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ALL MANDATORY RENT ESCROW BILLS ANALYZED AND COMPARED

My Email to Housing and Judiciary Committees

Recently I wrote an email to both the Committees on Housing and Judiciary. I am publishing what I wrote to them as I believe it is a good summary of why we need Mandatory Rent Escrow in MA.

“Dear Committees on the Housing and Judiciary,Committee on Housing - Massachusetts Legislature

I am the founder of http://MassachusettsLandlords.com – a site that gets about 600 new visitors a month.
I would like to meet with any of you to talk to you about Mandatory Rent Escrow and try to better understand the concerns and objections you may have with allowing it out of your Committee.

 

Mandatory Rent Escrow is the #1 issue for Property Owners in MA. If a tenant runs out of rent or if we write a letter of warning about something, let’s say loud music, then some tenants call the Health Board in retaliation and in bad faith and then try to use the Health Board report to “withhold the rent” even though they are the ones who called the Health Board in bad faith. They also try to use that bad-faith call to the Health Board to file habitational counterclaims against us when we take it to the next level and try to evict them for non-payment.

 

We are afraid to manage our own buildings because we are afraid of expensive retaliation by the tenants.

 

All of this overloads the Housing Court and creates a lot of unnecessary landlord-tenant confrontations that cost the State in lost tax revenues. One way to decrease Tenant Retaliation Against Landlords and bad-faith calls to the Health Board is to require that the tenants put aside all the “withheld” rent in an escrow account (minus any receipt-based repairs that they had to do themselves). That way the incentive to call the Health Board in bad-faith is taken away. When the tenant knows that they have to demonstrate that they have the full rent (which they should have anyway) and were ready to pay the rent “if it weren’t for the poor conditions” then it is safe to assume that they did not call the Health Board out of retaliation, bad-faith or just because they ran out of money for the rent. If the rent is not escrowed then it must be assumed that they did not have it in the first place and they should not be allowed to game the system as some of them are doing now.

 

All of this seems very common-sense.

 

I would like to understand if you understand what we are asking as MA Landlords and what are the objections and concerns to what we propose.

 

It seems to me Retaliation should not be allowed regardless whether it comes from the Landlord or the Tenant. Currently Tenant Retaliation Against Landlords is legal in MA and that shouldn’t be the case.

My schedule is wide open…”

 

So this is what I emailed them the other day. Let’s see how many hide behind the majority (tenants and their lawyers who would lose substantial earnings if this got enacted) and refuse to even meet with the minority (landlords) to try to address their concerns. I will report to you on that.

In the following article I will look at all the 7 currently proposed Mandatory Rent Escrow (or as I prefer to call them “Make-Tenant-Retaliation-Against-Landlords-Illegal-in-MA”) Bills. (By the way, another good way of calling this bill is “A Bill to Promote Rental Housing Stability”  because it does promote rental housing stability). In any case, this written comparison between all the proposed bills has never been done before to the best of my knowledge and it is about time that someone did it and talked about it. I do not want Massachusetts Landlords to waste their time supporting multiple bills on the same thing. We need to get united and choose one bill and support it.

My comments are in red.

Bill #1110, Robert Fennel

SECTION 1. It correctly adds a 5th exception to paragraph 2 of MGL 239, sec8A by saying that the tenant cannot raise habitational counterclaims if they cannot “produce a true copy of a bank statement evidencing the deposit of all withheld rent as such rent became due”.

SECTION 2. It asked for voluntary rent escrow (My Comment: We already have that right but just requesting it does not mean the judge will listen to us. We need mandatory rent escrow. )

MY COMMENT: This bill is not strong enough because of sec2. Also if they can simply deposit the rent in their personal account and not an escrow account who is to say that they would not take the money and run in the end.

 

Bill #626, William Brownsburger

Mr. Brownsburger  wants to give the right to landlords to demand rent escrow in the Notice to Quit. He expects the Court to maintain, to collect and manage the escrow account. The rent should be deposited with the Court within 5 business days of the Notice to Quit. If the tenant is on Section 8, then they would be expected to deposit their share only. We are supposed to file the Notice to Quit with the Court as well so that they know what to expect. This bill allows the tenant to deduct and repair as long as they have proper documentation, receipts, etc. This bill goes into great detail how if both tenant and landlord are not happy with what’s demanded or deposited they can ask for a hearing as to what the correct escrow amount would be, etc. If the tenant does not deposit the correct escrow amount then they cannot bring any counterclaims or defenses as far as the upcoming eviction is concerned but they can raise habitational counterclaims after their eviction.

A portion of the escrow funds may be given to the landlord for repairs if needed before the eviction. The final court decision allocates  what portion of the escrowed funds are to be given to the tenant and what portion to the landlord.

