A judge in Rio de Janeiro yesterday upheld QuintoAndar's appeal against an injunction which had temporarily forbidden the online rental brokerage from charging tenants a service fee.
The ruling came after the Sao Paulo-based proptech unicorn was abruptly forced to stop charging tenants a controversial service charge of 2% of monthly rental payments last week.
QuintoAndar is facing a civil lawsuit brought in September 2022 by several dissatisfied customers whose lawyer claims that the company should not legally be allowed to charge tenants a service fee.
Last week the civil court handed down an injunction ordering the company to stop charging the service fee, a state of affairs that has now sharply been reversed by the regional appeals court according to a QuintoAndar source who told Online Marketplaces:
"We celebrate the decision from Rio's Justice Court as it allows QuintoAndar to continue offering services that make life easier for our tenants and creates an opportunity for this relevant discussion about economic freedom and technological entrepreneurship in Brazil. QuintoAndar fully complies with the Brazilian legislation and always operates with absolute transparency with its consumers. We want to continue contributing to the debate on this topic."
For now QuintoAndar, which manages more than 200,000 rental contracts in its native Brazil, will be able to continue charging tenants a service fee which it says goes towards the upkeep of the app and development of new features that benefit the tenant. In the long run, however, the merits of the ongoing civil suit may ultimately determine whether the company has to change its policy or not.
An outcome of the civil suit is not expected for some time, but if the angry tenants' argument is ultimately upheld it may spell trouble for the Brazilian rentals behemoth.
QuintoAndar started life as an online end-to-end rentals brokerage in 2012 and although it has diversified significantly since then (a 2019 move into sales, the acquisition of Navent Group's real estate classifieds in 2021 and the launch of Benvi in Mexico in 2022), the Brazilian rentals business is the company's bread and butter.
Although QuintoAndar is very well capitalised having received more than $750 million in funding according to Crunchbase, having to absorb the cost of the lost service charge revenue or switching the charge to landlords would have major implications for the business.