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The LandLord Advocate Aug 2010

Lead Article:

Know when to fight the fight.

You’ve all got tenants, residential or commercial, that make your life complicated. Their demands are unreasonable. Their timeframes are accelerated. Their expectations reach far beyond the edges of your negotiated lease deal. Sometimes, one of these tenants steps out of line. I don’t mean they make crude remarks as they walk away from a face-to-face meeting. I mean they take advantage of you and their relationship with you and they default under their lease in a major way. They swing the pendulum of power in the lease relationship all the way to your side of the arc, you catch it there, and you must now decide how you want to swing it back – let it go, give it a nudge, or hurl it like a major league pitcher back at them. STOP.

Now is the time you want to go into slow motion. Now is the time to really take stock of the situation. Now is the time you want to make sure you have good advice on all of your options. Because, now is the time where you will avoid or create unintended consequences for the rest of your life as a landlord. I know, that sounds extreme, but follow me for a minute.

Perhaps you will agree that your options at this point are the greatest they’ve ever been since your relationship started with this tenant. The lease that once completely dictated the relationship with your tenant can be set aside and you are the one in control. The tenant may not even realize the balance of power shift that has occurred, but you do, and now have something you didn’t have before with this obnoxious tenant – options outside the lease.

Perhaps you will agree that each of the various options you now have will have direct, intended outcomes, which, should you pursue them, will give you considerable benefit, while putting the tenant in their place. The tenant has taken advantage of you and your conscious decisions to let things slide and cumulatively, the tenant has put you at your wits end. They’ve now done something that allows you to return the volley. And, you are more than ready to do it.

And, perhaps you will agree that with all of these options facing you, it may benefit you to consider them in the full context of the circumstance with someone who is not so emotionally invested in the circumstances as they stand. You would not want to make a rash decision that has negative implications for you in the future.

So, what you are really deciding at this point is whether this fight is worth fighting. Take yourself, or get someone to help take you, out of the situation emotionally. Look at it as if you were a third party who knew nothing of the history between you and the tenant. Now, evaluate your options against the following criteria:

  • If I win this battle, what will be the positive effects on my relationship with this tenant?
  • If I win this battle, what are the positive effects on my company’s future operations?
  • If I win this battle, will I see a positive return on my investment of time and money?

Now, ask the same question but replace “win” with “lose” and replace “positive” with “negative.” Lastly, ask yourself “If I win this battle, what are the negatives consequences of fighting it?”

You may notice that all of these questions focus on the business aspects of the relationship. Whatever battle you decided to initiate, you should consider the pros and cons from the business perspective. Make sure your shield the analysis from your emotional involvement in the relationship. Getting professional advice can help you evaluate whether your analysis is tainted by the hair on the back of your neck that stands up every time you see the tenant. Then make an educated decision as to which battle you want to wage and what you want out of it. If you do this, you will be better equipped to fight the fight.

If, after your analysis, you conclude that the only reason you want to fight the fight is because this particular tenant will be your opponent, consider the following possible outcome. You will enjoy starting the fight, you will grow tired of the fight about midway through, and you may regret that you started it long before it’s finished. And, it will cost you a lot more money than if you fight the fight after you’ve completed a cost benefit analysis.

There is a time to fight and a time to wait. Make a good decision and know when to fight the fight.

“Do you accept Section 8 vouchers?”
YES.

Here is a simple way to avoid the expense and countless hours of frustration and emotionally-draining time spent defending yourself and your company from a Connecticut Commission on Human Rights and Opportunities (“CHRO”) complaint when it comes to Section 8 programs – always answer “yes” (no more, and no less) when asked by a prospective tenant if you accept Section 8 vouchers, and simply move directly to the application process.

Landlords and property managers are in both a product and service business of providing housing, and our experience is that the professionals in this field are very caring individuals who try to “do the right thing” for their tenants and prospective tenants. They do not like seeing prospective tenants spend time and money in a pre-ordained losing battle to get an apartment when they have experience with “Section 8” being unwilling to approve the required rent.

Section 8 programs generally have limits on the maximum rent that they can approve, and landlords are not obligated to reduce their rent demand to those levels, so many landlords whose rent exceeds the limits often have no Section 8 tenants. However, this is because the Section 8 programs are unwilling to pay the monthly rent that those landlords can demand in the marketplace, not because the landlords refuse to accept Section 8 vouchers. This may seem obvious to those landlords and other law-abiding members of the industry, but it is not to the prospective tenant or CHRO, who are wary of the reality that some landlords try very hard to dissuade (or outright deny) a Section 8 voucher recipient from applying to become a tenant for discriminatory reasons.