The standard 4 conditions are there explaining when the tenant can raise habitational counterclaims:

1) The Health Board established that such conditions constitute serious violation of the standards of fitness for human habitation and if landlord has received the Health Board report before  the tenant received  the Notice to Quit. (my comment – this is somewhat new and it is good)

2) If  the tenant did not cause  the poor conditions

3) if the premises are not a  hotel or motel, rooming house, etc..

4) if the conditions can be repaired without having the tenant to move out, etc

It adds a 5th condition : The tenant must have complied with all provisions of this section regarding deposit of past and accruing rent

MY COMMENT: Too long and it has one fatal flaw – it gives the tenants only one option by  expecting the Court to collect, manage and distribute escrow funds and with the current cuts to finding that is not a good idea. It is much better for the tenant to go and deposit the rent with a bank and just show proof of that. If they can’t show proof, then they can’t raise habitational counterclaims now or in the future. Also these additional hearings about the “correct” amount of escrow before the Actual Eviction Hearing can seriously tax the Housing Court system.

 

Bill #799, Bruce Tarr, Richard Ross, Ann-Margaret Ferrante, Michael Knapik

SECTION 1. It wants to modify not only sec 8A but also sec 1A to say that the landlord can bring an emergency action to recover possession upon showing that a significant damage to the premises is occurring or likely to occur.(My comment: That sounds OK)

SECTION 2. The standard 4 situations when the tenant CAN raise habitational counterclaims are : (My Comment : By the way we need to STOP using the double negatives in grammar and law because they are confusing and  cancel each other anyway and produce a positive. Why can’t we just use the positive? In other words, instead of saying “the tenant shall not be entitled to relief unless” we should simply say “the tenant can raise habitational counterclaims and defenses only when:”. It is much less confusing.)

1. If the landlord knew of the poor conditions before the tenant was behind with rent. (My comment: this is not going to work. We need something more like “the landlord knew in writing of the poor conditions, before the tenant was behind in rent…etc)

2. If the tenant, within 7 days of the typical rent payment date, deposited the withheld rent with the clerk to be held in escrow (My Comment : Again, this puts an expectation for Courts to act as escrow agents and that idea is Dead on Arrival because of lack of funds)

3. The Plaintiff does not show that such conditions were caused by the tenant, except that that Defendants shall have the burden of proof to show that they were not caused by them when the violations are appearing solely within the portion of the premises within their control.

4. The tenant shows that they did not deny access after a reasonable notice by landlord (My Comment: Yes, that is very much needed to be added)

5. The premises are not a hotel, motel, rooming house, etc with consecutive occupancy for less than 3 months

6. If the plaintiff does not show that the conditions complained of cannot be remedied without the premises being vacated, lead paint temporary vacancies excepted (My comment: again, there are double negatives here within double negatives. In fact I think there is a triple negative somewhere there. What are they trying to say? I think they are trying to say:  “The tenant can raise habitational counterclaims …..if the landlord shows that there is no need for the tenant to vacate the premises in order for the repairs to be completed, except for temporary vacancies required due to Lead Paint treatment , etc.”)

And finally this bill asks that the escrowed rent shall be given to the Landlord within 3 weeks after the poor conditions were fixed as long as the Board of Health certifies that the conditions have been fixed.

MY COMMENT: This bill needs some work. The language needs to be simplified, double negatives removed, #1 doesn’t require that the landlord is notified in writing. Also the landlord must wait for 3 weeks after the case is decided to get his money, etc.

Bill #1669, Chris Walsh, Cory Atkins, Bruce Tarr, Cleon Turner

This bill adds a 5th situation to the already existing 4 as to when the tenant can file habitational counterclaims – only after ” the tenant deposits with the clerk all rent due prior to the final disposition of the plaintiff’s action” (My comment: That is not going to work at all. We want the rent to be deposited every month when due not for us to go through  2 years of civil litigation and then 1 day prior to the “final disposition” the tenant shows that they have all the rent. What if they don’t have it? Would there be no final judgment then? It may work if it said “the tenant deposits all rent due prior to filing any habitational counterclaims and continues to deposit it every month as it becomes due”).

It also changes the last sentence of the 4th paragraph to make the deposit of rent in escrow mandatory after the landlord initiates the eviction suit. It asks the court clerk to be the escrow agent.

MY COMMENT: Final disposition is too late in the process and asking the clerk of the court to be the escrow agent may not be a good idea due to lack of funding.

Bill #1662, Cleon Turner

It modifies MGL 239, sec 2 instead of 8A (My comment: what about 8A, are we going to just leave it alone?)

