Is Los Angeles Treating Landlords Fairly?

Los Angeles institutes a tenant favored program to stop all evictions for nonpayment of rent during Coronavirus. But, does it make sense?

In a city where more than 60 percent of households rent, city lawmakers passed a law designed to help renters – namely two local emergency measures to thwart evictions.  While it doesn’t absolve renters from paying their rent, it does allow them to defer their rent for up to 12 months. You read that right – 12 months after May 15th – when the mayor’s emergency measure expires. In a city where the average rent is over $2500 a month, that’s a tall order for landlords to take on.

The ordinance also halts evictions of renters who have “unauthorized occupants,” such as family members or pets, living with them because of COVID-19. (It covers tenants facing eviction for “nuisance” reasons, like a loud child who’s in the apartment more now that schools are closed.)

There are also protections against two more types of evictions, in addition to nonpayment of rent, including:

  • Cases where tenants who have contracted COVID-19 are being evicted for reasons that are not their fault. “No-fault” evictions include instances where a landlord might want to tear down the building or take the unit for a family member.
  • Evictions under the California Ellis Act, which owners of rent-controlled buildings invoke when they want to demolish their buildings or remove them from the rental market, have also been halted now and are not allowed to resume until two months after the end of the “local emergency period” we’re in now because of the COVID-19 pandemic.

Under the city’s anti-eviction rules, residents just have to notify their landlord within seven days after the rent is due that they’re unable to pay because of economic or health circumstances caused by the virus. The city does not require tenants to provide their landlord with documentation proving they have been impacted by COVID-19. So in other words, all you have to do is claim you’ve been affected by Covid 19 and you can get up to a year deferral on your rent – interest free. On the other side of this, landlords are required to act like banks, and continue paying their mortgages, property taxes, utilities, and any other expenses related to operation.

As per Curbed LA, The California Rental Housing Association, which represents more than 22,000 landlords who lease out more than a half-million units, and the Apartment Association of Greater Los Angeles, are advocating for a relief program where the state would cover the cost of at least some of the rent and pay it directly to landlords.

“Many landlords are so small, they’re mom-and-pops. They depend on that rent to supplement their retirement incomes and put food on their tables,” says Daniel Yukelson, executive director of the Los Angeles apartment association. “They’re going to be in severe financial peril today.”

What makes this even tougher and more confusing for landlords is the overlapping and dizzying federal, state, and local tenant protections that have emerged in the last few weeks.

As part of the federal stimulus package approved last month, there is a nationwide eviction moratorium for nonpayment of rent, but only for renters whose landlords have mortgages backed by the federal government — something most tenants don’t know and would have a difficult time figuring out. Gov. Gavin Newsom has agreed to delay eviction proceedings for renters affected by the virus, but only through May. And dozens of mayors and city councils across the state have come up with their own rules like the ones enacted in L.A.

Landlords are struggling to understand which rules they have to follow, said Daniel Yukelson, executive director of the Apartment Assn. of Greater Los Angeles. At the same time, many are also navigating a similarly haphazard patchwork of government protections for late mortgage payments.

“It’s really unfair what’s being done,” Yukelson said. “We did not go in the business to be lenders to tenants. And that’s what we’re being asked to do.”

Who’s looking out for landlords in Los Angeles? While the adaptive laws to help tenants make sense, why isn’t the city balancing out the remedy with a program to help property owners? That’s a question that Mayor Eric Garcetti is ultimately going to have to answer.

The Definitive Guide To The Housing Stability and Tenant Protection Act of 2019 in New York City

The 2019 Housing Stability and Tenant Protection Act ushered in significant changes to New York’s rent regulation system. Among the new restrictions implemented as part of the sweeping state tenant protection law, landlords can no longer raise rent on rent-stabilized apartments by up to 20% when a tenant leaves, which was known as a vacancy bonus. Allowable rent increases associated with rent-stabilized building and apartment improvements have also been capped. Here’s some other things to note…