Landlords and property managers should constantly remind themselves that their job is to provide housing at the monthly rent amount that they have decided to seek in the marketplace to prospective tenants who otherwise pass their non-discriminatory application and tenant screening process. They must provide access to that housing to those who can pay that rent on their own or through a Section 8 program that approves and subsidizes the demanded rent according to the Section 8 program’s rules and regulations.

Landlords and property managers do not work for any Section 8 program, and need not spend any time or energy trying to help prospective tenants navigate the system. In fact, Section 8 program administrators often refer to the voucher holder as the “client,” and view the landlord as a vendor with which it contracts to provide subsidized housing for its client. Let the Section 8 program staff assist a prospective tenant through the complex web of Section 8 requirements.

Moreover, as discussed in the accompanying article, there are two (2) different Section 8 voucher programs operating independently of one another in Connecticut – a federal and a state program – each with its own rules and regulations, which are not static. As time passes, things can change, and change quickly, in one or both programs.

For example, as discussed in last month’s newsletter, the federal Department of Housing and Urban Development (“HUD”) is looking to consolidate the multitude of subsidy programs into the Section 8 model. This does not bode well for the low-income public housing model that has existed for decades, where the federal government owns and operates housing complexes. Instead, the government is indicating that it wants to be out of the owner-operator business, and instead just provide the housing subsidy to private landlords who otherwise handle the ownership and operating requirements. From a practical standpoint, this will mean that HUD and, by extension, the local housing authorities that administer the federal Section 8 voucher program, will have the funding and/or program flexibility to approve higher monthly rents to allow Section 8 voucher recipients to penetrate more of the local housing market. Thus, your long-standing experience of not having Section 8 voucher tenants may change.

Landlords and property managers should contact their landlord attorney if they find the answer “yes” (no more, and no less) approach unsatisfying or unacceptable from a customer service perspective, so that their more detailed answer to the prospective tenant’s question does not land them under a CHRO complaint or discrimination lawsuit by a prospective tenant.

A big heart that caused a huge problem.

Our parents always wanted us to “learn from their mistakes.” As kids, exactly what that meant was somewhat elusive. Now with kids, and being the parent, I sort of get it. So, in true parent-style, how about we learn from someone else’s mistakes – another landlord, perhaps?

A landlord recently approached me with a problem. Guess it goes with the territory. He had a problem tenant who recently moved out of one of his apartments. Unfortunately, that is the only good news in this story. It turns out that the tenant is an educated tenant; perhaps even reaching the level we sometimes call the “professional tenant.” You know the ones. They often act as though they know more about managing property than you do, spouting off “state laws” and public policies like they just left a joint legislative session in Hartford. The “professional tenant” actually knows just enough to make your life miserable and usually just when you least expect it. The tenant in this story is a “professional tenant.”

The tenant moved into the unit May 2008, giving the first month’s rent and security deposit before taking occupancy (guess there was a little more good news.) And, that’s where it all started going sour. As we talked, the landlord related his experience over the last two years as the agony of defeat crept across his face. Month number 2 – he received a letter from the tenant requesting an extra two weeks to come up with the rent. Thus began the monthly dance you’ve all joined – the first of the month comes and goes; a note from the tenant saying the rent will be late; your response that you’ll give them this exception once; the rent shows up toward the end of the month; repeat. This dance went on for nearly 24 straight months. But, it wasn’t your ordinary dance.

The tenant had some fancy moves throughout the show:

  • There was a divorce and alimony dispute thrown in.
  • There was a contract job the tenant completed for a public agency where the payment was not released.
  • There were numerous post-dated checks that were intercepted by a money order and note requesting that the check not be negotiated.
  • There was a custody battle that flared up and the threat of an appeal of the “final” divorce.
  • There was a past tax obligation that took priority several months over paying the rent.

You get the picture – or maybe you’ve got one of your own The landlord has a giant golden heart. He politely and gentlemanly acquiesced each time the tenant asked for another accommodation of his soap opera situation, still to this day, believing he did the right things. As a human, perhaps. As a landlord, it has come back to haunt him.

Just before the tenant vacated the premises, the tenant sent the landlord a letter. In it, he spelled out any number of complaints that, to date had never been raised with the landlord. The tenant indicated they would not be paying the last month’s rent based on these various issues and that the landlord could expect another letter after they vacated concerning the additional amounts the tenant believed they were owed. The landlord then committed the first deadly sin for a vacating tenant – he failed to properly account for the security deposit. So, thirty-one days after their departure, the tenant writes to the landlord demanding double the security deposit and other amounts based on the conditions of the apartment, only recently identified for the landlord.

