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Time for meaningful legal reform

Posted by Rona Fischman May 17, 2012 01:41 PM

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Attorney Richard D. Vetstein brings you the second part of his discussion. Are you ready to take action to support these pending bills?

The vast majority of the laws protecting tenants were passed in the 1970’s when rental housing was far more problematic than it is now in 2012. Unfortunately, these draconian laws disproportionately hurt the small property owners who own over 80 percent of the rental stock in Massachusetts. Laws which make investing and managing rental property hurt the economy and result in higher rents. Due to political pressure from tenant activists and liberal groups, lawmakers have been reluctant to level the playing field.

There are several bills pending at the State House which will provide landlords with more incentive to own rental property in Massachusetts, starting with a rent escrow bill.

Rent escrow
Massachusetts is one of the minority of states which does not have some form of rent escrow law. The need for one is absolutely critical because without it landlords incur large losses when the tenant’s defensive claims of “bad conditions” turn out to be minor, nonexistent or, worse yet, the result of intentionally inflicted damage to the property by the tenant in order to live rent-free.

A mandatory rent escrow law would require any tenant who is claiming rent withholding to pay the withheld rent to a local court month by month until code violations are repaired. After repairs are done, either the landlord and tenant agree on how the escrowed rent should be divided, or a judge orders a fair settlement. In most cases, the owner will get back most of the withheld escrowed rent. But the most important impact of a mandatory rent escrow law is that those nonpaying tenants who do not escrow can be promptly evicted for nonpayment of rent. Although nonpayment evictions will still take about three months, and owners will lose about three months of rent, much-longer-delayed evictions and the free rent trick will be stopped. This should be a no-brainer.

Security deposit reform Presently, the security deposit law provides mandatory triple damages and payment of tenants’ attorneys’ fees for a violation however minor. The law should be reformed to provide a safe-harbor and discretionary penalties for when landlords make a good faith effort to comply but get caught up in the procedural mess, like for example if they put the deposit in a savings account instead of a special deposit account.

Remove automatic possession for tenants
Presently, the law is drafted so that if a tenant prevails on any number of claims for property conditions, etc., they most likely cannot be evicted. This is especially unfair in the tenancy at will context where the landlord does not need any reason to evict a tenant. The result is that tenants get free passes and occupancy for life as long as they can dig up a counterclaim or two. This needs to be changed.

Property owners, if you are tired of getting man-handled in Housing Court, lobby your elected officials! Here is a list of all pending rent escrow and landlord-tenant reform bills up at the State House. Senate Bill 779 is the major piece of legislation to bring to your legislator’s attention.


This blog is not written or edited by Boston.com or the Boston Globe.
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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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