New Rights for Tenants

  • Landlords cannot reject tenants because they had been in a court case with a prior landlord. The courts cannot sell eviction court data. Records of evictions that were the result of a foreclosure are sealed.
  • Landlords must give tenants the opportunity for a walk-through before they move in and before they move out, and return the security deposit within fourteen days with an itemized list of any deductions.
  • Landlords cannot evict or otherwise penalize tenants who complain about conditions.
  • Landlords must give receipts (on request for personal checks) within specific time frames and notice by certified mail when rent is not received.
  • Landlords cannot charge late fees until rent is five days late and the late fee cannot be more than $50 or 5% of the monthly rent, whichever is less.
  • A landlord must make reasonable efforts to re-rent an apartment before they can charge a former tenant who left before the end of the lease for the rent for the rest of the lease.
  • Starting in October 2019, landlords must give 30, 60, or 90 days’ notice of lease termination or a rent increase of 5% or more, depending on how long the tenant has lived there.
  • “Self-help” eviction is a crime.

New Rights in Eviction Court

  • Rent demands must be in writing and served fourteen days before the landlord can start a court case for non-payment.
  • Court papers have to be served at least 10 days before the court date.
  • The landlord cannot get any non-rent charges in a non-payment proceeding.
  • A non-payment proceeding stops if a tenant pays all the rent before the first court date.
  • Tenants who raise defenses have a right to a fourteen-day adjournment before trial.
  • A warrant of eviction must be served at least fourteen days before the tenant can be evicted.
  • A tenant in a non-payment proceeding can pay all the rent due before the eviction and end the proceeding.
  • If a court finds that a tenant breached her lease, the court must give the tenant thirty days to correct the problem.
  • Under certain circumstances, the court can give a tenant up to a year to relocate as long as the tenant stays up to date with rent.

Cincinnati Might Ditch Tenant Security Deposits

Two thirds of the population of the city are renters

Cincinnati may do away with security deposits under a proposed bill and replace it with a requirement that landlords accept a security deposit insurance policy instead. The proposal could make Cincinnati the nation’s first locale to mandate a new option for renters to pay security deposits. Landlords and property owners aren’t fond of the proposed measure, but city officials believe the traditional security deposit format is in need of a serious revisiting. A security deposit in Cincinnati is typically the equivalent of single month’s rent. Lawmakers are citing what is a growing affordable housing crisis in the United States and maintain that the necessity to supply that a security deposit is a heavy burden to place on tenants.

The monthly rent for a typical one-bedroom apartment in Cincinnati was $850 in 2017. Two years later it’s risen to $1,300, with a 2-bedroom costing about $1,600 a month.

“This would keep money in the pockets of middle- and working-class Americans to be able to provide for their families,”  – Cincinnati Mayor John Cranley

With security-deposit insurance, a tenant signs a policy with an insurer and pays a monthly premium. The policy guarantees an amount of money would be given to the landlord if there’s damage to an apartment. The premiums cost less than the average security deposit in the city, with the only drawback being that renters don’t receive the money back, with interest, after they leave an apartment.

Although the measure has garnered support from Cincinnati Mayor John Cranley, fellow council members and property owners are skeptical about the proposal. According to Inman, some landlords at the first recent public hearing on the law indicated that the plan could possibly remove the incentive to take care of the property. Another point tabled was that tenants’ credit could also be at risk if they fall behind on insurance payments. There were also questions about what would occur if a claim was denied by an insurance company.

A second hearing has been scheduled for December 31. Are you a property manager or landlord in Cincinnati?  What do you think of this new law?

The Definitive Guide To The Chicago Landlord Tenant Ordinance

A Municipal Law That Governs Most Tenancies in Chicago

If you’re a landlord in the Windy City, it’s essential you know the Chicago Residential Landlord and Tenant Ordinance, also known as the RLTO.

The ordinance has been in effect since 1986 and outlines many of the city’s regulations and rules that govern the relationship between a landlord and tenant. Understanding the municipal ordinance can help in avoiding unnecessary conflicts and disputes with your tenants. A summary of the ordinance, by law, must be attached to the lease. If you are a landlord in Chicago and fail to provide a summary of RLTO, your tenant has the right to terminate the lease upon notice.

The RLTO applies to all apartment buildings in Chicago unless:

  • the building has 6 or fewer units and the landlord lives there.
  • Hotels, motels and rooming houses (private houses where rooms are rented for living or staying temporarily), unless the tenant pays rent on a monthly basis and the unit is occupied for over 32 days.
  • School dormitories, shelters, employees’ quarters and non-residential rental properties.
  • Co-ops and condominium that the owner occupies.

