AG Ellison Sues Landlord Over Alleged Profit-Maximization Scheme, Calling Homes 'Uninhabitable'
MINNEAPOLIS (WCCO) -- Minnesota Attorney General Keith Ellison announced a lawsuit Thursday against HavenBrook Homes, one of the largest landlords in the state, accusing the business and related companies of misrepresenting repair practices, leaving homes uninhabitable for tenants, and violating COVID-19 emergency orders during the pandemic.
"It's almost impossible to afford your life and live with dignity, safety, and respect when your landlord puts their profits ahead of your health and safety," Ellison said, in a statement.
In a complaint filed in a Ramsey County, HavenBrook and five related companies are accused of severely and systemically understaffing their upkeep resources so as to maximize profits from hundreds of rental homes in the state. Moreover, the company is accused of violating Gov. Tim Walz's executive order on evictions during the COVID-19 peacetime emergency.
The lack of resources put into the properties has led, the complaint alleges, to tenants living with no heat, backed-up sewer systems, doors and windows that won't close, mold, and even with wild animals inside. According to prosecutors, the average HavenBrook rental home in Minnesota is over 80 years old.
The complaint alleges that HavenBrook violated state law by telling renters it had "around the clock" emergency repair service when in practice requests for repair were often ignored or met with a "shoddy" response. In past years, some of these ignored responses have led to the company losing rental licenses or being cited for health and safety violations.
According to Ellison's office, HavenBrook is owned by Pretium Partners, LLC, a New York-based, privately-held hedge fund with $30 billion in assets. The hedge fund has roughly 70,000 rental homes across the country, including 600 in Minnesota.
Through handling home repair and maintenance internally, Pretium and HavenBrook cut costs significantly, and, according to the complaint, achieve profits from single-family-rental business "equal to or better than multi-family-rental businesses (which typically have much better economies of scale)."
Despite these costs-cutting strategizes, the companies also maximized profits by raising rent, Ellison's office alleges, adding that significant rent increases were mandated.
These rent increases were justified due to "maintenance costs," and they did not change during the pandemic. The complaint says the company told tenants behind on rent to leave or they'd be evicted, even when the governor's peacetime emergency order stopped landlords from doing precisely that.
In a statement Thursday afternoon, HavenBrook said it was aware of the state lawsuit and was reviewing the filing.
"We are committed to providing the highest-quality rental housing experience possible by offering consistent, dependable and attentive service for all residents in Minnesota and across the country," the company's statement said, adding that under new ownership it has doubled the size of its local maintenance team.
According to state prosecutors, this isn't the first time HavenBrook has faced controversy in the Twin Cities. In Minneapolis, the company was found to have had nearly 1,000 health and safety violations over a recent five-year period. In St. Paul, the company had several certificates of occupancy revoked and tenants were told to vacate the homes over "their landlord's failure to make ordered safety repairs."