Landlord-Tenant Laws
The beginning of a new year is traditionally the time to evaluate current rental policies and practices for business and legal compliances.
This year the analysis and evaluation process may be a business necessity.
New landlord tenant legislation is scheduled to become effective this year in several states and many cities. Some of the new requirements may already be in effect, as new laws also often become effective on January 1st.
As due diligence responsibility, a landlord must research legal requirements affecting the property’s location to make sure business policies and practices are in full compliance.
As of this writing, rent controls, tenant screening practices including use of credit reports, credit scores, criminal background checks, and eviction history, eviction proceedings, and security deposits are some of the legislative changes that have already been implemented or will become effective later this year. Many of these changes will have some effect on a landlord’s business policies and property management in those states and cities. Continuing the trend from last year, there are now more initiatives by cities, states, and tenant activist groups to provide for increased tenant protections as part of more inclusive rental housing decisions.
In evaluating current practices, a landlord should have a firm understanding of basic landlord tenant statutory requirements and the business necessity that is required for property operations. Even though experienced, a landlord cannot afford to take for granted that his property management is fully compliant without confirmation through legal research of applicable state, local, and federal laws.
Landlord-tenant laws serve as legal protections for landlords and tenants. Without defined standards and requirements, landlords or tenants could suffer business loss, or damage to persons and property. In some states, landlord-tenant regulations are more landlord-friendly, affording more protections to landlords as property owners. In other states, landlord-tenant regulations are more tenant-friendly, by providing tenant protections and remedies for housing deficiencies or unreasonable or illegal practices by a landlord.
Legislative Changes
Legislation at state and local levels can have significant impact on traditional rental housing policies for evaluating business risk through tenant screenings, selection standards, and rental policies. The following are examples of recent landlord-tenant legislation by cities and states. Information is provided for discussion purposes only and should be reviewed in context of the importance of landlord due diligence for business and legal compliances.
City Ordinances
Minneapolis, Minnesota
The City Council of Minneapolis, Minnesota has updated the city’s Renter Protection Ordinance. The updated ordinance regulates how landlords conduct tenant screenings of potential tenants. One of the provisions of the ordinance prohibits landlords from rejecting a potential tenant for having an insufficient credit score or insufficient credit history.
Historically a credit score has been regarded as an objective, measurable, and defensible method of evaluating financial risk to the landlord’s business. The applicant’s use of credit, credit payment history, and debt exposure were set out as indicators of future credit performance. The applicant’s creditworthiness was in practice judged by his credit history and/or credit score. Now, a Minneapolis landlord should examine his rental standards, and as necessary, revise standards to comply with the updated regulations. In some cases, a landlord will need to change his tenant screening policy and practices to remove qualification requirements for credit score and satisfactory credit history. The landlord must assess the potential financial risk of an applicant using various screenings that are in compliance with the ordinance.
Other provisions in the Renter Protection Ordinance forbid landlords from charging security deposits that exceed a single month’s rent; rejecting a potential tenant for any misdemeanor convictions older than 3 years and most felony convictions older than 7 years; and rejecting tenants for evictions older than 3 years. There are provisions for a landlord to reject applicants with convictions for certain crimes such as murder, kidnapping, criminal sexual conduct, etc., but only if those convictions were within the last 10 years. Landlords who use an individualized assessment process are allowed to reject applicants because of criminal record, credit score or eviction history. However, before rejecting an applicant, the landlord must first give the potential tenant the opportunity to provide supplemental information about the nature and severity of the potentially disqualifying behavior. If the landlord still wants to reject the applicant after considering the supplemental information, the landlord must provide written reason for denying the application and a copy of the document must be filed with the city.
Portland, Oregon
The Portland City Council has issued a mandate that renters in the Portland city limits who are served a no-cause eviction or any of the following triggering events must be paid Relocation Assistance by their landlord. Those events include:
- a no-cause eviction, or
- a qualified landlord reason for termination, or
- a rent increase of 10 percent or higher over a 12-month period, or
- a material change in the lease terms, or
- a renter receives no option to renew their lease.
Tenants must receive a written notice for any of these events at least 90 days prior to the effective date, including a description of their rights and obligations and the amount of the Relocation Assistance they are eligible to receive.
Seattle, Washington
The Seattle City Council has passed 5 new tenant protection laws, including new protections for domestic violence survivors from being held liable for damages to a rental unit that were caused by their abuser.
Additionally, to strengthen renter protections:
- landlords are prohibited from restricting legal occupancy limits established by local, state or federal laws (aka the “roommate bill”) allowing tenants to share the costs of rent and other benefits of shared occupancy;
- information on the rights and resources of tenants is required to be included on notices to terminate a tenancy, increase rent or for landlord entry to a unit;
- authorized enforcement of compliance to state law requires landlords to provide receipts for rental payments and prohibit the requirement for electronic payments only; and
- landlords are required to register the rental unit with the appropriate governing agency before filing and issuing an unlawful detainer to terminate a tenancy.
Kansas City, Missouri
The Kansas City Council has passed a tenants bill of rights package. The tenant rights package includes two pieces of legislation. The first part cites local, state and federal law and provides a list of rights already afforded to tenants, including rights to habitability, freedom from discrimination and retaliation, and the right to organize and collectively bargain. The second part of the ordinance requires that landlords give 24 hours’ notice before entering properties and provide tenants with a means to get a utility estimate for the property. Landlords are also required to provide a copy of the bill of rights. The ordinance also bars discrimination against prospective tenants solely because of a prior arrest, conviction or eviction.
State Legislation
Illinois
The state of Illinois has passed a new law preventing landlords from evicting, retaliating, or threatening to take action against undocumented immigrant tenants who report code violations or make requests for maintenance. Illinois was the second state after California to pass such a law.
New York
The state of New York passed the Housing Stability and Tenant Protection Act of 2019, called the strongest law protecting tenants in the state’s history that established stronger tenant protections statewide. Landlords cannot evict or otherwise penalize tenants for making good faith complaints to the landlord about violations of the warranty of habitability. Security deposits are limited to one month‘s rent and landlords must give tenants the opportunity for a walk-through before they move-in and before the tenant moves out. The security deposit must be returned within 14 days with an itemized list of deductions. The eviction process was changed to provide new rights in eviction court.
Washington
The state of Washington’s Landlord Tenant and Eviction laws had major changes in 2019 that included a landlord’s mandatory use of the 14 day Notice to Pay or Vacate (previously landlords used a 3 day notice requirement). If a tenant is a day late in rent, a landlord must give the tenant 14 days to pay rent before the landlord can file an eviction lawsuit. Tenants cannot be evicted for not paying charges that aren’t actually “rent”. A landlord must apply the tenant’s rent payment first toward rent before applying the payment to other kinds of non-rent such as late fees. A landlord is required to provide at least 60 days’ notice in advance for a rent increase (previously only a 30 day notice was required).
California
The state of California passed the Tenant Protection Act of 2019 which has a number of changes for residential properties regarding rent control and eviction protections. The law took effect on January 1, 2020, with some of its changes implemented over several months during a transition phase. The Tenant Protection Act of 2019 extends a rent cap and eviction control to the entire state where rent control does not already exist. Full discussion of the Tenant Protection Act is beyond the scope of this article. California landlords are advised to conduct due diligence on the Act, seek legal consultation as required and implement their rental policies accordingly.