citihabitatsisrotten

Thinking about using a rental agency to rent your apartment? I am posting this as a public service to anyone who is considering using an agency to rent out their apartment.

You might think that if you hire an agency like Citi Habitats, they have a fiduciary responsibility to you. This is not the case. When you hire them, they will ask you to sign a contract that contains a number of tricky clauses that allow them to take advantage of you.

A rental contract is a little bit unusual in that it requires the person who signs the contract to subsequently recall the contents of the contract years after it is signed. This is a Trojan Horse. They rely on the person signing it to subsequently forget its contents (or, as in my case, to lose the contract like a total idiot). They then give the person who signs it an unexpected surprise. In this case, Citi Habitats placed a clause in a contract does not seem to be cognitively related to the issue at hand.

For instance, Citi Habitats’ contract to lease clearly states “Contract to Lease” at the top of the document. However, the contract contains another clause (in my case, item 7 in a list of items) making it a contract to sell as well. If I sell to my tenant, they have a right to a percentage of the sale. They do not have to raise a finger to help you sell the apartment, they just wait in the wings for the sale, and, boom! They receive a significant percentage of the sale.

I fell victim to this. I remember crossing out relevant clauses in the contract when I signed. But memory becomes vague over time, and contract copies get lost as months and years go by. A day after I sold my apartment, Citi Habitats called to collect their $100,000 plus “commission” from the sale. Since I could not find my copy of the contract that I remembered scratching off, I was on the hook. They produced only a PDF that did not contain the relevant section crossed out. It is likely that I simply thought, “what are the chances that I will actually sell my apartment?”

Don’t get me wrong. I am the fool here. But why should one be fooled by one’s own client–in this case, my agent? One should know better than to deal with real estate agents unless one absolutely has to. Citi Habitats has a D rating with the Better Business Bureau, so I’m all that much more an idiot for using them and not doing due diligence.

Had we gone in front of a jury, I certainly had a case. For instance, I had some evidence that the agent, Dicky Tsuarte, had been less than clear to me about the contract in our text communications. However, because they use arbitration rather than a judge or jury to gauge the validity of the contract I had little choice but to pony up. (See this great New York Times article on how arbitration stacks the deck against people like me.) Her team at Citi Habitats, which included Johnny Lal and Seth Hirschhorn, jumped into action as soon as the sale happened. They said a contract was a contract, that it would go to an arbitrator who would favor them and that I was on the hook for the full amount. If I fought it, I would only end up adding to the cost, with my legal fees and theirs to boot. It was not until I brought up the text that I was able to move them a little bit on the price. But I wasn’t able to move them much.

The back story

I am not wealthy. I am lucky enough to have an apartment in New York City that I could rent out. It’s not at all difficult to find a renter. It is also easy to generate a lease agreement online. While I was preparing the apartment, though, I ran into an agent. Her name was Dicky Tsuarte and she was just starting out. She seemed nice, broke, and stressed about her new job. So, I thought “why not?” It would be doing her a favor and would save me a little bit of trouble.

I expressed concern about some of the things in the contract, and have copies of these concerns on old text messages. I genuinely remember crossing out the clause that said that the contract was also a contract to sell (in twisty language) that didn’t expire. Ever. I remember crossing out the clause. At any rate, they were able to produce a PDF of the contract without the offending clause crossed out and I was not able to produce my contract as it was lost in the move.

Dicky wasn’t the greatest agent. There were a few things that she was supposed to do that were in the contract that she didn’t do and she had a harder time coming up with a client than I did. She was just starting out. I wanted to help. And, in the end, we rented to a really nice couple and I was happy about that.

At one point, she texted me and I mentioned that I was thinking about selling the apartment to the tenants. She said nothing about the contract. She just congratulated me. Then they bought. One day later, I got the text. I had to pony up. She had been waiting for me. To add insult to injury, she was glowing about her little victory. She called me an “angel.” She sprinkled her text with “LOLs.”

I encourage readers to leave comments and share their stories of Citi or other brokers. Please leave a review on Yelp if you had a bad experience with them or other brokers. Unlike Yelp, Streeteasy contains unsolicited reviews of Citi Habitats. (Citi’s agents all ask their good clients to write positive reviews of them.) You think you are hiring these people, but they are willing to do anything to squeeze money out of you. That is real estate.