What's New In Landlord/Tenant Law
Also see: Legislative Updates
State Law Changes and Updates
ADA - Americans with Disabilities Act - A drug and alcohol treatment center applied for a building permit in an area zoned for "mixed-use" retail and residential. The permit was granted because the center qualified as a business or professional "office" under the city's zoning ordinance. However, the zoning board revoked the permit after residents and business owners protested that the center would lower property values because the clients are a bad element. The ZBA did not hold a hearing or issue a written opinion, but found that the rehab center was actually a "clinic", not an "office". The treatment center sued on the basis that a zoning decision is a government "service, program or activity" within the meaning of the ADA. The U.S. Court of Appeals, Second Circuit, in affirming a preliminary injunction, held that the act clearly encompasses zoning decisions because they are a normal governmental function. Therefore, the zoning board cannot base a decision on "stereotypes and generalized fears about drug- and alcohol-dependent people". See Group Homes
Return to contents
Civil Forfeiture - Many municipalities have adopted, so called, "drug lock-out laws" in the event of repeated drug arrests at a property. The U.S. Attorney now has a notification program to landlords who rent to drug dealing tenants. Landlords who ignore the notices risk having their property seized under civil forfeiture laws.
Community Reinvestment Act - Pending legislation in the House threatens the very survival of the Community Reinvestment Act (CRA). Meanwhile, Congress continues its examination of the Fair Housing Initiatives Program, which funds private fair housing enforcement groups, and on the Fair Housing Act with respect to property insurance.
Debt Collection - Landlords and creditors can now garnishee the wages of military personal and federal employees. A new Michigan law also allows for a 10% garnishment of social service benefits to collect for damage to rental property. Skip tracing of tenants has been made much easier through the use of various search engines on the WWW and wide number of computer databases assessable through the Internet. However, landlords and attorneys must still comply with the Fair Debt Collection Practices Act when using the new technology to find skippers and collect debts. See RHOL Credit Services
Defamation - A landlord cannot be sued by a tenant for defamation for calling him an obscene name and threatening to evict him for odors emanating from his restaurant.
E-Sign Act: On June 30, 2000, President Clinton signed into law the federal Electronic Signatures in Global and National Commerce Act, also known as the "E-Sign Act." Public Law 106-229, effective October 1, 2000, was a major step in ensuring that the United States has in place a legal structure that supports and promotes the growth of online commerce.
Fair Housing - Now a landlord may be liable for disability discrimination even if unaware of any disability. A tenant was evicted for failing to cooperate with pest extermination. He claimed he was depressed and needed a "reasonable period of accommodation" to prepare for the exterminators. Even though the landlord did not know about the tenant's "mental disability" at the time the eviction notice was sent, it can be sued under the Fair Housing Act where it learned about the disability before the tenant was actually evicted. The act is violated when housing is "denied" by actual eviction because of a handicap (U.S. Court of Appeals, Eighth Circuit).
Group Homes - The U.S. Supreme Court ruled that a group home for recovering addicts, in the City of Edmunds, may operate in a residential neighborhood even though zoning ordinance prohibited more than five unrelated people. Municipalities must allow the homes as a reasonable accommodation for the handicapped. See ADA above.
Implied Warranty of Habitability - Should a professional landlord be able to disclaim the implied warranty of habitability in its leases? An Indiana Court of Appeals implied yes, then disclaimed their implication and said: "The question was not presented, and we did not decide in a footnote, whether the implied warranty of habitability can be expressly disclaimed in a residential lease. Accordingly, in order to avoid an extension of our holding beyond its reach, we have withdrawn the last sentence of footnote 3 in the opinion, which shall now read as follows:
Invisible Disabilities - Tenants with "invisible disabilities" such as mental illness, mental retardation, brain injury, multiple chemical sensitivity and neurological disorders are protected by the Fair Housing Act and the Federal Rehabilitation Act of 1973. These laws require that landlords "reasonably accommodate" the tenants' disability.
Liability Insurance Coverage Extended - A Maryland Court of Appeals ruled that a tenant's child who ate lead-based paint was covered by the landlord's homeowner's policy. The U.S. Court of Appeals (Second Circuit) ruled that carbon monoxide poisoning was also covered under the landlords homeowner's policy.
LEAD PAINT DISCLOSURE CLARIFICATIONS
Pursuant to the Residential Lead-based Paint Hazard Reduction Act, a seller of pre-1978 construction must provide a prospective buyer with lead-based paint hazard information and allow the buyer up to 10 days to arrange for and complete an inspection for, or risk assessment of, lead-based paint hazards.
HUD and the Environmental Protection Agency (EPA) together recently issued a lead-based paint disclosure guide for the real estate industry entitled Interpretative Guidance for the Real Estate Community on the Requirements for Disclosure of Information Concerning Lead-Based Paint in Housing. Two items in this August 2, 2000 guide are of particular interest to real estate practitioners.
Lead Based Paint Misinformation - There have been recent stories in the mainstream press regarding lead based paint which say, and I quote: "If significant levels of lead are found the property owner can be ordered by the local health department to treat the hazardous condition." Please note: the regulations from EPA and HUD do not require a seller or lesser to even test for lead based paint, much less require that it be removed.
