By Elizabeth Elliott, Davida Finger and Melissa Gallo
While the City has many responsible landlords, all too often in our practice at the Loyola Community Justice Clinic, our clients face landlords who refuse to repair substandard housing, wrongfully withhold deposits at the end of leases, try to illegally evict in order to rent to Mardi Gras tourists and other offenses that take advantage of the landlord-friendly laws. Louisiana has lagged far behind other states in protecting renters, and Senate Bill 298 is an attempt to find the correct balance between landlord and tenant rights and interests.
Senate Bill 298 requires that a security deposit be returned in 14 days. Under the current process, it can easily take up to three months for the deposit to be returned, and based on our experience representing low income tenants, for many, the deposit is wrongfully withheld without explanation. Currently, there are 15 states that require a deposit returned in less than 30 days after the termination of a lease. Of those, at least seven other states require a landlord to return the deposit within 14 days. Tennessee requires the deposit returned within a shorter period: 10 days. While 14 days may not seem like a lot of time for the landlord to “assess damage and receive estimates for repair,” it is a reasonable balance between the landlord’s interest to be compensated for damage and to fill the vacancy as quickly as possible, and the tenant’s interest to be able to acquire the deposit to put down for a new residence or to replenish their savings.
Senate Bill 298 requires that the security deposit be kept in a separate account. Let’s also be clear about one key fact: the deposit is the tenant’s property held by the landlord; it is not the landlord’s property to do with as he/she pleases. By maintaining the deposit in a separate account, SB 298 recognizes that the money does not belong to the landlord, but is being held in trust for the tenant. Additionally, this arrangement would protect the tenant’s deposit from any creditors the landlord may have. Currently, 23 other states that contain “small property” landlords (i.e. where the landlord owns a duplex, rents one unit and lives in the other) also have a similar provision.
Senate Bill 298 extends the eviction process and this has raised concerns from landlords that it will place a burden on their ability to pay their own bills. It is not only good practice, but recommended practice, for landlords to not rely on their tenants’ rent as their sole means of income. Landlords assume risks by renting out to tenants at the beginning of each lease term, and while background and credit checks can mitigate potential losses, unforeseen events do occur without any malice on the part of the tenant. There needs to be a reasonable process that allows people to find a home, but that does not cause serious impacts financially to landlords. Thirty days is enough time for a tenant to look for housing, without imposing costs on landlords who should not be relying so heavily on rent. The Fannie Mae Landlord Guide (available at https://www.fanniemae.com/content/tool/landlord-guidance.pdf) states that landlords need to “plan for the unexpected” and maintain at least “3 months of expenses in reserve.” Reasonable landlords take these precautions and assume the risks, just as tenants take on risks that their landlords will maintain the premises in good, safe conditions.
New Orleans has long maintained a legal system that not only favors landlords, but heavily neglects necessary protections for tenants. Landlords in New Orleans have the upper hand – there is a shortage of affordable, habitable housing in this city and landlords can select tenants through background, credit, and reference checks that mitigate risks. Tenants, however, don’t have these checks available to them when they rent and risk living in situations where the landlord does not maintain the property. Aside from the important protections mentioned above, Senate Bill 298 allows tenants to more easily make repairs and deduct the costs from their rent when their landlord fails to make repairs, and provides protections against increasing rent without the tenant’s consent. Additionally, SB 298 allows survivors of domestic violence to break their leases without penalty, in order to protect them and/or their children from violence.
The protections proposed by SB 298 are common in other states. In a city with more than 80,000 renter-occupied units, SB 298 is badly needed to provide renters with a few more protections.
Elizabeth Elliott is a student Practitioner at the Loyola Law Clinic. Davida Finger is an Associate Clinical Professor at the Loyola Law Clinic. Melissa Gallo is Associate Counsel for the Fair Housing & Community Development Project of the Lawyers’ Committee for Civil Rights Under Law.