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DOJ gets ‘largest ever’ settlement against property management company, and it involves military renters in Hampton Roads

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Military servicemembers in Virginia Beach and Newport News who have been dealt with default judgements on their rentals by PRG Real Estate Management will be compensated.

The U.S. Attorney’s Office for the Eastern District of Virginia on Friday said PRG Real Estate Management and several related entities have agreed to pay up to $1.59 million to resolve allegations of violations of the Servicemembers Civil Relief Act for obtaining unlawful court judgments against military tenants and by charging improper lease termination fees.

“The incredible sacrifices our servicemembers make when they deploy and move frequently should never create financial or legal hardships for them,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “This settlement helps ensure that these men and women are honored for, not disadvantaged by, their military service, and that servicemembers’ rights are protected going forward.”

The settlement is the largest ever obtained by the Department of Justice against a landlord or property management company for violations of the SCRA.

“When landlords violate the SCRA, it causes disruption in the lives of servicemembers and their families. Our men and women in uniform deserve all the protections the SCRA provides them against civil lawsuits while they are defending our nation,” said Assistant Attorney General Eric Dreiband. “We thank PRG for its cooperation in this case. This substantial settlement clearly sends the message that the Department of Justice is committed to the vigorous enforcement of federal laws that protect servicemembers.”

Under the settlement, PRG will pay up to $1.49 million to compensate 127 servicemembers who had 152 unlawful default judgments entered against them and nearly $35,000 to compensate 10 servicemembers who were charged early lease termination fees in violation of the SCRA. PRG will also pay a civil penalty of approximately $62,000 to the United States. The settlement also requires PRG to repair the credit of affected servicemembers, provide SCRA training to its employees and develop new policies and procedures consistent with the SCRA.

The Department of Justice launched its investigation after Navy legal assistance attorneys in Norfolk reported that PRG had obtained eviction and money judgments against servicemember-tenants in Virginia state courts by filing affidavits that failed to accurately disclose the tenants’ military status. Under the SCRA, if a landlord files a civil lawsuit against a tenant and the tenant does not appear, the landlord must file an affidavit with the court stating whether the tenant is in the military before seeking a judgment. If the tenant is in military service, the court typically cannot enter judgment until it appoints an attorney to represent the tenant and the court must postpone the proceedings for at least 90 days, according to the U.S. Attorney’s Office.

In a complaint filed in the U.S. District Court for the Eastern District of Virginia, the Department of Justice alleged that from 2006 to 2017, PRG obtained at least 152 default judgments against 127 SCRA-protected servicemembers by failing to disclose their military service to the court or by falsely stating that they were not in the military. Landlords and lenders can verify an individual’s military status by searching the Defense Manpower Data Center’s free publicly available website or by reviewing their files to see if there are applications, military leave and earnings statements, or military orders indicating military status.

The civil claims settled are allegations only; there has been no determination of civil liability.

The complaint further alleged that PRG imposed unlawful charges against servicemember-tenants who attempted to terminate their leases early in order to comply with military orders. The SCRA allows military tenants to terminate a residential lease early if the servicemember receives deployment or permanent change of station orders or enters military service during the term of the lease. If a tenant terminates a lease pursuant to the SCRA, the landlord may not impose any early termination fee.

According to the U.S. Attorney’s Office, servicemembers who will receive compensation under the settlement were tenants at the following properties:

  • Linkhorn Bay Apartments – Virginia Beach
  • The Courtyards of Chanticleer – Virginia Beach;
  • Hilton Village Townhomes – Newport News;
  • Heritage Trace Apartments – Newport News;
  • Hyde Park Apartments – Chester; and
  • Ashton Creek – Chester.

An independent settlement administrator will contact the servicemembers to be compensated through this settlement in the upcoming months. The independent administrator will locate victims and distribute payments at no cost to servicemembers.

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