Apr 182014
 

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.

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  • Owen Courrèges

    This is a meek and highly misleading defense of SB 298. You state that “[t]he protections proposed by SB 298 are common in other states,” when this is not the case. The centerpiece of this legislation is a non-waivable 30-day notice period before an eviction action can be filed for all evictions — including those based on nonpayment of rent. Can you name one other state that has such a notice period for evictions for nonpayment? I haven’t been able to find one. It’s an extraordinary, unprecedented requirement.

    You continue the deception by giving the false impression that the 30 day period is the only time that the defaulting tenant has to look for housing. In reality, the tenant could wait out the 30 days, force the landlord to formally file for an eviction (at his own expense), then wait out the hearing date (usually a few weeks later) and only leave in advance of being thrown out by the constables. When dealing with an obstinate, non-paying tenant, a landlord could expect the entire process, from the giving of notice to being able to get the constable out, to take approximately two months. I don’t see how you could possibly argue how that is a reasonable “risk” to impose on landlords.

    Furthermore, in defending this requirement that no other state has ever adopted, you argue that landlords shouldn’t rely on rental income as their sole source of income. This is true enough, but it doesn’t justify extending the notice period. It’s also true that the tenant should have sufficient money to pay their rent. Why should the landlord be forced to give free housing to a tenant that can’t pay? Why do we assume that the landlord should prepare for financial setbacks so that the tenant, who failed to do the same, should get a free ride on the landlord’s back?

    If the “unforeseen” happens and the landlord loses his job and unexpectedly has to rely on rental income more than anticipated, his mortgage company isn’t going to accept the notion that he can’t make his payment because a deadbeat tenant costs him two months in rent plus the expense of filing for an eviction. They aren’t going to be required to let a few missed payments slide. You have a great deal to say about how responsible a landlord should be with keeping a financial reserve and not relying too much on rental income, but you use these arguments to promote reckless irresponsibility on the part of tenants vis-a-vis the promises made to their landlord.

    The other matters dealt with by SB 298 are somewhat more reasonable, but they still go too far. Requiring small landlords to maintain a separate bank account for deposits is not necessary and imposes a significant burden on a landlord who may only be renting a single unit. Also, 14 days for return of a deposit is too brief. You practically acknowledge this, but then say that it is necessary to achieve a “balance” between competing interests. However, in those cases where a tenant has caused major damage to a unit, having such a brief period for receiving estimates will not seem very balanced.

    It seems to me that this is a botched attempt at reform. I would have been behind legislation to make the five day notice period non-waivable and/or to substantially increase the penalties for illegally withholding a security deposit after 30 days, but not when combined with all these other poison pills. SB 298 is an extremist effort that nobody ought to get behind.

    • esvenson

      Owen: if you want to respond to the argument just make your case. The ad hominem labeling (e.g. “meek … defense”) is unnecessary and petty. I hope you don’t write like this in your legal briefs and pleadings.

      • Owen Courrèges

        esvenson,

        Characterizing an argument as a “meek and highly misleading defense” is not an ad hominem attack. It’s a description of the argument, not an attack on the speaker.

        Describing the weakness of arguments is certainly something I do in legal pleadings, and something I commonly see. I don’t believe you can claim otherwise.

        • esvenson

          Okay, I’ll follow up in response (against my better judgment).

          How does labeling their defense as “meek” help your counter-argument? If their defense is “misleading” isn’t that enough to build your attack upon?

          Should the authors you criticize have been more “bold” in their “misleading defense”? Is THAT what you mean to say?

          Because, read literally, that’s what you’re saying.

          • Owen Courrèges

            I didn’t say that each and every point made was simultaneously “meek” and “misleading.” That’s taking quite a logical leap from a more general statement. I meant to say, as my comment suggested, that the defense was meek in at least a couple of major respects.

            First off, it did not forcefully defend the 30 day notice provision as a major departure from common practice (which it is), and instead simply ignores that fact entirely. I say, if you want a radical change, then defend a radical change.

            Secondly, the piece openly acknowledges that 14 days is a brief period to assess repairs, but then vaguely defends it by saying that it strikes a “balance” without further argument. And to top it off, it does this admitting that the proposed “balance” is, in fact, a minority view among the states. I’d call that a pretty meek defense.

            Of course, I spent a great deal more of my analysis dealing with the “misleading” parts because that’s what really offends me here – the effort to misinform the public.

  • Michael

    As one who in the business of owning and renting apartments, I have made significant investment in my business. If I run my business honorably I am entitled to a return on that investment.
    Your proposal that I not ‘rely’ on my rents is preposterous. What other businesses do you feel you have the right to micromanage? Do you not rely on your paycheck to manage your budgetary obligations? (ill refrain from suggesting that you forego 2 months of your paycheck so that you can help others pay their rent….)

    Giving tenants a free 30 ride is unfair to property owners. By the time this 30 day period begins the tenant has already decided to avoid their obligation to pay rent.

    The property owner should not be the party penalized for the tenants decision to stop paying rent. A decision that is frequently coupled with intention damage.

    • Owen Courrèges

      Michael,

      Hear, hear. It really boils down to the fact that relying too greatly on rental income can, in some circumstances, not be prudent. However, that doesn’t justify increasing the risk to landlords across the board by allowing their tenants to take advantage of an excessive notice period.

      It should be noted that in some states, “notice” for nonpayment is satisfied when the rent isn’t paid; the landlord isn’t required to post anything. In at least one state (Arkansas) the landlord has an option of handling evictions as a criminal matter — after 10 days, the police won’t just kick out the tenant, they’ll arrest them. In this context, Louisiana’s laws aren’t quite as anti-tenant as people seem to think.

  • Owen Courrèges

    AhContraire,

    Notice periods are generally nonwaivable. In Louisiana, the tenant currently may agree to waive the statutory 5 day notice for evictions in their lease.

    As for 30 day notice periods, as I notedin my other comment, I’ve never seen a 30 day notice period for evictions for nonpayment. Some states have a 30 day notice period for evictions where no cause is stated, with much shorter periods for evictions for any legal cause. I’m not sure which states have waivable notice periods other than Louisiana.

  • IrishChan

    Not paying rent AND unlawfully keeping a tenants deposts should be looked at the same… BOTH are basically stealing and there should be stiff penalties to discourage both! Any new laws or increased penalties should focus on these two issues, along with preventing (not delaying) unlawful evictions.
    I agree with parts of the legislation, but Increasing the time it takes to evict someone isn’t protecting the tenant from unlawful evictions, or kept deposits… It’s just giving the tenant more time to live without paying rent (stealing).

    I missed your link to FannieMae’s guide to being a good tenant… Wait, I think found it, and it’s pretty short… “Pay your rent!!!” … or in reality, it would probably include something along the lines of saving 3 months worth of personal expenses, including rent. It’s the same logic that tells me I need to keep three months expenses as a landlord.

    You seem to be very forgiving if the tenant hasn’t saved up… but you also forget, landlords are people too. What if due to uncontrolable circumstances, neither party is currently in a postion to have this cushion? Who is the person that signed up for an obligation they are not fulfilling? HINT: It’s not the landlord…

    In all of the articles and arguements on the topic, proponents for reform to the eviction process seem to not even acknowledge that the renters are not fulfilling an obligation to pay rent… I don’t understand it. Whether I have enough of a monetary cushion saved or not, I think you are forgetting that I don’t have the obligation to let them steal money from me by living for free…