Has this ever happened to you? Another property manager approaches you and asks “I’m currently charging 10% for my monthly management fee; what are you charging?” How do you answer? Do you know the dangers of giving them the answer they want to know? I hope that you do because if you reply with the actual amount of what you charge you have just violated antitrust!
There are real estate/property management companies who do not make a conscious effort to follow antitrust in their business. Antitrust laws can apply to both business and individuals. Penalties for violating antitrust can range from civil to criminal penalties. An individual violating these laws may be jailed for up to three years and fined up to $350,000 per violation. Corporations can receive fines of up to $10 million per violation. It pays to follow antitrust legislation!
Every real estate/property management company should take three definite steps to protect their company from antitrust violations.
First, know the definition and governance of Antitrust
You cannot understand what you do not know. If you are not sure of the scope of antitrust, it is time to do some reading.
Antitrust laws, also known as competition laws, are legal rules to promote fair competition in the marketplace. Merriam Webster defines antitrust as “protecting against unfair business practices that limit competition or control prices.” They designed antitrust laws to prevent actions that might hurt consumers or unfairly harm other businesses, such as the formation of monopolies, illegal cooperation between competing businesses, and certain mergers between companies. These types of laws are in effect in many countries and even shared between countries in some cases, such as in the European Union.
There are several major antitrust laws, beginning with the Sherman Act of 1890, the Clayton Act of 1914, and the Robinson–Patman Act of 1936. These federal laws and many others have shaped antitrust laws in the United States and many states have passed additional antitrust legislation.
The Federal Trade Commission, the US Department of Justice, state governments, and private parties who are sufficiently affected may all bring legal action in the courts to enforce the antitrust laws.
The most common violation in the property management industry is price-fixing or discussion of fees. It is illegal to discuss specific management fees with other management companies, agents, brokers, etc. You can discuss what “types” of fees you charge a client but you cannot discuss specific percentages or dollar amounts. You can, of course, discuss what you actually charge with a property owner but steer away from any discussion of your competition. When in doubt, do not discuss what you charge! You never know who could be listening.
Second – develop a written antitrust policy for your company and train all personnel
Set up a company antitrust written policy that complies with the antitrust laws. Add it to your policy and procedures manuals, employee manual, and any other appropriate documentation. Outline the definition of antitrust, reference the major antitrust federal laws, what violations can mean to the welfare of the company, and that all personnel must be responsible to following the company policy on antitrust. Include examples of how severe a legal action against the company can be because of an antitrust violation. Make your written policy clear, concise, and readable.
Remember that the courts are not tolerant of ignorance of the law so incorporate training on antitrust into your company meetings and discussions. Too often broker/owners overlook that personnel may not have knowledge of certain practices/laws such as antitrust. Personnel who are unaware of the importance of antitrust legislation as it relates to real estate/property management can be a liability to the company.
Third – remain vigilant at all times
It’s not enough to learn about antitrust, set a policy in writing, and train personnel. It must be an ongoing process. Keep up with any developing or new legislation, review your written policies when appropriate, and periodically cover antitrust in office meetings and personnel discussions.
Antitrust legislation is not only here to stay but will be constantly monitored and revisited by the courts when there are violations. Comply with it to protect yourself and your company.
Jean Storms, MPM®, is an active NARPM® member, a NARPM® National Affiliate, and owner of LandlordSource,which specializes in combining real estate / property management and technology to create systems for professionals.Disclaimer: LandlordSource does not represent the article content in this website as legal advice. It is shared information only and up to the reader to use this information responsibly, seeking legal advice as necessary to their business.
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