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Baltimore tenants file class action to stop alleged illegal collection practices

March 7, 2014
Contact:  Zafar Shah, Public Justice Center, (410) 625-9409, ext. 237, shahz@publicjustice.org

Baltimore tenants file class action to stop alleged illegal collection practices

Lawsuit claims company used “fee churning” scheme affecting hundreds of renters

BALTIMORE, MD – Three Baltimore City tenants filed a class-action lawsuit today against rental company Sage Management, LLC, alleging that the landlord has engaged in the anti-consumer practice of “fee churning.” The class plaintiffs’ complaint says that Sage’s billing and collection practices have run afoul of state consumer protection laws and violated a Maryland law which caps late fees at five percent of the monthly rent. According to the complaint, Sage Management operates hundreds of rental properties throughout Baltimore and routinely sues 200 or more tenants in the city’s housing court each month.
The lawsuit states that after the tenants make late rent payments, Sage charges them not only a one-time late fee but then continually assesses other fees, charges, and penalties that are illegal under Maryland law. The complaint further alleges that Sage attempts to hide so-called “agent fees” on its internal accounting ledgers by combining them with potentially legitimate court costs incurred when filing a legal complaint for failure to pay rent. The complaint states that the wrongfully assessed fees, charges, and penalties appear on Sage’s accounting records even after the tenants have paid the rent that is due, and even if that payment has resulted in dismissal of the legal actions Sage filed against the tenant in district court.
Adding to the problem, the lawsuit claims, Sage Management misapplies the tenants’ next rent payment to cover the illegal fees and charges, instead of the intended month’s rent. According to the complaint, this misallocation of the tenant’s rent payment converts the tenant’s full rent payments into a partial payment on Sage’s books, prompting Sage to charge additional late fees, agent fees, and court costs that is central to the fee churning. The complaint also states that Sage furthers this fee-churning by sending misleading notices to tenants that misstate the amount that the tenant must pay to stay in the property after Sage has obtained a rent judgment.
Fee churning schemes especially harm renters living on a variable income, who are struggling to find and keep a home in Baltimore’s increasingly unaffordable rental market. Recent data reveal that nearly 53 percent of Baltimore renters are burdened by housings costs. Tellingly, landlords filed nearly 157,000 lawsuits for non-payment of rent last year. These cases by far outnumber any other type of lawsuit in Baltimore courts.
Low-wage workers, young families, people with disabilities, and elders make up a sizable segment of Sage Management’s tenants. Through this complaint, the tenants say they may be late on the rent from time to time but they’ve had enough with the deception.
“They led me to believe that I was paying enough to stay, but I’ve paid them more than what I owe,” says plaintiff Detrese Dowridge, who resides at Sage’s Parklane Apartments building with her young son and is organizing with other Sage tenants through the community group Right to Housing Alliance. Because of illegal fees, Dowridge says she had to cut back on other expenses and became late on other bills. “I can’t put away any money because I’m worried about what I’m going to have to pay Sage Management.”
The case is Detrese Dowridge, et al. v. Sage Management, LLC, filed in the Circuit Court for Baltimore City. The class plaintiffs are represented by the Public Justice Center, a non-profit legal services organization, and the law firm Goldman & Minton, P.C.

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