It asks that this bill apply only to multi-family buildings with 5 or less residential units. (My comment: this is not good. Why the limitation?) It asks that any time that habitational counterclaims were filed they need to be filed by a verified answer or counterclaim (My comment: that is a good idea). At the time they file their Answer the tenant must deposit with the court all rent due or prove that is has been escrowed in a bank in the name of both landlord and tenant or shall file  bond for the rent. Such deposit or proof of escrow shall be waived by the court if the tenant files an affidavit containing  the Heath Board report or proof that the landlord was notified about the poor conditions. If they cannot do either of those things then they can’t claim any habitational counterclaims.

My COMMENT: Do you think that the kind of tenant who calls the Health Board in bad faith and in retaliation would care about lying and falsifying affidavits? I don’t think so.

Bill #1656, Cleon Turner, Stephen DiNatale, Cory Atkins, Denise Andrews, Bruce Tarr

same as Bill #1662 except it does away with the limitation that it only applies to 5 and less families residential

MY COMMMENT: same as the comment to Bill #1662

Bill #1131 , Bradley Jones, George Paterson, Bradford Hill, Elizabeth Poirier, Viriato DeMacedo, Donald Humason, Sheila Harrington, Paul Frost, Nicholas Boldyga, Kimberly Ferguson, Todd Smola, Kevin Kuros, Matthew Beaton, Daniel Winslow

SECTION 1. Adds to MGL 167D, sec 32A. Banks will be required to create an account for landlord-tenant disputes payable only upon the signatures of both landlord and tenant. The tenant can create the account without the landlord. The bank shall provide accounting upon the demand of either landlord or tenant .

SECTION 2. Modifies 239, sec 8A in the following manner:

Again they use double negatives. Double negatives in grammar equal a positive, people!

The tenant can file habitational counterclaims only if:

1. The Board of Health has found conditions which rise to the level of endangering or materially impairing the  health safety or well being of the occupants.

2. The tenant has notified the landlord in writing within 10 days following such certification by the Health Board and not less than 15 days before withholding any rent.

3. The landlord has failed to remedy  such conditions substantially within 15 days after receiving the written notice from  the tenant or such longer period as may be required, in the exercise of due diligence.

4. If the landlord fails to show that such conditions were caused by the tenant or the tenant fails to show, in areas solely controlled by them, that they were not caused by them.

5. The premises are not a hotel, motel, rooming house, etc with less than 3 consecutive months of occupancy.

6. The landlord fails to show that there is any real need for  the tenants to fully move out before the conditions can be repaired (this does not apply to temporary moving-out due to removing or covering lead paint).

7. The tenant proves that all the rent withheld has been deposited at or before the time when it was due either into an account maintained by the clerk of the court or an escrow account controlled by an attorney or into an escrow account set up under SECTION 1.

Legitimate expenses under MGL 111, sec 127L (Repair and Deduct Law) are not required to be escrowed  (My comment: it should say here that the tenant should be prepared to show receipts).

If a tenant receives rental assistance from the Government then only their portion of the rent is required to be escrowed.

The escrowed funds will be distributed per mutual agreement before trial or after trial as the Court directs. The Court has the option to distribute some of the funds before the trial if the landlord needs the money to repair or in cases of severe financial hardship.

MY COMMENT: I like this bill. It is written in a simpler way. It is not difficult to read even though the double negatives need to be removed and replaced with a positive statement so as not to confuse people.

It properly instructs banks on how to open and distribute escrow accounts. It gives the tenants not 1 but 3 choices – they can use the Court for the escrow or they can use a Bank, or they can give it to their lawyer.  

The a), b) and c) need to be replaced with numbers.

I like the fact that a Health Board report is required but is not sufficient to withhold rent. Their findings  must rise to a certain high level of endangering or materially impairing the  health, safety or well being of the occupants . In other words, the tenant cannot “withhold” the whole rent because of a missing window screen, for example, as it is now.

Now is the time to also say that we should remove the words “well being”  from here because they are already covered by “health” and “safety” and by themselves they don’t really mean anything or, rather, they can mean anything you want them to mean and because of that they have been abused in landlord-tenant law over the past 40 years. “You are threatening my well-being”. What does that mean? Is your well being threatened because I served your coffee too late or is it something more serious? On the other hand we all know what it means when someone says that their Health or Safety were impaired and endangered.

I also like that in this Bill the tenant cannot withhold rent or file habitational counterclaims if they do not notify us in writing about the poor conditions 15 days prior to withholding, time that we need to address those poor conditions. Right now there is no requirement that they notify us in writing and many tenants just lie on the stand they did when they never did. In the age of having email and text capabilities there is no excuse not to notify us in writing.

I like the fact the there is a time limitation on notifying us in writing – within 10 days after the Health Board report.

