A pair of Dubuque landlords recently agreed to pay nearly $30,000 in order to settle a class-action lawsuit over the use of an illegal lease agreement.
Greg and Bridget Prehm also will pay $23,000 in attorney fees incurred by Taylor Webber, Heather Price and Tiffany Spark, the named plaintiffs in the suit, according to court documents. The agreement still must be approved by the court.
But perhaps most importantly, the settlement prohibits the Prehms from increasing rents of current tenants for one year, allows those tenants to demand new, lawful leases and puts landlords who rely on predatory lease agreements “on notice,” according to attorney Sam Wooden.
“Going forward, this should put not just the Prehms, but other landlords in Dubuque who want to use exploitative-type leases, this should put them on notice,” said Wooden, who represented the plaintiffs.
As of one year ago, the Prehms had about 180 rental units in more than 90 properties in Dubuque. At least 12 of their properties had been sold as of this summer.
Webber, Price and Spark filed the suit in October 2018, claiming multiple clauses in the lease agreements they signed with the Prehms’ company were illegal. Specifically, they alleged that the terms violated Iowa’s Uniform Residential Landlord Tenant Act.
The illegal lease elements included a requirement that tenants must pay for carpet-cleaning services. The agreements also attempted to exempt the landlords from housing and building code mandates that residences be kept fit and habitable.
The leases also allowed landlords to create liens on household goods, withhold security deposits in bad faith and hold tenants liable for damages in excess of what is allowed by law.
The Prehms have stopped using those leases “and will be issuing a notice as part of the settlement agreement,” said their attorney Samuel DeGree.
The named plaintiffs each were awarded $1,500. Another $25,000 will be set aside for others impacted by the lease agreements. Class members will be eligible for damages equivalent to three times their monthly rent payments.
More than 40 area residents are eligible for those payments, Wooden said.
“Our clients are pretty pumped about the way it’s worked out, specifically because they knew from the outset of litigation that any financial recovery was pretty unlikely,” he said. “They basically did it on principle.”
Per terms of the settlement, neither party admits any wrongdoing. DeGree said he couldn’t say whether his clients find the agreement fair.
“There is economic pressure and risk (from going to a trial),” he said.
Meanwhile, a settlement has been reached in a separate class-action lawsuit against the Prehms, according to DeGree. However, the settlement has not been filed in Iowa District Court for Dubuque County, and details were not available Tuesday.
The plaintiffs in that case allege that the Prehms attempted to enforce illegal lease agreements and that they unlawfully withheld a security deposit from a pair of former renters.