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A State College-based property management company agreed to pay $40,000 after a review of its security deposit practices, state Attorney General Josh Shapiro announced Tuesday.
The Bureau of Consumer Protection accused Continental Real Estate Management of deducting a 15% administrative fee from tenants’ security deposits upon the termination of their leases since January 2012, according to a court document.
That practice continued through January 2015, at which point the company had collected $79,223 from tenants — an average of $79.70 per tenant, according to the document.
The administrative fee had no relation to the “actual amount of damages” and was merely a surcharge added to the alleged damages, the attorney general’s office said.
The company also was accused of retaining $14,483 in tenants’ deposits from January 2013 to March 2017 as “liquidated damages,” according to the filing.
Continental “gets an A” for cooperating with the investigation and for agreeing to change its business practices, Shapiro said. The agreement did not include an admission of fault or liability from the company, according to the document.
“College students are trying to secure their future, dealing with rising costs and navigating living on their own for the first time. These unfair leasing practices were an additional burden,” Shapiro said. “This company should be a model of how Pennsylvania companies can work with my office to correct violations and protect consumers.”
Continental agreed to pay $30,000 in restitution to former tenants; they must file valid claims by May 31 in order to be eligible. The company also agreed to pay $5,000 for civil penalties and $5,000 for public protection and education purposes, according to the court document.
Claims may be filed by calling (800) 441-2555, emailing email@example.com or visiting www.attorneygeneral.gov.
Continental President John Hanna, who signed the agreement, said the settlement was “a simple business decision” after he spoke with attorney Brett Woodburn.
If tenants fail to close out their related bills and don’t leave the property clean — in accordance with their lease — the management agency must do so, Hanna said Wednesday.
“It takes time and money for us to do that, and that’s what the administration fee is for — when people do not comply with the terms of their lease. That’s the end of it,” Hanna said. “Everybody in town has been charging this for as long as I can remember, and I’ve been in this business for a long time.”
The company was not aware it violated the Landlord-Tenant Act and was surprised when it was contacted by the attorney general’s office, Hanna said.
“Our choice was to take this to court and pay more legal fees or to settle. It all comes down to the technical definition of damages,” Hanna said. “That’s what they’re relying on. If they want to take that position, then for us to prove otherwise would take a lot of money and a lot of time in court.”
The agency stopped charging administration fees in August and will not charge them in the future, according to the company’s press release.
“We’re doing everything we can to get this behind us. It’s that simple,” Hanna said. “We want to move forward. We’ve got a good reputation in town, and we want to preserve that.”