STICKER SHOCK

About 9 months or so later, the tenant would receive a rent increase notice that deceptively appears to be a legal document issued by the city government, with a letterhead including “District of Columbia Department of Housing and Community Development.” Actually, the form is filled out by the landlord and the city doesn’t check it for accuracy.

The notice claims that her monthly rent will increase by an absurdly high amount, often more than $1,000. It isn't unusual for a corporate landlord to claim that a tenant’s "rent" for a moderate one-bedroom apartment will be over $3,000 per month as shown in these redacted real-life examples.

[NOTE: The decision in the DC Attorney General’s case against Equity Residential found this to be false advertising, awarding $1 million to tenants.]

The tenant now realizes that last year the leasing agent had tricked her into signing a lease with an absurdly high amount listed as the "rent." It was not a formality as was claimed. The tenant is trapped.

The tenant meets with the leasing agent to plead for a better deal. The agent says not to worry because he can offer her another “concession.” But this time it’s smaller than before. He offers a new rent that is $250 more per month than what she had been paying. This far exceeds the maximum legal increase, which depending on the rate of inflation should be in the ballpark of $50 per month.

The agent says that he can only offer the tenant this deal if she signs a new lease. The lease will list an even higher “rent” than last time. The agent says not to worry – promising the tenant that she will get another big “concession” next year.

Ironically, the sales agents often don’t know that this is illegal — the scam was designed by the corporate owner and its attorneys. That’s one reason that the scam is so effective - the sales agents appear to be nice people who would not lie to you, so you sign the predatory lease.

THE COSTS ADD UP

Let’s take a conservative example:

After a lot of negotiation your landlord forces a tenant to accept a rent increase that is $50 per month more than the legal limit. This adds up to $600 over the first year.

We'll assume that the same thing happens next year: The landlord forces the tenant to pay a rent increase that is $50 more than legal limit. She will be overpaying $100 per month -- $50 because of last year's bad deal and $50 because of this year's bad deal. This costs her $1,200 over the next year. 

The same thing happens the following year. This adds another $50 more per month. Now she is paying $150 more per month than you would be paying if the rent increases had not exceeded the legal limits. This costs her $1,800 over the next year. 

At the end of third year, she will have overpaid by a total of $3,600.

This is a conservative example – a tenant could end up paying a lot more. If tenants don’t know their rights, they may not even know that they have been cheated. Now, imagine the combined figures on a scale of tens of thousands of DC residents.

NEXT: Trapped