What Tenants Need To Know:

43 percent of Chicago residents rent according to the most recent data from DePaul’s Institute for Housing Studies, and the RLTO dictates that they have to pull their weight as well.

Some of the basics of what tenants are required to do are:

  • Buy and install working batteries in smoke and carbon monoxide detectors within the tenant’s apartment.
  • Keep the unit safe and clean.
  • Use all equipment and facilities in a reasonable manner.
  • Not deliberately or negligently damage the unit.
  • Not disturb other residents.

Landlord Remedies:

  • If your tenant fails to pay the rent you can terminate the rental agreement after giving a 5 days written notice.
  • If the tenant fails to comply with the Code or the rental agreement, the landlord, after giving 10 days written notice to the tenant, may terminate the rental agreement if tenant fails to correct the violation.
  • If the tenant fails to comply with the Code or the rental agreement, the landlord may request in writing that the tenant comply as promptly as conditions permit in the case of emergency, or within 14 days. If the breach is not corrected in the time period specified, the landlord may enter the dwelling unit and have the necessary work done. In this case, the tenant shall be responsible for all costs of repairs.

Security Deposits:

As a landlord, you are legally required to provide a receipt to your tenant for a security deposit. A receipt must be provided when the deposit is made and it must be signed by the person receiving the deposit, include the name of the person receiving the deposit and the name of the landlord, if the person receiving the deposit is not the landlord. The amount of the deposit is also a requirement as is the date it was made. The tenant must also be given the name and address of the financial institution where the deposit is maintained. If a receipt meeting these requirements is not given, the tenant is entitled to return of the security deposit and to damages against the landlord of double the amount of the security deposit plus interest at 5% per annum.

Read a summary of the ordinance here or download the whole thing here.

 

New York City Landlords Get Creative To Commit Tenants

Landlords face steep competition as thousands of new units emerge onto the market.

The New York Times published a great piece a couple of days ago about the rental market in the big apple. At this time of the year, college grads start looking for apartments and generally speaking see rents rise with the season, however, this year is more of the same sluggish growth that market has seen since coming out of the financial crash. New York rents have skyrocketed in the last 10 years – but professional salaries haven’t exactly kept pace. With renters unwilling or unable to pay ever higher rents, the market has flatlined – and now it’s become a tenant’s market. As per the piece, last year, 8,774 market-rate units opened in Manhattan and Brooklyn, with an additional 15,291 opening this year. For the first time in years tenants renewing leases have the upper hand.

February saw rents for studios and one-, two-, and three-bedroom apartments in Manhattan fall year-over-year, according to real-estate appraiser Miller Samuel. As a result, landlords are getting quite creative in offering perks to tenants who agree to rent their units. Everything is on the table. Netflix subscriptions. Free Uber rides. Even flat screen televisions are on the block. The market is also seeing reduced security deposits and even a month of free rent. These creative enticements to differentiate apartments in an increasingly cluttered market of rentals are called “concessions”, and there are growing number of them. According to the StreetEasy there’s been a significant increase of tactics like this.

…citywide, the share of rental listings on StreetEasy with concessions rose to roughly 14 percent of listings in October…

Overall, StreetEasy’s data shows that the share of concessions has grown substantially over the past five years, rising from an annual total of 2.7 percent of listings in 2011 to 10.4 percent of listings in 2016. It looks as if they’re working too, at least to get tenants to renew their leases. The number of new leases was down 28% from a year ago.

The biggest deals seem to be happening at the top of the market, where some luxury developments are offering up to four months of free rent on a 24 month lease. But deals are to be had in older, less expensive buildings, too.

As of April 2017, average apartment rent within the city of of New York, NY is $3074. One bedroom apartments in New York rent for $2732 a month on average and two bedroom apartment rents average $3510. Manhattan’s median rental price fell 0.9% year-on-year to $3,350 in February. Median prices also fell in Brooklyn and Queens.

