RealPage, Justice Department settle suit over software used by landlords

The Department of Justice on Monday agreed to settle an antitrust suit that alleged software maker RealPage created a program that landlords and property managers — including some operating on Long Island — used to collude to inflate rents.

The settlement requires RealPage to take steps to prevent its software from providing nonpublic, competitively sensitive information that property owners could use to determine rents, according to the department’s announcement Monday. It also requires RealPage to overhaul features the DOJ alleged reduced the likelihood the software would suggest decreasing rents.

In addition, RealPage must accept a court-appointed monitor to track compliance with the settlement, which is pending approval in federal court in North Carolina.

"Competing companies must make independent pricing decisions, and with the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement," Abigail Slate, assistant attorney general in the Justice Department’s Antitrust Division, said in a statement.

The settlement ends the federal government's case that alleged it was more than mere market forces driving rents higher across the country. On Long Island, about half of all renters pay more than 30% of their income toward their housing costs. Property managers named in several federal lawsuits filed last year, including the DOJ's case against RealPage and other companies, oversee several thousand apartments on Long Island, spanning from Valley Stream to Port Jefferson, Newsday reported in January.

The investigative news website ProPublica first raised concerns in October 2022 about Texas-based RealPage’s dominance in the real estate industry and the potential landlords might use the software to collude in violation of federal law.

In a statement Monday, RealPage noted it did not admit wrongdoing as part of the settlement and will continue to sell AI-enabled software to the real estate industry. The company said it began implementing changes required by the settlement more than a year ago.

"We are convinced that RealPage is part of the solution to addressing the cost of housing, helping operators make informed, independent decisions in a complex housing market," Dirk Wakeham, RealPage’s president and CEO, said in a statement.

A government settlement designed to stop landlords from colluding should have the effect of lowering rents for consumers, said Ronald Colombo, a Hofstra University law professor. However, any potential benefit to Long Island renters would depend on how pervasive the use of such software was on Long Island. If RealPage implemented the changes outlined in the settlement more than a year ago, there would be no new benefit to consumers, he said. 

Still, consumers will benefit from the agreement if it prevents RealPage or another tech company from creating software that landlords might use to share nonpublic information, Colombo said.

"The DOJ is identifying certain types of market practices it deems anti-competitive," he said. "So the precedent that's set here is even if you think it's not anti-competitive, now you can't do it."

The Department of Justice, under President Joe Biden, filed the case against RealPage in August 2024, and amended its suit in early January to add some of the country’s largest landlords, including Greystar Real Estate Partners. Greystar manages 13 apartment communities on Long Island, according to data from CoStar, a commercial real estate data and analytics company. It is unclear whether Greystar, and several other property managers named in federal lawsuits, used the software on Long Island.

Last week, Greystar agreed to pay $7 million to nine states to settle claims Greystar’s use of RealPage software pushed housing prices higher. New York was not among those states. 

However, Gov. Kathy Hochul signed a law earlier this year that bans landlords from colluding through the use of rent-setting algorithms. That law takes effect on Dec. 15.

"Every New Yorker deserves the fair chance to build a better life in a home they can afford," Hochul said in an October statement after signing the new law. 

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.