PROPERTY MANAGEMENT COMPANY REACHES SETTLEMENT WITH ATTORNEY GENERAL'S OFFICE

Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division has reached a settlement with a Frederick, Maryland property management company, Property Management People, Inc. ("PMP"), of 82A Wormans Mill Court, Frederick, Maryland, and its owners, Rose and Edward Thomas. PMP agreed to return more than $37,000 to more than 225 consumers and to change its practices with respect to application fees and deductions from security deposits.

The Consumer Protection Division alleged that PMP and its officers violated Maryland law by deducting amounts from tenants' security deposits to pay for repairs that were needed due to ordinary wear and tear, not damage by the tenant, and by charging set fees for breach of lease. The Maryland Security Deposit Law permits deductions from security deposits only for damages in excess of ordinary wear and tear, lost rent, or actual damages due to breach of the lease. The Division also alleged that PMP violated the Consumer Protection Act by charging prospective tenants excessive application fees, as well as a holding fee. Maryland law limits the amounts which consumers may be charged to apply for a residential apartment to no more than $25 or the actual cost for processing an application (i.e., credit, criminal background or employment checks).

PMP and its officers denied they violated the law, but agreed to stop charging application fees over $25 unless they return to consumers any portion of the fees not actually expended on a credit check or other expenses arising out of the application for a lease. PMP and its officers also agreed to remove provisions from their leases that allowed them to make deductions from security deposits that the Division alleged were improper. Under the settlement, PMP and its officers agreed to return to consumers the amounts in excess of $25 charged in connection with the consumers' rental applications, as well as $37,968 in deductions they made from tenants' security deposits. PMP also agreed to arbitrate any claims regarding deductions it made from security deposits that may be made by former tenants who vacated properties managed by PMP on or after January 1, 1998. Finally, PMP and its officers agreed to pay the Division $20,000 for its investigation costs.

"Tenants cannot be required to pay unreasonable fees in order to apply to rent and occupy an apartment, and deductions from security deposits must conform to the limitations imposed by state law," said Attorney General Curran.

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