What's New In Landlord/Tenant Law

Also see: Legislative Updates

State Law Changes and Updates

 

Contents: Use the quick jumps to the subject that interests you, or scroll down the page for all the news.

      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

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      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.
      Public Law 106-185, effective April 25, 2000, entitled the Civil Asset Forfeiture Reform Act of 2000 addressed several abuses. This Act creates a number of safeguards when assets are seized for the so-called well-intentioned reasons of reducing criminal profit and returning it to the law-abiding community. Read all about it.

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      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. 

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      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

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      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.

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      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.
      This Act established for the first time certain rules to facilitate the nationwide use of electronic signatures, contracts and records in commercial transactions including real estate transactions. It also established certain safeguards to protect consumers who participate in online transactions.
      The E-Sign Act preempts state law unless a state enacts the Uniform Electronic Transactions Act (UETA) as approved by the National Conference of Commissioners on Uniform State Laws

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      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).

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      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.

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      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:
We affirm this court's commitment in Breezewood Management to "support the reasonable expectations of the contracting parties whenever possible." Breezewood Management, 411 N.E.2d at 675 n. 2. We agree that "one who, 'with open eyes,' rents a hovel cannot later expect and sue for the Waldorf Astoria." Read the opinion.

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      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.

  1. Courts have held that mentally disabled tenants cannot be evicted for threatening neighbors or other tenants. They must be given reasonable opportunity to control their behavior with medication.
  2. A condominium association was forced to stop using pesticides and to pay a $40,000.00 settlement because one resident owner had multiple chemical sensitivities.
  3. Tenants have been allowed to keep pets in violation of no pet provisions, if the pet is needed for therapeutic reasons.
  4. Tenants cannot be denied an apartment on the basis that they are unable to live independently.

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      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.

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      Lead Paint Information:

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.
      First, a seller may not decline to accept an offer that otherwise contains terms and conditions acceptable to the seller, but requests a lead inspection or risk assessment. The guide notes that "[a] party selling target housing ... may not offer or advertise property as being available only if purchasers will not take advantage of the opportunity to conduct a risk assessment."
      Second, a seller may decline to agree to make a purchase contract contingent on the results of an inspection for lead-based paint hazards. In other words, a seller must offer a buyer a 10-day opportunity to inspect for hazards, but does not have to agree to release the buyer from the contract if testing indicates the presence of lead. As noted in the guide, "...if a seller wishes to require a buyer to honor the other terms of the contract regardless of the outcome of an...inspection or risk assessment, such a clause must be included in the contract language."

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      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.
      Federal regulations do however permit states and counties to impose their own regulations. So far, there are few areas that currently require that lead paint be treated. Local associations are advised to check with their local health department regarding any local regulations requiring treatment or removal.
 
      Other lead based paint misinformation states that inspectors must be state or federally certified. We have seen correspondence from HUD which specifically states that the purchaser is not required to use the services of a certified inspector or risk assessor, although that would be preferred.
      The only time a certified inspector must be used is if a landlord wants to state that their residential rental unit is lead-based paint free, as determined by a certified inspector.
      Also see: New Regulations on Lead Hazard | Lead Talk | Lead Lawyers and landlords |  disclosure requirements for sellers, landlords and their agents for all pre-1978 housing.

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      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.

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      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.
      In the U.S., legislation is in place allowing seniors in federally funded housing to have pets. A HUD administrative judge ruled in November 96 (HUD vs. Dutra, No HUDALJ 90-93-1753-8 (HUD Offices of Admin. Law Judges 11/12/96)) that the managers of a California apartment community with a no pets policy violated the Fair Housing Act by attempting to evict a disabled tenant because he had a cat. The resident's physician said the cat served a therapeutic purpose and therefore, in the eyes of the judge, the apartment manager's failed to make a "reasonable accommodation". (See invisible disabilities)
      In a 1997 Maryland case, a mother sued a landlord for not enforcing a "No Pets" clause in a lease, after a pitbull attacked and killed a visiting child. The trail court found the landlord liable and awarded $6 million in damages. The decision was reversed on appeal, but only because of an error during trial. Amberwood Associates Limited Partenership Inc. v. Matthews, 694 A.2d 131 (Maryland) 1997.

      California Assembly Bill 860, of 1999, prohibits landlords from prohibiting pets. See New California Law Below.

But now read this:

      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.
      The lease expressly agreed acceptance of rent wouldn't operate as a waiver of any lease violation, including the no-pet clause. Also see: Pets on our pages

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      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.

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      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.

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      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

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      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.

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      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.

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      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.
      A taxpayer in the 15 percent marginal tax bracket who sells a capital asset for a profit on or after January 1, 2001, and who has owned that asset for over five years, will pay a maximum capital gains tax rate of only eight percent. Prior to this change, the taxpayer would have paid a gains rate of 10 percent.
      There is as of yet no corresponding tax relief for taxpayers in 28 percent and higher marginal tax brackets. They will continue to pay a 20 percent capital gains tax on profits through December 31, 2005. For sales of capital assets on or after January 1, 2006, the capital gains tax rate for these taxpayers will finally drop to 18 percent from 20 percent if they have owned the assets for more than five years.

      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.
      The summary contained in our Property management Web was directed at landlords, who are prohibited by the Act from restricting a tenant's ability to receive such signals. Generally, a landlord cannot prohibit a tenant from installing a receiver in any area to which the tenant has exclusive rights-balcony, patio, deck, or interior of the rental unit. The landlord may, however, prohibit a tenant from installing such a receiver in any common areas not under the tenant's exclusive control, and from drilling holes through the roof or exterior walls. See Updates in the Property Management Web.

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New California Laws

Pets Permitted: Assembly Bill 860 of 1999 would allow California residents of condominiums, planned unit developments, mobile-home parks, and every other form of common-interest housing to keep pets, regardless of management regulations. A similar bill in 1998 was passed by the Assembly, then vetoed by then-Governor, (Republican) Pete Wilson. The new (Democrat) Governor, Gray Davis, may pander to the populace and sign the bill. The legislation would force people who purposefully and freely choose to live in pet free housing, for many reasons, to live with untethered dogs and prowling cats, whether they want to or not.

Tenant Security: New state law requires rental property owners to install and maintain an operable deadbolt lock on each main swinging entry door of a dwelling unit. Compliance with this requirement (Civil Code 1941.3) must have been by July 1, 1998.

Regulations on Application Fees: A new law in California allows property owners to collect an application/credit check fee provided that: the fee does not exceed $30.00. the owner/manager provide prospective resident with an itemized receipt for the fee. the owner furnish a copy of the credit report to the prospective resident, *upon request only.*

Day Care Notification Requirements: New CA law requires a day care operator to notify the property owner or manager of the child care operation. It also allows the owner to charge the maximum security deposit (twice the monthly rent in CA) without fear of a discrimination claim.

Utility Charge Relief: New CA law stops the local municipal utility companies from putting a lien on the property when a resident has vacated without paying the bills. It requires a utility co. to collect the unpaid debts directly from the user (tenant). Finally, it allows the utility co. to collect a security deposit prior to entering into an agreement with a user for service.

Posted by: Gail McMillan, Tri-County Apartment Association, San Jose CA

Also see: California Page

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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)

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