Realtors as Rental Agents and the Fair Debt Collection Practices Act
Realtors don’t just help people buy and sell homes, often they help people rent out their homes and properties, acting as a rental agent for landlords. In that role, the Realtor will advertise, vet tenants, get leases signed, hold rent deposits, and act as the “point person” for the tenant when there is an issue in the rental.
The Realtor may also be charged with making sure the tenant stays current on rent. Although the Realtor may not think of herself as a “debt collector” when she contacts a tenant about late rent, the courts think differently. Earlier this year, a federal judge in Camden allowed a tenant to sue a real estate agent for alleged violations of the Fair Debt Collection Practices Act (“FDCPA”), a federal law that limits how and when debt collectors can contact debtors. In this case, the Realtor was an agent for the landlord, and had contacted the tenant’s employer about overdue rent. The employer then terminated the tenant.
This is new territory for real estate agents. A person is a “debt collector” under the FDCPA if she regularly engages in the collection of debts on behalf of another person. While a single letter to a tenant regarding late rent is not likely to qualify a Realtor as a “debt collector,” it’s unclear from this case how much rent collection is enough to qualify the Realtor as a “debt collector.” Posternock Apell, PC recommends erring on the side of caution. Steer clear of any potential for violations of FDCPA, by observing the following guidelines:
Any time an agent communicates with a tenant or tenant’s representatives, whether verbally or in writing, the agent must disclose that she is a debt collector, and the information given will be used for that purpose.
An agent may not harass a tenant by contacting the tenant at inconvenient times or places, such as before 8 am or after 9 pm. Agents cannot contact tenants at work about late rent if the tenant has told the agent (verbally or in writing) that the tenant cannot be contacted there.
If the tenant hires an attorney to represent him, you must contact the attorney, rather than the tenant.
The agent cannot contact other people, including tenant’s employers, friends, and family, to discuss the debt.
The agent must be careful when discussing the back rent with the tenant. The agent cannot make any misrepresentations about the amount of the rent, late charges, or other amounts owed, or the consequences of not paying the amount owed. Even unintentional misrepresentations may get the agent in trouble.
If an agent is found to have violated the FDCPA, even if the tenant has not suffered actual damages, the agent may be subject to penalties of up to $1000, plus payment of the tenant’s reasonable attorney’s fees and costs. If the tenant can prove damages, the agent may be liable for those damages.
It’s important to understand that the FDCPA does not supersede New Jersey’s eviction laws, and tenants who do not pay rent can still be evicted under law. But Realtors must be mindful of their communications with tenants in order to stay on the right side of this new application of the FDCPA.