 

Toledo’s Landlords Slow On Lead Safe Ordinance

In the summer of 2016, Toledo became the first city in Ohio to pass a law that prevents lead poisoning in the most at-risk children by requiring home inspections of rental properties. The “lead safe” ordinance calls for some rental properties built before 1978 to be inspected and deemed safe before leasing to tenants. Unfortunately, the city’s landlords have been slow off the mark. As it currently stands, landlords have until September 17, 2017 to gain the certification. Those who fail to comply are facing fines of $50 per day per dwelling unit with a maximum annual penalty of $10,000 per unit. Five months into Toledo’s passage of the law, only 22 properties have completed the steps necessary to be in compliance. As per the Toledo city paper; Chapter 1760 of the Toledo Municipal Code, also known as the Lead Safe Rental Ordinance:

The ordinance states that no property owner of a building built before 1978 with one to four rental units may permit people to live in the unit or provide child-care services in the structure without obtaining a lead-safe certificate for the property.

The average can of paint in the 1900s to around 1950 contained up to 50 percent lead carbonate. For 50 years, the U.S. used lead based paint extensively. 40 years ago, political leaders declared war on lead paint, citing evidence that even small amounts of lead can have awful effects on young brains, intellectual growth and cardiovascular, immune and hormone systems. The federal government began phasing out leaded gasoline in 1975, and banned lead-based household paints in 1978. In 2000, a federal strategy was deployed to end lead poisoning in children within a decade.

This all produced the desired effect. By 2006, blood lead levels in children under 6 had fallen to close to a tenth of their 1970s levels. But that positive momentum has since almost stopped. By the most recent estimate, about 37 million homes and apartments still have some lead paint on walls and woodwork, 23 million with potentially hazardous levels of lead in soil, paint chips or household dust. The Ohio Department of Health has identified 18 high risk ZIP codes in Lucas County. High risk ZIP codes contain at least one census tract where 12 percent or more of children tested in 2001 had blood lead levels of 10 micrograms and are further defined by demographic and socioeconomic data. One academic study predicted more than 3,400 children in Toledo have lead poisoning – an appalling statistic. The Ohio Department of Health estimates that approximately 19,000 children in Ohio have lead poisoning.

Any rental properties constructed prior to 1978 and in-home daycares constructed prior to 1978 will need to register with the Toledo-Lucas County Health Department and obtain a Lead-Safe Certificate. If a Local Lead Inspection takes place and the property passes upon the first inspection, the Lead-Safe Certificate is valid for six (6) years. If the property has undergone Lead Abatement in eliminating lead hazards consistent with the Ohio law, the LeadSafe Certificate is valid for twenty (20) years. According to the Toledo-Lucas County Health Department, inspections are likely to cost somewhere between $200-400, depending on the inspector. Considering the circumstances, this is an ordinance that makes sense. The consequences of not complying with it are considerable.

Arkansas: Bad For Tenants…But Is It Good For Landlords?

The U.S. state of Arkansas was recently featured in an excellent Vice News piece on what tenants in Bill Clinton’s home pasture deal with when they rent. The piece – entitled “Arkansas” The Worst Place To Rent In America” – was a fascinating look into a place where the lack of laws regulating the rental market work backwards. As founders of a software that serves landlords – not really tenants – and as landlords ourselves, we’d be lying if we said we didn’t sympathize more with the plight of property owners renting out to tenants. As we’ve said before, it’s a thankless job most of the time. With that said, we’re also advocates of healthy and productive relationships between landlords and tenants. Relationships that are fair, follow the law in whatever province, state, or district you happen to be in, and that include methods and approaches that are reasonable and equitable.

Here’s a few key things in Arkansas. It’s the only state in the entire country that has no “implied warranty of habitability”. In english, that means landlords have no legal obligation to repair or maintain their properties – unless there was a written or oral agreement to fix something. It’s also the only state where you can be fined and jailed if you don’t pay your rent on time. Seriously. Here it is. To real estate investors – this could be perceived as an ideal place to invest your money. The existing law favours landlords heavily, and repossessing property there is fairly easy to do when tenants don’t pay rent. On the other side of the debate, a 3rd of Arkansas’ almost 3 million residents are renters, and a high percentage of those renters have serious concerns and issues with the properties they rent. Most renters are agreeing to take their units “as is”. By law – tenants are required to pay their rent no matter what – even if landlords don’t repair or maintain their buildings and units. Taking into account that Arkansas is the second poorest state in the U.S., and that 18% of the population live below the poverty line, this creates a situation where in arrears renters get swept up into the criminal justice system.

