Increasing Landlord Workload
Increasing Landlord Workload
Each year landlords’ lives become evermore complicated due to federal, state, and local governments enacting new laws related to both being involved in any type of business as well as related specifically to ownership of income properties. Landlords must be concerned about lead-based paint; mold; bedbugs; fair housing and ADA; the FCRA; the FDCPA; state landlord-tenant laws; credit screening record handling under FTC regulations; a variety of business taxes, income tax, property taxes, and, in some jurisdictions, rent taxes; employee vs. independent contractor issues; insurance coverages and costs; and whether tenants will pay their rents next month.
Recent Supreme Court decisions will likely now further increase the complexity of landlording for all those who manage income properties, even more so for those landlords and property management companies who hire employees.
In May 2011 the U.S. Supreme Court issued a major ruling affirming the right of a state to pass legislation penalizing employers who knowingly hire illegal workers. Arizona was the state whose law was affirmed. The Arizona law provides for revocation of business licenses of offending businesses, with the term “business licenses” considered to be very broad.
At the local level, in September 2010 the Third Circuit U.S. Court of Appeals had stopped city leaders in Hazleton, Pa. from enforcing a new ordinance prohibiting employers from knowingly hiring illegal aliens. The subject city ordinance also sought to prevent landlords from harboring illegals in their rentals. The city was attempting to stop a population explosion of illegal workers who don’t pay local income taxes.
The Hazelton case will now be sent back to the Third Circuit Court of Appeals with instructions to review the matter given the court’s ruling in a nearly identical Arizona case that the Supreme Court had resolved in May.
The required use of the federal E-Verify database when hiring was the focus of both cases. This data base tracks the immigration status of millions of people. The Supreme Court, in a 5-3 ruling, said state governments can force the use of the system even though Congress has never mandated its use.
Kris Kobach of the Immigration Reform Law Institute told the court “Hazleton’s ordinances match the terms and classifications of federal immigration law and require officials to defer to federal determinations of aliens’ immigration statuses,” adding “In drafting the ordinances, the city made every effort to avoid any conflict with federal immigration laws.”
It’s the same argument Arizona’s lawyers made when their case went before the Supreme Court and is one that Chief Justice John Roberts and four of his colleagues agreed with. Roberts wrote last month “(Federal law) expressly reserves to the states the authority to impose sanctions on employers hiring unauthorized workers, through licensing and similar laws. In exercising that authority, Arizona has taken the route least likely to cause tension with federal law.”
During the past decade there has been legislation in various state legislatures and some ordinances at the local government level, all attempting to deal with employment of and rental to illegals. Most attempts have been struck down in lower courts for one or more reasons. While some states and local governments have continued to move forward on such laws, many states and local governments have hesitated to pass such laws, preferring to wait until the Supreme Court clarified what might pass muster and what won’t.
In view of the Arizona law Supreme Court decision and the likelihood that the Third Circuit U.S. Court of Appeals will now change course, it should be expected that many states and local governments will be passing laws regarding both employment and rental issues. Accordingly, landlords must be certain to keep informed about legislation and ordinances being considered in jurisdictions where their properties are located. Landlords should also be sure to follow laws currently in place to ensure that they are not found in violation of old laws when enforcement of new laws is in place, perhaps with more rigorous enforcement. For example, current law has long (since 1986) required the use of USCIS Form I-9 when hiring employees.