Progress Residential must pay Minnesota tenants millions in restitution, debt forgiveness
April 25, 2024
On March 15, Minnesota Attorney General Keith Ellison announced that he reached a settlement with Progress Residential, HavenBrook Homes, and related companies for his February 2022 lawsuit.[1] The lawsuit alleged that the “syndicate of corporations”[2] under-maintained over 600 single family rental homes and falsely promised maintenance services for years.[3]
HavenBrook is now owned by Progress Residential,[4] the largest single family housing landlord in the United States with over 100,000 homes.[5] Both companies are owned by the private equity firm Pretium Partners[6]. Progress was added as a defendant in the lawsuit when it acquired HavenBrook in August of 2022.[7]
The AG suit in question, filed in early 2022, alleged that Progress violated Minnesota consumer protection law by “systematically misrepresenting its property-repair practices and keeping its properties uninhabitable for tenants.” The widespread habitability issues included tenants repeatedly losing heat and hot water, water leaks, haphazard fixes, mold, and severe pest infestations.[8]
“No Minnesotan should have to live in a home that loses heat, lacks hot water, and is infested with pests and mold due to a landlord’s negligence. … When HavenBrook repeatedly failed to follow the law, my office sued them and has now secured a judgement [sic] that does right by HavenBrook’s tenants. Landlords cannot use their legal and economic power over renters to take advantage of them. …This positive resolution is a milestone for ensuring that Minnesota tenants are treated with the safety, dignity, and respect that we all deserve,” said the Attorney General in a statement.[9]
Under the terms of the settlement, Progress will put $2.2 million into a restitution fund held by the Attorney General’s Office for the benefit of current and former tenants who experienced delayed repairs, who had a member of the home diagnosed with elevated blood lead levels, and who vacated their home due to HavenBrook’s violation of the state executive orders protecting tenants at the start of the COVID-19 pandemic.[10]
In addition, HavenBrook and Progress Residential will forgive rental debt owed by all their former Minnesota tenants up to a cap of almost $2 million.[11]
The majority of Progress’s Minnesota portfolio is located in the historically Black neighborhood of North Minneapolis. Research has shown that institutional investors force Black families out of homeownership, widening the racial wealth gap.
A past report from PESP and Inquilinxs Unidxs por Justicia/ United Renters for Justice (IX) found that Progress siphoned over $60 million in wealth out of Minneapolis and Hennepin County between 2014 and 2023, $40 million of which was extracted from families in North Minneapolis. Progress removed opportunities for working families by buying up starter homes, forcing tenants to pay rent rather than building equity. Furthermore, when the homes doubled in value, Progress benefitted rather than community members.[12]
For this reason, it is meaningful that a third part of the agreement publicly announces Progress Residential’s plans to transfer their properties to affordable housing entities this spring. The defendants are not required by the agreement to transfer their homes to a new owner; however, for any home that they do not transfer to new owners, the settlement requires them to comply with numerous habitability terms to ensure that their tenants have safe housing, including following both state and federal lead-paint hazard laws; making timely responses to both emergency and standard repair requests; providing tenants with copies of city inspection reports of the rental properties if health and safety repairs are ordered; and abating rent if city-ordered repairs are not completed by the required date.[13]
Further, if the properties are not sold, existing tenants who owe at least 2 months’ rent may end their lease early and receive past-due rent forgiveness. All existing tenants are also eligible for $1,000 in relocation assistance per household if they choose to move and will receive full refunds of their security deposits with interest. It is a groundbreaking victory for hundreds of Minnesota tenants, and follows a temporary injunction that issued in December, requiring Progress Residential to follow state and federal lead-hazard laws.[14]
Progress Residential is expected to make these offers to tenants directly. The state will reach out to tenants in the next few months to participate in the restitution plan.[15]
This important settlement falls in line with Minnesota’s role as a national leader in policies and regulatory actions that bolster tenant protections.
However, it could not have happened without tenacious advocacy from the tenant movement, namely Inquilinxs Unidxs. After years of tireless organizing, “tenants have won monetary compensation, a one-year rent freeze, repairs, the power to choose how and where to receive utilities, and the opportunity to move into renovated Progress Residential homes. The City of Minneapolis even passed a list of agreements that the landlord managed by Progress Residential signed in order to operate in the City of Minneapolis.”[16]
[1] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[2] https://www.documentcloud.org/documents/24483316-mcro_62-cv-22-780_amended-summons-and-complaint_2022-08-10_20240315102814?responsive=1&title=1
[3] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[4] https://www.housingwire.com/articles/46012-progress-residential-bags-1b-to-boost-single-family-rental-business/
[5] https://rentprogress.com/about-us/news/announcements/general-counsel-ama-romaine-progress-residential
[6] https://www.housingwire.com/articles/46012-progress-residential-bags-1b-to-boost-single-family-rental-business/
[7] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[8] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[9] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[10] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[11] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[12] https://pestakeholder.org/wp-content/uploads/2023/06/PESP_Report_Extraction-of-Wealth_May2023-v3.pdf
[13] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[14] https://www.ag.state.mn.us/Office/Communications/2024/03/15_HavenBrookHomes.asp
[15] https://www.startribune.com/attorney-generals-office-settles-with-landlord-accused-of-neglecting-north-minneapolis-homes/600351621/
[16] https://www.inquilinxsunidxs.org/en/campaigns
