The following is a legislative update from Delegates Kathy Szeliga and Ryan Nawrocki.
For the last five years or more, many bills have been passed in Annapolis regarding rental properties and landlord and tenant issues. Many small mom-and-pop landlords have sold their properties because lawmakers have made it difficult to own rental properties. Of course, no one supports or wants to enable slumlords. In an effort to address a very small minority of bad actors, lawmakers in Annapolis have made it all but impossible to pay the expenses of owning a rental property and much less make a profit.
There is a push for more affordable housing, but increased regulations on housing in Maryland make it more expensive to rent or own property. “Affordable housing” is a popular feel-good political phrase, but government intervention is making rental properties less affordable.
Here is a summary of some of the bills the House of Delegates passed this legislative session. Thankfully, not all of them became law, as the Senate did not pass all of them.
Perhaps the worst bill the House passed this year was HB477, sometimes referred to as Just Cause Eviction. The only thing “just” about this law is its title. House Bill 477 provides tenants with a life occupancy in a property. Under current law, landlords and tenants may decide to renew or not renew a lease at the end of the term. In some cases, landlords don’t renew leases for very good reasons, like tenants that are a nuisance to the community or may not live up to the cleanliness standards that most would expect. Or, landlords may want to have a family member or friend to live in the property. In this legislation, a landlord would have to go through a quasi-eviction process if they do not want to renew a tenant’s lease.
Only a few housing markets in the country have this type of legislation in effect, such as San Francisco and Oakland. It is worth noting that these areas have the worst housing crisis in the country. This policy completely disincentives the private sector from investing in new multi-housing units in these communities. Thankfully, this bill did not become law.
Another bill, HB693, unfortunately, did become law, which creates a new office for tenants to encourage them to take legal action against landlords. In addition, the bill also requires a landlord to offer tenants the right of first refusal when the landlord decides to sell a residential property and establishes a procedure for notifying the tenant and the offer process. The bill significantly increased filing fees and surcharges a landlord pays to file actions against a tenant, such as when someone doesn’t pay their rent. As it left the House, the bill prohibited these charges from being awarded to the landlord if the case was resolved in the landlord’s favor. An amendment in the Senate allowed landlords to deduct the court charges from the tenant’s security deposit if the courts found in the landlord’s favor. However, in an eviction process, tenants usually owe much more in back rent and damages than the security deposit will cover.
Another bad bill is HB1117, which will create an entirely new process for renters to put their rent in escrow until a landlord remediates property defects. While no one wants people living with severe defects in their homes, this bill goes much further than that. It expands a renter’s ability to withhold rent for reasons unrelated to property defects, which could potentially put a significant financial burden on landlords as they have mortgages, taxes, and insurance to pay as they work through the court process.
The purpose of the current rent escrow law is to provide tenants with a tool to force housing providers to repair serious and dangerous defects rather than simply making a landlord pay damages that do nothing to improve living conditions in the dwelling unit. This bill will make it harder to repair units and allow tenants to seek damages for things that have nothing to do with defects in a unit. This complicated government scheme is another reason people will get out of the rental property business.
Another bill, SB 19, requires the District Court to shield all related court records within 60 days after the final resolution of a failure to pay rent proceeding that did not result in a judgment of possession. The District Court may, on motion of a tenant and if specified requirements are met, shield all court records relating to a failure to pay rent proceeding that results in a judgment of possession.
In Maryland, the average eviction process takes many months. During this period of months, a tenant may make payments to become current in their rent and stop the eviction proceedings. However, it doesn’t mean that the tenant hasn’t missed or been late on their rent payments. With these records now shielded, future landlords will not know a future tenant’s payment history, even if the tenant was habitually late and often in court for failure to pay rent.
We all recognize that there is a need for more quality and affordable housing. We also recognize that tenants have the right to live in quality units. However, the approach of penalizing all landlords to punish a few does nothing to solve this housing problem. Instead, we need to focus on incentivizing quality housing construction and focus on holding bad landlords and bad tenants accountable. The approach of simply attacking all landlords does nothing to solve this housing problem and instead just further exacerbates the crisis.