It should also say somewhere there that they must provide us with access to repair after a reasonable notice, otherwise they cannot file habitational counterclaims. On many occasions tenants call the Health Board and then prevent us from doing the repairs for as long as they can because they know that, since they are not required to account for the rent, every day we don’t do the repairs is money in their pocket and that was the real reason why they called the Health Board.

It also addresses many of the tenants’ concerns about due process. It has provisions that  the tenants are still allowed to repair and deduct according to MGL 111, sec 127L and that if they are on Section 8 for example they only need to escrow their usual portion of the rent not the whole rent.

It also allows the escrowed funds to be distributed by agreement which encourages settlement conversations and without the involvement of the court while it gives the court the flexibility to allow the landlord to use some of that money for the repairs or in cases of extreme financial hardship, etc.

This bill is thoughtful and I believe it covers everything that needs to be covered. It is not a coincidence that already 14 Reps and Senators support it and not many support the other bills. Fourteen is not too much but is a start.

Tell your Representative or Senator to add his or her name to support Bill H 1131.

For the reasons mentioned  above MassachusettsLandlords.com endorses Bill #H1131 with the following recommendations:

The Bill needs to be further simplified and written an a language that can be understood by the average landlord. My summaries above are a good starting point. For example instead of saying things like “the tenant cannot raise counterclaims unless” (2 negatives) say “the tenant can raise counterclaims if”(1 positive)  or “the tenant can raise counterclaims unless” (1 negative). Simplify, simplify, simplify…

Remove the words “well being” as they are too general and undefined.

Add a paragraph about tenants allowing us access to repair.

All Massachusetts Landlord groups need to get behind this one Rent Escrow  bill only…Bill H1131 is what we need. (click to tweet)

In closing, bills 626, 799, 1669, 1662, 1656,  have been given to the Committee on the Judiciary to decide while bills 1110 and 1131 were assigned to the Committee on Housing. I don’t know why some housing bills were assigned to the Committee on the Judiciary but, in any case, the bill we care about (#1131) is in the Housing Committee.

Passing Mandatory Rent Escrow in MA is not only good for landlords but also for Tenants, Housing Court, The Health Boards and the Taxpayers. (click to tweet)

Let's call the Health Board

Passing Mandatory Rent Escrow is the right thing to do because it not only decreases Tenant Retaliation Against Landlords and so it is clearly good for landlords but also it is good for tenants as well. It promotes rental housing stability.

Even the current MGL 239, Sec 8A states that if a judge decides that the tenant owes to the landlord more in back rent than the landlord owes the tenant for the poor conditions then the tenant cannot be evicted BUT ONLY IF they pay what they owe to the landlord within a week. In many cases because the rent was never escrowed but instead was simply spent by the tenant they don’t have the money needed to remain and they get thrown out. This modification to MGL 239, 8A will assure that money is waiting for them when they need it.

All of these unnecessary evictions can be avoided if there was a Mandatory Rent Escrow.

In addition, the passing of this Bill will dramatically decrease the case loads in Housing Court. Speaking from personal experience, I have been a landlord for about 15 years, I own about 50 units and the Health Board has been called on me about 8 times. In all of those cases it was not because I refused to repair but in retaliation to what I said or wrote to the tenant. In one case it was because I warned them that they play their music too loud, in another it was because I told them that I received complaints that they are using drugs, in another case it was because I sent them a warning letter about them being consistently late with the rent, in another it was because I sent them a warning letter that they must remove their pittbul as they were not allowed under the Agreement, in another it was because I told them that they are the ones who brought the bedbugs, etc, you get the point. They called the Health Board not because they were unhappy with the conditions (clearly they were living there for a year or two without any complaints) but in bad-faith and because they were trying to retaliate. And that is wrong!

Passing this bill will substantially decrease Housing Court case loads and the demands on the Health Boards in MA who will have more time to concentrate on legitimate calls. When landlords get some of their rent because it was escrowed and not spent they will also have more money to pay more taxes which is a good thing, right?

After over 35 years of enduring this poorly written law (MGL 239, sec 8A) it is time for us to update it and bring it into the 21st Century.(click to tweet)

 

 

Copy and paste any of the blogs into your email and send it as is or modified to one or more of the following groups of legislators. Keep in mind some of the legislators belong to multiple groups.

 

Here are the emails of All Legislators in Massachusetts

 

Here are the emails of the Joint Committee on Housing

 

Here are the emails of the Joint Committee on Judiciary

 If you want to read a specific Bill or to send emails to the Legislators who are representing your specific zip code, then you can find them here.

 

You can contact me on Facebook (http://www.facebook.com/massachusettslandlords) or follow me on twitter @malandlords. Sometimes I post and tweet things that are different from the posts I publish on MassachusettsLandlords.com.

 

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