The landlord’s shoulders, as he shared his story, began to droop, his chin noticeably reaching for his chest. His words grew softer and longer. The pauses between his sentences extending for what seemed an eternity. “What can I do?” he asked, with what one might have thought was his last breath. We talked a while longer. I found some light at the end of this long dark tunnel he was traveling and we came up with a plan that would allow him the time and space to distance himself from this gut-wrenching experience. He had spent the last two years being human to his tenant. He was gracious, kind, caring, and respectful. He experienced his tenant’s situation with compassion and offered his goodwill and conscience as a pillow to soften the tenant’s fall. He was offered a dagger in the back in return.

There is but one lesson for landlords in this all too familiar storyline. The only way to prevent this tragedy – the only way to prevent “professional tenants” from leeching the lifeblood out of your livelihood – is to give them no wiggle room. I often tell landlords, regardless of how many chances you want to give your tenant, expect a judge to give them one more. So, if you are inclined to give them the benefit of the doubt ONCE, let them use the judge’s one chance. You won’t earn any mileage from all the humanness you exhibited over the last two years. The judge won’t take your compassion, agree that was enough, and give you immediate relief. Give them the one chance that the judge will offer, and give it to them the first time they step out of line. Recognize that the tenant’s problems are not yours and they you and the judge will give them one chance to right the ship. After that, it is time to find another harbor. This way your big heart won’t create a huge problem.

CT landlords MUST participate in Section 8 voucher programs – even the VOLUNTARY ones.

Landlords often ask us how the Section 8 voucher program can be mandatory on Connecticut’s residential landlords when the program itself is, by express federal regulation, voluntary. For example, Minnesota’s Court of Appeals recently held that residential landlords are not required to accept any federal Section 8 tenants, citing the applicable federal regulation. Moreover, it found that a landlord’s refusal to participate in the federal Section 8 program for a valid business reason is not a violation of the Minnesota’s anti-discrimination statute governing residential housing. The court indicated that a landlord’s unwillingness to be subject to the federal Section 8 program’s (sometimes onerous) contractual, inspection, and/or annual rent increase application requirements would be a valid business reason allowing it to reject all Section 8 voucher holders without any legal exposure to a discrimination claim.

Why does not the same logic apply to Connecticut?

First, it does – Connecticut landlords are not obligated to participate in the federal Section 8 voucher program as a matter of federal law; rather, Connecticut state law has made participation in the federal program mandatory. While this may sound weird, it is an excellent example of what it means to live in a union (the United States of America) of separate and independent governments (the states). Although the federal Constitution and statutes are the supreme law of the land under the federal Constitution’s Supremacy Clause, it does not automatically follow that federal law defines the full extent of our legal duties when it comes to federal programs. Indeed, unless the federal law occupies the field by overwhelmingly defining the rules of the game, a state can regulate and establish additional rules regarding an area in which a federal program operates, as long as the state law does not undermine the federal law’s purpose.

Here is the kicker – each state court system decides, upon review only by the Supreme Court of the United States, whether the federal law occupies the field, or “preempts” such state regulation. In two (2) central cases, the Supreme Court of Connecticut has held that federal law does not preempt state law in the arena of subsidized residential housing, and has made Connecticut landlords’ participation in that program mandatory. It appears that no Connecticut landlord has challenged these rulings to the U.S. Supreme Court.

Interestingly, the applicable state law does not say that landlords must participate in the federal Section 8 program. Rather, it says that they cannot discriminate based on a tenant’s lawful source of income, which the courts have defined to include housing subsidy programs like a federal Section 8 voucher, even though the tenant does not receive any income from the Section 8 voucher. While this may also sound weird, it is a commonplace occurrence – the state legislature often uses words and phrases that are vague or ambiguous, and the courts are required to sort out the legislature’s intent.

Second, a state can mandate that landlords participate in that state’s own social service programs. Connecticut is one of the few states in the country that has its own state Section 8 voucher programs, called the Rental Assistance Program (“RAP”) and Temporary Rental Assistance Program (“T-RAP”). RAP and T-RAP are modeled after the federal Section 8 voucher program, but are not identical to it. RAP and T-RAP are identical to one another, except that a T-RAP voucher lasts for only one (1) year without any possibility of extension or renewal.

The RAP and T-RAP programs fall within the purview of the State of Connecticut Department of Social Services (“DSS”). DSS has contracted with J. D’Amelia & Associates to manage and administer this program, which has in turn subcontracted with many local housing authorities to divide the state into several sections for administration purposes. This explains the often-cluttered letterhead on state Section 8 voucher program correspondence to landlords.