NO Smoking - The Fort Pierce (FL) Housing Authority has recently banned smoking in private apartments in all public housing in St. Lucie County. A bill (S-580) before the Massachusetts State Senate would require that 75% of all units of public housing be reserved for nonsmokers...Apartment hunters have noted an increasing number of rental ads for "nonsmokers only."...Tenants have been sued for smoking in their own co-op apartments.
Pet Prohibition - Ontario, Canada passed a law in 1990 prohibiting the eviction of tenants just because they have pets. In Toronto it is illegal to discriminate against people who have a pet.
California Assembly Bill 860, of 1999, prohibits landlords from prohibiting pets. See New California Law Below.
Despite a lease term prohibiting tenants from having pets in a rented apartment, a tenant owned a dog. The lease stated the landlord's acceptance of rent with knowledge of any violation of the lease did not waive the violation -- the violation could only be waived in writing. When the landlord tried to evict the tenant, the tenant argued the landlord waived the no-pet provision by accepting the rent checks while knowing about the dog. After a series of proceedings, the court ruled the landlord was entitled to possession of the apartment.
Protected Sex and Politics - Lansing Michigan wants to add Political Affiliation and Sexual Orientation to it's protected classes under Fair Housing Laws.
Public Housing - The House and Senate negotiators on the public housing reform bill appear to be at an impasse over whether the Housing Act of 1937 should be repealed. It appears unlikely that the bill will be enacted before adjournment.
Punitive Damages For Housing Defects- Punitive damages are allowed in warranty of habitability cases - only if there is clear, unequivocal, and convincing evidence that the landlord's conduct was motivated by malice or so reckless and/or grossly negligent as to reach the level of "criminal disregard" for the tenant's health and safety.
Reasonable Occupancy Requirements - The U.S. Department of Housing and Urban Development (HUD) created confusion and consternation concerning the "reasonable occupancy requirements" under the Fair Housing Act. Last summer, the HUD General Counsel issued a memo rescinding the "two-person per bedroom" standard as reasonable occupancy under the Fair Housing Act. The counsel advised landlords to use the Buildings Officials and Code Administrators Standards. However, this memo was rescinded by the Deputy Assistant Secretary of HUD in September, 1995. The Mountainside case upheld reasonable restrictions on occupancy by landlords. A mobile home park was allowed to restrict three people per unit to accommodate sewer capacity and to maintain the quality of life. Also see: Occupancy Standards
Section 8 - Senator Connie Mack (R-FL), Chairman of the Senate Housing Subcommittee, introduced S.2042, the Multifamily Assisted Housing Reform and Affordability Act of 1996, on August 2, just as Congress adjourned. The bill attempts to address the budget problem created by expiring Section 8 contracts with high rents (the mark to market issue). Mack intends to have the bill considered by the Banking Committee so that it might be included in either the VA/HUD Appropriations bills.
Strict Liability - The California Supreme Court finally reversed a 1985 case which had held that landlords were strictly liable for latent defects in rental housing.
Tax Law - Federal: Recent federal tax law changes are a mixture of good news and bad news for some owners of real estate and businesses who sell their assets at a profit.
Capital Gains Tax Reduction: as a result of the Taxpayer Relief Act of 1997, a new holding period for capital gains tax purposes-the five-year-gain became effective on January 1, 2001.
Installment Sales of Businesses: Public Law 106-170, entitled the Ticket to Work and Work Incentives Improvement Act of 1999, was enacted on December 17, 1999 to extend certain tax benefits that otherwise would have expired. To offset the revenue lost to these benefits, Public Law 106-170 among other things repealed the ability of an accrual basis taxpayer to use the installment method when reporting the profit on the sale of a business. This repeal became effective for sales of businesses on or after December 17, 1999. A cash basis taxpayer may continue to use the installment method when reporting resale profits.
See more on real estate related tax law in the RHOL Real Estate Investors Web
Telecommunications Act Update: The Telecommunications Act of 1996 and, specifically, a Federal Communications Commission (FCC) order, effective January 22, 1999, calls for implementation of Section 207 of the Act. Section 207 prohibits any restrictions that impair a viewer's ability to receive video programming signals from direct broadcast satellites, television broadcast stations and wireless cable providers.
New Landlord/Tenant Law in East Lansing, MI
Property owners in the city of East Lansing, Michigan, home to Michigan State University, must now have city official's permission to rent their own property. The town that started the spread of the mandatory rental inspection cancer in Michigan has now essentially confiscated many other private property rights with an even more onerous Rental Housing Ordinance. It now requires many more fees and inspections as well as use of the City's own rental housing lease addendum. The document threatens $500 per day fines for violation of it's eleven points which address: License, Occupancy, Sleeping Rooms, Parking, Trash and Recycling, Noise, Party Litter, Grass and Snow, Pets, Neighborhood Associations and more. Information contributed by: Bradley A. Wegrzyn, LOMM (Landlords of Mid-Michigan)