Hundreds of current and former tenants of Sage Management housing in Baltimore will get nearly $1 million in compensation and debt forgiveness under a settlement of a lawsuit that accused the rental company of charging illegal late fees.
Three tenants filed the class action lawsuit in March 2014 on behalf of current and former residents since January 2004, saying the company routinely charged late-paying tenants not only the permitted 5 percent penalty but also illegal fees, charges and penalties and perpetuated a cycle of debt. The complaint also alleged the landlord hid "agent fees" by combining them with legitimate court costs.
A city Circuit Court judge granted preliminary approval Tuesday to the settlement, which compensates about 1,872 current and former Sage tenants in apartments and townhouses around the city.
"It's one big step in the right direction," said plaintiff Shonda Billings, a former tenant at a Sage-managed apartment in Northwest Baltimore, who said hundreds of dollars in illegal fees "made it very difficult to catch up and get yourself back afloat. Hopefully this will set an example for some other landlords doing the same type of thing."
Gil Horwitz, president of Sage Management LLC, which manages more than 900 rental units in more than 19 communities, called the lawsuit claims "without merit."
"Sage's charging of certain fees relating to the filing of failure to pay rent notices reflected reimbursement of costs and expenses incurred as a result of tenant delinquencies and were consistent with standard practice in the industry," Horwitz said in a statement, adding that the company agreed to forego such fees in the future.
Under the agreement, Sage will forgive about $794,000 worth of rent balances, according to the Public Justice Center, which filed the lawsuit. That applies to tenants who left a Sage property before January 2014 and who did not have a final judgment against them in rental court by Dec. 31, 2014.
In addition, about 1,872 current and former Sage tenants will get a total of $150,000 in cash payments, while current tenants in that group will be given $50,000 in rent credits, the center said.
The lawsuit accused Sage of misapplying some tenants' rent payments to cover illegal fees instead of rent, prompting additional late fees.
"The settlement provided important relief, which is financial, and it requires Sage Management to keep a clean set of books about what they're charging for rent in addition to hidden fees," said Zafar Shah, an attorney with the justice center. "Our allegation through the litigation was that there were two sets of books. There was a book of basically what their rent is … but also the book they didn't show which had all these fees and inflated court costs.
Jessica Lewis, an organizer with the Right to Housing Alliance, which works with tenants in Baltimore on fair housing issues, said the allegations are not unique to Sage.
"What's happening here with Sage Management is a symptom of a larger problem of the lack of accountability by landlords in the city," Lewis said. "We're seeing an increase in the cost of rental housing, and it's not been matched by an increase in people's incomes. Landlords … are not in any position where they have to fix these problems because they know tenants have very few options."