As a tenant, if you don’t pay your rent – even if your roof has holes in it and your windows are broken, not paying gives you 10 days to vacate. If you don’t – you could go to jail. Don’t bother contesting the order to vacate, because in the vast majority of cases, tenants don’t get the opportunity. The legal process for getting in front of a judge is convoluted by the black and white insistence of whether the money is owed, and if it is, for whatever reason that might be, you’re more likely to see the inside of a jail cell than a judge. The state’s unique “failure to vacate” law sees tenants charged as criminals purely on their landlords’ say-so, without any independent investigation by prosecutors. That’s why 90% of tenants who receive an order to vacate decide to just leave. It’s simply a criminal issue immediately. To boot – Arkansas is one of only 10 states that don’t prohibit retaliatory eviction. For the uninitiated – retaliatory eviction is when the landlord doesn’t like something you’ve done..like the reporting of a health or building code violation…and wants you out of the unit. So, in short – if you’re landlord doesn’t like your face, you can be evicted. If you make a complaint, you can be evicted. If your landlord simply wants you out of the unit, and you’ve been paying on time – they can rip up a good check or make themselves conveniently unavailable to accept cash from you on whatever agreed upon date, and you’d technically be evictable.

The Non-Legislative Commission on the Study of Landlord-Tenant Laws, created in 2011 by the state legislature, released a report on Dec. 31st, 2013 that recommended 15 tenant-landlord law reforms. Lynn Foster, professor at the William H. Bowen School of Law at the University of Arkansas at Little Rock and a member of the study commission, said, “If you’re on a month to month lease, maybe it says the landlord makes repairs, maybe it doesn’t — but if you report something to code, the first thing the landlord is going to do is try and evict you. That’s why it’s imperative that if we adopt a warranty of habitability, we also adopt a statute prohibiting retaliatory eviction.”

Human Rights Watch, an organization that follows rights violations worldwide, issued a report in 2013 called “Pay the Rent or Face Arrest: Abusive Impacts of Arkansas’s Draconian Evictions Law.”

This is all a far cry from some of the provinces and states that have laws that in some cases favour tenants. Good laws achieve as much of a possible balance possible between the obligations of providing habitable and functional dwelling to people paying for them while also protecting the landlord’s rights and property. The lack of this in Arkansas has police being involved with evicting people for not paying their rent – an almost ridiculous waste of that resource – and people who don’t pay their rent for whatever reason in many cases entering the criminal justice system.

What do you think? Are you an Arkansas landlord? Are you an Arkansas tenant? Share your thoughts with us.

Colorado Based D.C. Landlord Shares Rich Person Problems In The Washington Post

Douglas Hsiao, a Colorado lawyer and occasional columnist with the Washington Post, successfully achieved writing a sort of pointless piece about the “challenges” associated with being a landlord in Washington D.C.

As you may or may not know, the U.S. national capital has been going through a bit of a resurgence to some degree. It’s become a trendy place to live. He wrote this piece about how he can’t make money on his unit – even though $3000 a month is common for 2 bedrooms in his Dupont Circle neighbourhood.

Some gems from Hsiao’s piece:

As I admitted before, I’ve refinanced the property several times, so much of the cash flow problem is my own fault; I’ve used the condo as a bank once too often, and thus I have a fairly substantial mortgage on it. But more than that, the growth in expenses has outstripped rents for several years now, and I rent it out with nearly no cash flow.

Um. Ok. Well refinancing the unit for a Porsche will do that. Here’s another one:

As some may recall, I chose a couple who were moving from Denver to Washington, and they turned out to be the “responsible, clean, quiet, long-term, reliable, uncomplaining” dream tenants I was hoping for. I received hopeful signs throughout this past year that they would renew their lease; they e-mailed me that they loved the apartment, the Dupont Circle neighborhood and the residents. They even had the property manager prepare the renewal papers. Just when every indication I was getting seemed to suggest that they would renew, they were lured away. And not by a real estate agent waving a luxury downtown high rise or a house in Chevy Chase in front of them but by an apartment in my own building!

