Attorney General’s Office settles with landlord accused of neglecting north Minneapolis homes

The Minnesota Attorney General's Office has settled a consumer protection lawsuit it launched two years ago against a "hedge fund-owned mega landlord" that rents and manages more than 600 rental properties in Minnesota.

The AG's office had accused HavenBrook Homes, its parent company Progress Residential and the "syndicate of corporations" behind them of extracting profits from low-income tenants by "severely under-maintaining" the homes. The Minnesota Supreme Court had denied the companies' appeal earlier this year.

"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," said Attorney General Keith Ellison. "Landlords cannot use their legal and economic power over renters to take advantage of them."

Under the settlement agreement, HavenBrook Homes will have to put $2.2 million into a restitution fund for current and former tenants who had delayed repairs, reported that a member of their household was diagnosed with elevated blood lead levels, or had been illegally forced to leave a HavenBrook home during the governor's COVID-19 eviction moratorium. The companies have also agreed to forgive rental debt owed by all former tenants of their Minnesota properties up to $1.9 million.

"Enhancing the leasing and resident living experience and making a positive difference for our residents has been our top priority since taking over property management for Havenbrook in mid-2022," said Progress Residential general counsel Ama Romaine. "We are pleased to have resolved this matter in a manner that is consistent with our commitment to making a positive impact on the communities we serve."

Much of the legal wrangling in this case revolved around the state's efforts to establish the relationship between HavenBrook Homes' various holding companies.

In early 2021, the New York investment firm Pretium Partners acquired the once publicly-traded single family rental company Front Yard Residential, whose property management affiliate was HavenBrook Homes. Around the same time, Minnesota tenants of HavenBrook Homes began to protest a myriad of problems they said made their homes uninhabitable. The city of Minneapolis repeatedly sued HavenBrook Homes for repairs and launched a special inspection project for all its properties within the city. Columbia Heights revoked HavenBrook Homes' rental licenses in 2022.

The companies' lawyers claimed the state could not prove that they owned HavenBrook Homes — as opposed to merely investing in it through another corporate affiliate — and were therefore not responsible for the HavenBrook's housing violations.

"What they're trying to do is clump them all together and kind of create a bunch of dust, if you will, and say, look, there's all this stuff going on, they're in the single-family home rental industry," argued the companies' lawyer, Joseph Windler. "The bad acts are alleged way over here, and then they did this stuff over here ... that might be related, so, therefore, all of them are connected."

The courts declined to dismiss Pretium Partners from the lawsuit, finding that it had repeatedly held itself out as the owner of the Minnesota homes through communications with Minnesota tenants and housing advocates. Pretium employees had also facilitated third-party inspections of HavenBrook Homes and contacted Columbia Heights trying to get HavenBrook Homes' licenses reinstated.

Crystal Progress Residential tenant Arianna Anderson said Friday that she was still trying to understand the settlement, but hoped it would provide an avenue for tenants to buy their homes. "For me, if we can get those 600 people that were affected by the malpractices of HavenBrook, Progress and whoever they are now, if we can get them into safe, dignified and affordable housing, that's the real win."

Progress Residential and Pretium Partners have announced plans to transfer their properties to affordable housing entities this spring.

The companies are not required to follow through, but the settlement ensures tenants can't be displaced in the process and that any homes that are sold must comply with lead-paint hazard laws and city-ordered repairs. For any property that isn't sold, existing tenants who owe at least two months' rent will be able to end their lease early and get rent forgiveness, as well as $1,000 in relocation assistance.

Progress Residential is expected to make these offers to tenants directly, according to the Attorney General's Office, while the state will reach out to tenants in the next few months to participate in the restitution plan.