"Your landlord, does he only have the one apartment or does he own several? Are they all rented to BeNest Apartments?"
Ava looked at me, stunned. "I think he bought three or four units in our building and rented them all to BeNest... So... he won't sue me, will he?"
I gave a dry laugh. "Oh, there's a chance."
"But whether he'll actually win a lawsuit depends on the specifics of his contract with BeNest. Right now, court rulings on cases like these are pretty much split down the middle."
"More likely, though, he'll be too busy dealing with tenants who can't afford to move and have no place else to go. This issue's already gone public—no way the government's going to let tens of thousands of renters end up on the streets."
"They've even issued notices warning landlords against harassing tenants with threats, breaking locks, or cutting off water and power to force evictions."
"Of course, enforcing it fully isn't possible, but it's enough to give landlords a headache." I added, "The fact that you've already moved out is your greatest advantage. Right now, your landlord's biggest problem is that he has tenants who not only refuse to pay him back the rent BeNest took, but also insist on staying in the apartment until the lease is up."
"Since they have nowhere else to go, moving out is the last thing they want to do. For them, leaving would be the worst choice, so they're bound to be the most stubborn about it. The landlord's top priority will be dealing with them."
"If he really wants to go after you, he'd have to prove that his contract with BeNest wasn't an agency lease agreement. But that would be costly and discourage most landlords from taking that route. In the end, they'll have to negotiate."
"Let me put it this way: ideally, the blame falls entirely on BeNest, and both the landlord and tenants are victims. Both sides should be suing BeNest together."
"But in reality, BeNest's already run off, leaving landlords and tenants fighting each other. The landlord holds the upper hand as long as you're still occupying his property."
"He could accuse you of illegal occupancy—imagine coming home from work to find your belongings in the hallway and the locks changed. If you were still living there, I'd suggest swallowing your pride and negotiating with him."
"But now that you're out, the tables have turned. If he wants that rent back, he'll have to go to court. And believe me, dragging a case out in our legal system can drive people mad—some cases take years, and that's even without hiring a lawyer."
"In fact, given how much public outrage this incident has sparked, I bet the courts aren't going to look kindly on landlords suing tenants who've already moved out to recover rent."
"So use that as leverage: tell him you've already moved out, which is more than enough. He can re-rent it and recover his losses. No way will you give him a penny, but if he wants to join forces and go after BeNest, you're on board. Everyone here's a victim."
"If he keeps pressing you, just drag it out until he gives up." I paused. "By the way, did you pay your rent annually, or was it through a small bank loan? And... are you planning to sue BeNest?"
After my long-winded answer, Ava sat there, looking like she was still processing. Finally, after a long pause, she asked, "So... are you saying the landlord actually can't do much to me?"
I nodded. "Exactly. Many people say it's unrealistic for tenants to pursue landlords through legal channels, and to some extent, that's true."
"But the reverse is also true. For a landlord to come after you and recover that rent—given the contract issues and the public impact of this mess—is equally unrealistic. Most landlords, desperate to cut their losses and move on, don't want a prolonged lawsuit either."
"Now, if you paid your rent for the full year upfront, then there's not much you can do. BeNest's run off with the money, leaving you with only one option: to sue. And I still recommend doing so."
"It'll at least leave a record in the court system. If by any miracle they manage to recover funds from Nest, you might have a chance at a partial refund. But if you went with a rental loan through a smaller bank, you might have some wiggle room."
Ava quickly replied, "I... I did take out one of those rental loans. Thirty thousand dollars. Now I'm most worried about how I'm going to repay it." I stroked my chin thoughtfully. "This whole mess is like a financial trap."
"BeNest rented out apartments from landlords at above-market rates and rented them to tenants at below-market rates. They paid the landlords monthly, but offered tenants options to pay quarterly or even annually."
"In the long run, this model would bankrupt them, but short term, it pulled in massive funds. Their goal was to monopolize as many properties as possible, locking in market share. That way, people who didn't want to live in BeNest apartments or didn't need to would eventually have no choice but to rent from them because there'd be so few properties left."
