Junk Fees Lawsuits Are Coming: How Property Managers Can Protect Themselves on Fee Transparency
Property managers across the country are about to face a wave of legal pressure they are not ready for. Baltimore just made that clear.
The city of Baltimore filed a lawsuit against a property management company and software vendors for allegedly charging residents undisclosed or excessive fees. (Baltimore Banner) This is not a niche story. This is a signal. And if you manage properties for a living, you need to pay attention to it right now.
This Is Bigger Than Baltimore
Baltimore is not an outlier. It is the leading edge of a national trend. Governments at every level are looking for ways to crack down on what they call "junk fees." That term covers any charge that residents feel was hidden, unclear, or unfair.
The problem is that the definition of "junk fee" is moving. What was legal and normal last year may be the target of a lawsuit next year. We have already seen this play out with pet rent bans, application fee restrictions, and utility billing rules in cities across the country.
Washington State is watching Baltimore closely. So is Illinois. So are dozens of other jurisdictions where local governments are looking for headline wins on tenant protection. Property management junk fees lawsuit compliance is no longer a niche legal topic. It is a core business risk.
Why Software Vendors Got Named in the Lawsuit
Here is the part most people are missing. Baltimore did not just sue the property management company. They sued the software vendors too.
That tells us something important. Regulators and plaintiffs' attorneys are no longer willing to accept "the software generated that fee" as a defense. If your platform is producing charges that residents did not clearly agree to, you may share liability for those charges.
We think this is actually a fair development. Too many fee structures in property management have been built on opacity. That opacity did not come from bad property managers. It came from systems, habits, and industry norms that treated fee disclosure as optional. Those norms are now being challenged in court.
Property Managers Are Not the Villains Here
We want to be direct about something. Property managers are professionals who deserve to get paid fairly for the work they do. Managing a rental property is complex, time-consuming, and full of legal risk. Charging fees for that work is completely legitimate.
The problem is not fees. The problem is hidden fees.
When a resident signs a lease and later discovers a charge they did not know about, that is a trust problem. It is also a legal problem. It is increasingly a lawsuit problem. And it reflects poorly on a profession that is already undervalued and misunderstood by the public.
The path forward is not to stop charging fees. The path forward is to charge fees confidently, clearly, and in writing, every time.
What Fee Transparency Actually Looks Like in Practice
Transparency does not mean giving things away. It means making sure residents know exactly what they are paying for before they sign anything. Here is what we think that looks like in practice.
Every fee should be named and defined in the lease. Not buried in an addendum. Not referenced by a generic line item. Named. Defined. Explained.
Every recurring fee should appear in move-in materials. If you charge for utilities using a ratio utility billing system, residents should receive a plain-language explanation of how that works before they move in. We have written about RUBS transparency specifically because this is one of the highest-risk areas for fee disputes.
Pet fees and pet rent need special attention. Some cities are moving to ban pet rent entirely. Seattle is already heading in that direction. If you charge pet-related fees, document the purpose of each charge. Is it a deposit? Is it rent? Is it a one-time fee? Each of those is a different legal category with different rules.
Application fees are under scrutiny everywhere. Know the cap in your jurisdiction. Know what costs you can actually document. Charge only what you can defend.
Illinois Is a Preview of What Is Coming
Illinois is moving toward a broad rental fee transparency law that will take effect in 2026. The details matter and they are worth reading carefully. But the bigger lesson is simple: states are not waiting for federal action. They are writing their own rules. And those rules are getting more specific every year.
The property managers who are scrambling right now are the ones who assumed their current practices were fine because no one had complained yet. That assumption is no longer safe.
The Opportunity Here Is Real
We want to end on this point because it matters. Fee transparency is not a threat to your business. It is an opportunity to build a better one.
Property managers who can walk an owner or a resident through every fee on their schedule, explain it clearly, and show that it is consistent with local law, those managers are going to be seen as trustworthy professionals. They are going to attract better clients. They are going to have fewer disputes. And they are going to be far less exposed when the next Baltimore-style lawsuit lands in their city.
The junk fees lawsuits are coming. That much is clear. But the property managers who treat transparency as a professional standard right now will not have much to worry about when they do.
Audit your fee schedule. Read your leases. Know your local law. And charge for your work clearly and without apology.
That is what professionalism looks like.
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