Landlords and property managers may have valid business reasons why they would not want to participate in the Section 8 programs, as discussed above and in the Minnesota Court of Appeals decision. They may view the federal program’s “voluntary” status as indicative of Congress’ perspective that the Section 8 program must adapt and change to meet the marketplace to provide the best possible housing for low-income individuals and families, rather than force the marketplace to adapt and change to it. For these landlords and property managers, Connecticut’s law undermines those business goals and the law’s fundamental objective.

Connecticut landlords and property managers can address these disconnects by becoming more engaged and involved in state and federal legislative activities, as discussed in our previous newsletter. This can include joining organizations that represent their industry, which can consolidate the limited resources of many to create an effective and focused effort to address such issues. Moreover, landlords, property managers, and their organizations can turn to landlord attorneys who practice exclusively in this field to translate the specific industry goals and needs into effective lobbying and legal efforts.

Quick Tip:

Forgiveness isn’t always better than permission.

We’ve all heard the saying “It is easier to ask for forgiveness than permission.” And, in many instances that is in fact the case. However, it doesn’t always work out that way when the forgiveness you seek has something to do with the legal system. Some of the most innocent actions by property managers have turned into some of the most costly fights when someone challenges their legality.

If you’ve attended one of our Fair Housing seminars, you’ve heard us talk about the disability housing provider who lost a case for disability discrimination. Or, you’ve seen or heard about the patient landlord whose plea for equity from a court is met with yet more accommodation to the offending tenant. The point here is that each of your actions will have consequences. Question is, which ones are worth vetting before you move?

We are strong advocates of taking action to make your property a better community for your residents and a more prosperous business enterprise for you. We are equally as passionate about making sure your actions don’t backfire and cause you more pain when you are forced to ask for forgiveness.

Find out what your options are, evaluate them against your risks – both business and legal – and then act. You won’t need to ask permission to act, and you increase the likelihood that you won’t need forgiveness.

Quick Tip:

Beware the unauthorized occupant.

We are hearing more frequently from clients and prospective clients about problem occupants, who landlords and property owners generally call “unauthorized occupants” or simply “problems,” without distinguishing among two very different types:

  • those where a lease is (or was) somewhere in existence, versus
  • those where a lease never existed.

Why is drawing this distinction important? Because each group presents landlords and property owners with very different legal rights and responsibilities.

Connecticut’s landlord-tenant statutes cover the first group and require the landlord to undertake a legal process before removing them from the premises, such as a summary process (eviction) case. This group includes the unauthorized occupant (of a tenant on a lease) of whom the landlord was aware, but took no steps to prevent him/her from establishing a residence in the unit. In sharp contrast, the second group has no such rights, and the landlord or property owner can address them with self-help or by calling the police. This group includes the social houseguest, trespasser, and robber.

What about the myriad of other situations like the tenant’s live-in boyfriend or girlfriend, or the tenant’s family member that lost his/her housing and moved-in with the tenant? How about the fiancé of a deceased property owner who lived with the decedent, or the adult child who refuses to leave his/her parents’ home?

The legal test is whether the person has “actual possession,” and the law does not automatically make an occupant an “actual” possessor. This area of housing law is not well developed, because historical norms of behavior kept situations involving the second group from becoming court cases. For example, people generally left when they did not own or lease the unit, and the landlord or property owner told them that they were no longer welcome.

However, many landlords and property owners will tell you that the trend over the last ten (10) years has been in the opposite direction, with the unauthorized occupants forcing the landlord to take legal action or “give-up,” which mirrors our experience with landlords and property owners. Accordingly, it is becoming critically important for landlords and property owners to be aware of the distinctions between an actual possessor and just an occupant with no possession rights, so that the law develops accurately and favorably for property owners.

Connecticut’s landlord-tenant law is highly favorable to landlords who engage counsel well versed in its requirements and nuances, but it should apply to only those people who qualify as tenants or occupants with rights under the governing statutes. If you face unauthorized or problem occupants, contact your landlord attorney to determine your rights and the most effective and efficient method of removing them from your property.

DISCLAIMER:

The reading of this newsletter does not form an attorney-client relationship. The contents of this newsletter are for informational purposes only and do not constitute legal advice. Nothing in this newsletter is intended to imply or predict the outcome of any legal matter that you may be considering or be involved in. The Landlord Law Firm makes no warranties of any kind regarding the information contained in this newsletter.