So you found good tenants, had the unit paid for for a year, and then they decided to buy a unit in the building you own because they loved it so much? This isn’t exactly a problem. You own a unit in a building where “responsible, clean, and quiet people” decide to buy. Clearly, you’ll never be able to find another tenant, right? Oh wait….I don’t think you’ll have a problem. Also..you live in Colorado – don’t manage the unit yourself, and are complaining about having to pay the property manager?

The National Low Income Housing Coalition published a report last year on basically how if you work a minimum wage job, you can forget about living in D.C. The cost of living in the U.S. national capital is among the highest in the nation and it’s ranked as the 6th most expensive place to live in the whole United States! It also has a crazy lucrative short term rental situation going on.

Geez man. You own a unit in a rich part of a relatively rich city. Tenants love your building so much they look to buy the units. You’re mainly attracting an affluent tenant with this place. You’re admittedly running in the red because you refinanced the hell out of the unit. Expenses are going up for everyone on utilities and such. Maybe if the place wasn’t mortgaged to hell – you’d have a bit more money available to run in the black.

Some of the post’s readers have also been critical of Hsiao’s writing. A comment on the original article goes a little something like this..

Seriously, are you only keeping this place so you can write articles for the Washington Post? This has nothing to do with real estate. This article should be in the finance section as an example of how people were using their homes like ATM’s and that is how the housing market got in the mess it is/was. This has very little if anything to do with being a landlord. If this had been going on any where else other then (sic) DC Mr. Hsiao would be talking the hard times he went through with his short sale or his foreclosure. Sell this property and be done with it and stop whining about how your (sic) not making money as a landlord because of your own financial irresponsibility’s (sic).

Life’s tough Douglas. We know. I dunno… try being a landlord in Moncton, New Brunswick or Detroit or Richmond, Virginia where the vacancy rate has been at 15%.

 

Hamptons Landlord Pens Letter Of The Year To Lousy Renters

Caught this hilarious piece on Jezebel today. Long story short: a landlord in the Hamptons rented a residence out to some young professionals for the summer – for $40,000. Sounds like a lot, but it’s chump change for the Hamptons. Seriously.

The summer ended. The landlord came back to the residence, and proceeded to have a heart attack over the condition of the property. Her outlet of choice to articulate her displeasure? The world’s best point form letter.

With damage including a variety of “bodily secretions” that included blood and soiled linens, broken locks, and damage to wood mouldings and drywall, the landlord clearly had reason to be more than a bit miffed. As much as this piece was written to be a bit tongue in cheek, part of me kind of agrees with the author’s suggestion on “what would you expect here?”. If 10 guys with Lacoste golf shirts and popped collars rent out a house for a summer, this kind of thing might be a given – even if they work for JP Morgan Chase.

The landlord clearly has never seen Weird Science, 21 Jump Street, or Superbad. If you do a quick hashtag search for parties in the Hamptons on Instagram – things like #hamptonsparty and #hamptonspartyface come up.

Either way. Good for a chuckle.

Yee Haw! Eviction Law In Texas Become Uniform For All Counties.

Some good news from the Lone Star state. Effective August 31st, 2013, all 254 counties in the state of Texas will be required to abide by the same rules with respect to residential evictions. Previously, the process remained open to interpretation by local small claims courts and was a bit of an dentist waiting room dance. Why is this important? Well…it forces landlords to become more organized and it enables lone star state landlords to move more quickly in dealing with delinquent tenants. In many of the smaller counties, where precinct judges do not work full time, securing a court date in less than a month can be difficult. The new law forces the courts to set a date within a 10- to 21-day window.

“Timelines are so important and these rules were written out to help landlords deal with these tenants who are not paying rent,” said Bell County Precinct 4 Justice of the Peace Bill Cooke, who is a full-time judge. “These changes are not only going to give opportunity for more rights for the landlords but repair and remedy for tenants as well”.

Landlords previously took a tenant to court for an eviction hearing if rent wasn’t paid. The new laws will force landowners to take all of the tenants on a lease to court in order to evict them from the property.

Are you a landlord in Texas? What do you think of this legislative change? Share your thoughts with us!