement conference? There's bound to be a better use of their time."

Sorry this happened to you. $150 is a steep price, but it's a valuable lesson: read legalese closely and never be afraid to cross stuff like that out.
posted by averyoldworld at 12:28 PM on November 7, 2007

Response by poster: I might be left to follow SassHat's advice - We went to see the apartment Nov. 1st, they phoned us on the 2nd to say we were approved, we phoned them on the 3rd to say we had decided to go elsewhere. So they did inform us over the phone that they had approved us, and I may not be able to follow jannw's advice.

I can phone and complain, but I don't seem to have much to agreeably threaten them with. My strategy might be to not cash the cheque they mail out, wait until January, see if they've rented the place out, and if so, take them to small claims court to get my $150 back (since they can only hold on to the money in lieu of rent).

The idea that an application to rent can morph into a tenancy agreement is very surprising, but apparently not illegal. Always read the fine print...
posted by anthill at 12:55 PM on November 7, 2007

I worked for a similar large property management firm in Ontario (not Transglobe, but about equal in size and nearly identical in policy).

This is, unfortunately, legal. Take a look at the application for you signed and you'll notice that your "last month's rent" includes a non-refundable application fee. If your application is denied, you get the whole thing back. If it's approved and you change your mind, application fee is kept. Actually, you're lucky the fee was so low - where I worked, it was the ENTIRE last month's deposit.
posted by DecemberRaine at 12:55 PM on November 7, 2007

they phoned us on the 2nd to say we were approved

In that case, you're lucky to only be out $150. Chalk it up to experience, it could have been more.
posted by grouse at 2:24 AM on November 8, 2007

Wow, you're getting off easy. When you make out and hand someone a check, that means you've agreed to give that person or entity the amount of money specified on the face of the check. It does not mean that you have agreed to give them that money until you change your mind, then you can get it back. Think about it - would anyone take a check under those terms? Would you?

And when you signed your rental application, you entered into a binding contract with your landlord, subject only to the landlord's approval. They could have kept your money and waited for you to give written notice, holding you liable for rent all the while. You should be glad you're only out $150, it is cheap for a lesson in "don't sign your name to things you don't agree to."

By the way, whatever you think you've agreed to with these yo-yos, get it in writing.
posted by ikkyu2 at 10:57 PM on November 9, 2007

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