Invitation Homes, one of the nation’s largest corporate landlords, will pay $20 million to a whistleblower and 35 California cities to settle a lawsuit charging that the company made unapproved renovations to its portfolio of 12,000 homes in the state.
The company said the lawsuit is without merit and that the settlement is “in the best interest of all its stakeholders and allows the company to better focus on its core business operations.” Its stock is worth $22 billion.
An attorney for the whistleblower said the purpose of the lawsuit was to shine a light on the practices of large corporate landlords that emerged after the Great Recession to buy tens of thousands of single-family homes and convert them into rentals.
“We’re hoping this has made homes safer for the people who are renting houses from large companies like Invitation Homes,” said Vince McKnight, an attorney at Sanford Heisler Sharp.
A Washington Post story in 2022 reported that building department data in three markets showed Invitation Homes’ properties were less likely than others to have permits for renovations and other projects. At more than a dozen Invitation Homes properties across several states, the company hired contractors for renovations for which there is no record of the required permits. In multiple examples, the unpermitted work left tenants with homes in poor condition.
Formed by Wall Street investors after the Great Recession and foreclosure crisis, the company accumulated tens of thousands of houses across several states at depressed prices and then spent hundreds of millions of dollars on renovations. The company said it was leading a real estate “revolution.”
In most parts of the country, local officials require building permits for significant home renovations. Changing the plumbing, rewiring an electrical circuit or replacing a roof often call for payment of a fee and, sometimes, inspections. The responsibility for pulling a permit lies with both the owner and the licensed contractor doing to the work, building officials say. The process can cause delays and add thousands of dollars to renovation costs.
Building officials, however, say the permitting process ensures the quality and safety of homes.
