Santa Ana Faces Lawsuit Over Rent-Setting Software Ban
The City of Santa Ana is facing a potential lawsuit over a new ordinance that bans the use of rent-setting computer software. The measure was designed to protect tenants from algorithm-driven price increases. Opponents, however, argue the ban infringes on property owners' rights and could disrupt the local rental market.
- The Santa Ana ordinance specifically targets rent-setting software that utilizes non-public data, such as real-time rents and occupancy levels of competitors, to generate price recommendations. Landlords are still permitted to use software that relies on publicly available data. - This local ban is part of a larger movement, with cities like Berkeley, San Diego, and Portland having passed similar measures. This trend is a response to concerns that algorithmic price-setting facilitates collusion among landlords, leading to artificially inflated rental prices. - The U.S. Department of Justice filed an antitrust lawsuit in 2024 against RealPage, a major provider of rent-setting software, alleging that the company's platform unlawfully reduces competition and harms renters. Subsequently, California Attorney General Rob Bonta also filed a complaint against RealPage and several large property management companies, alleging an unlawful price alignment scheme. - While a lawsuit specific to the software ban has not yet been filed, it is considered highly likely. The Apartment Association of Orange County (AAOC), a vocal opponent of the ban, is already engaged in litigation with Santa Ana over the city's broader rent stabilization and just cause eviction ordinances, which were passed in 2021 and 2022. - Precedent for legal challenges to such bans exists. RealPage sued the City of Berkeley in 2025 after it passed a similar ordinance, claiming the ban violated the company's First Amendment rights to provide advice and recommendations. Berkeley initially paused its ban but later proceeded after settling the lawsuit. - The Santa Ana ordinance includes enforcement measures that empower tenants. A renter affected by a violation of the ban can seek injunctive relief, damages, and civil penalties of up to $1,000 per violation. - According to a 2023 U.S. Census Bureau survey, over 55% of occupied homes in Santa Ana are rentals. The same survey found that approximately 53% of these renters spend more than 30% of their income on housing. - The city's move to ban this software comes after it implemented a rent stabilization ordinance limiting annual rent increases to 3% and established a new Rental Housing Board.