"They'd grab control of one city's rental market, then move to the next. Meanwhile, they could list on the stock exchange, raise funds, and keep the cycle going. If a tenant couldn't afford rent up front? Enter lending institutions."
"In theory, banks should assess risk, but sometimes sustainability doesn't even enter the equation. Smaller banks, particularly, didn't mind bending the rules."
"They issued 'rental loans,' which went straight to BeNest without the tenant ever handling the money. Once they hit scale, BeNest would even direct tenants to the banks for financing, where they'd be offered rental loans. I bet there was a deal—BeNest brings in loan clients, the banks give BeNest a cut. BeNest got its cash flow, and the banks got a debt asset."
I shook my head darkly. "If those banks weren't already pushing boundaries, BeNest encouraged them to go even further. Tenants could get lower rent if they opted for loans, so long as they took out a rental loan from a bank. Those who chose that route were often people trying to save money, easily swayed. Even those who could pay annually might choose to borrow instead."
"But the risk grew with every loan. Eventually, when BeNest's cash flow dried up or expansion slowed, they'd be stuck with this discrepancy. That's when the scheme hits its limit. BeNest would declare bankruptcy—or just vanish—leaving investors with rent payments and loans, and a hollow company. If any legal representative's left, they're likely a fall guy. Some outcasts can be lured with enough money to take the heat, maybe even take the jail time."
"In the end, landlords are left without rent, fighting tenants over property rights, and tenants with unpaid loans are potentially evicted, forced to pay double rent to avoid getting blacklisted. It's ruthless. And the banks? They claim they're just third-party lenders. Unless tenants are ready to default, the banks aren't letting them off the hook. Their plan worked perfectly."
Ava's voice shook. "I read some articles analyzing BeNest's business model before, but I didn't pay much attention. Now, going through it myself, I realize just how deep this goes. Why would they even do this?"
I scoffed, "They exploited every loophole in the regulatory system. It's ruthless—a scheme that most people couldn't pull off. Regular loans have physical collateral; if something goes wrong, they can sell the asset to pay off debt."
"But rental loans are backed by your credit. If it's a reputable lender, that's one thing. But this is high-risk, borderline fraud. And they were bold enough to lend because they targeted people like you—young, educated, but without financial means yet. Your credit is everything. This scheme banked on the fact you wouldn't dare to default and end up blacklisted."
Ava sat silently, lost in thought. I kept thinking about all the research I'd done, following the news on this fiasco. I couldn't help but sneer.
After a long while, she spoke quietly. "If I took out this loan, you mentioned there's a chance—what kind of chance?"
I explained, "This scheme affects hundreds of thousands of BeNest tenants. And how many of those took out rental loans? Plenty—enough that the banks are already making statements, claiming they're investigating the incident."
"If they don't handle this well, the backlash could be enormous. I'm sure the government will step in. Sure, BeNest's people have skipped town, and tracking them down will be tough. The money's probably long gone, too."
"But the banks are still here. And they played a major role in enabling BeNest. If the government needs a way to ease tensions, besides urging landlords not to evict tenants, the banks are the next target."
Ava finally understood. "So you're saying the government might pressure the banks to extend loan terms or lower interest rates?"
I chuckled. "Not just that—interest rate reductions won't be enough. If these banks were mere innocent bystanders, they might get a pass. But they weren't just silent lenders here; they actively participated."
"These banks profited on the edge of legality with these loans, so if the government gets tough, they'll have plenty of grounds."
"My guess? The government will force the banks to absorb the debt and release tenants from their loans without penalty. The banks would have to go after BeNest for the money, though that's virtually impossible now."
"So if things turn out that way, then the worst case is that the small local bank helped sow will be one it has to swallow whole. With a mess like this on their hands, you can bet some of their top executives will end up walking away—if they're even allowed to leave," I chuckled, a wry smile crossing my face.
"The most lenient outcome for them would be if they drastically extended the repayment terms and waived the interest altogether. But honestly, I think that's the least likely scenario."
"A simple slap on the wrist like that? That wouldn't satisfy the country's expectations or meet the market's demand for justice."