The Certified Massachusetts Landlord™: Quality Assurance through Voluntary Certification

By Peter Vickery, Esq., Legislative Affairs Counsel

Introduction to the Certified Massachusetts Landlord™

Wouldn’t you like prospective tenants to know how wonderful you are? Great landlords want great tenants, so as a MassLandlords member – and, therefore, by definition, a landlord with more than the average level of attention to your business – you should be able to rely on the so-called law of attraction, which provides that “like attracts like.” But, as with so many laws, we sometimes have an enforcement problem. To address that problem and to help like attract like, we are creating the Certified Massachusetts Landlord™, a system of voluntary certification (not to be confused with licensing).

Certification Begins Fall 2019

 

Example LevelMeaning
cML Level One™ ProvisionalA commitment to use MassLandlords "Best Practices"; must become Level Two within 18 months
cML Level Two™ 2020A passing score on our exam; year of exam shown
cML Level Three™ 2020 - 2024Ten hours of continuing education credit over the last 12 months rolling; year of test and current year

In a nutshell, starting Fall 2019, members may choose to agree to certain best practices, pass an online test, attend continuing education events, and showcase this information on a publicly searchable site.

When would-be renters see that you have been certified through MassLandlords, they will be able to count on high standards and best practices. By jumping through the certification hoops, certified landlords may even be at less risk of costly litigation. And the program will help demonstrate that in this already highly regulated area of economic activity, lawmakers do not need to pass yet more laws for landlords to comply with.

This is something of a first. True, the National Apartment Association (whose local affiliate is the Rental Housing Association of the Greater Boston Real Estate Board) offers a variety of courses and credentials. But so far as we know, after searching the US Department of Labor’s Certification Finder database, the MassLandlords voluntary certification program for rental-property owners and managers will be the first state-based system in the country, one tailored to the unique legal landscape of Massachusetts.

Correcting Information Failure

MassLandlords members invest their time, money, and other valuable resources in achieving and maintaining high standards (e.g. by attending our Crash Courses and networking and training events) and would benefit from a simple way of making consumers aware of the fact. Prospective tenants searching for the best landlords need this kind of information to help them make a wise choice. Otherwise the landlord-tenant market suffers from a phenomenon known as “information failure,” which occurs when one party to a transaction does not know enough to make an optimal decision.

There are a few different ways to address the phenomenon of information failure. One way is through licensing; another is via voluntary certification.

Better than Licensing

Many occupations in Massachusetts (e.g. real-estate brokers) are regulated by state government. Others (e.g. mediators) are not. Certainly, for a mediator’s work to have the benefit of confidentiality and not be used in court proceedings the mediator must have completed 30 hours of training with an approved mediators’ organization, have four years of professional experience or be “accountable to a dispute resolution organization.” But this confidentiality stricture aside, you can just declare yourself a mediator and hang out your shingle.

In contrast, to become a real estate broker you have to pay $500.00 to sit an exam to obtain a license and, to remain licensed, complete six hours of continuing education every year.

Nationwide, approximately 30% of workers are in jobs that require a license. Here in Massachusetts, the Division of Professional Licensure regulates no fewer than 167 trades and professions. We do not want to make it 168.

The rental-property business is already hedged in by thicket of statutes, rules, and caselaw, and licensure would only increase costs and decrease profit margins. So rather than licensing we are aiming for a system of voluntary certification that assures high standards through regular reviews and continuing education without the bureaucracy, expense, and inflexibility of a government agency.

Readers may be familiar with the Better Business Bureau (BBB), whose members commit to abiding by the organization’s eight Standards for Trust and agree to monitoring for compliance.

Although the Certified Massachusetts Landlord™ program will feature high standards and regular monitoring, we are not modeling it on the BBB, whose fee-based dispute-resolution component makes some business owners leery. Instead our program will be more like that of industry-specific organizations such as the New Hampshire Landscaping Association, which requires work experience, an exam, and continuing education, and the Institute for Advertising Ethics (IAE), which provides certification for advertisers who subscribe to the Institute’s nine principles and practices.

In some ways it will resemble the optional program the IRS established for professional employer organizations (PEOs). Qualifying PEOs that opt in by paying a high bond and subjecting themselves to annual IRS audits are allowed to provide their customers with more tax-related services than they would otherwise, e.g. becoming completely legally liable for the customer’s withholding, reporting, and payment responsibilities, so as to give their customers greater peace of mind.

Don’t worry: MassLandlords’ certification is not going to involve supervision by the IRS! But we like the core idea of rewarding business owners who allow vetting to ensure that they are abiding by high professional standards.

To make the Certified Massachusetts Landlord™ program more useful to members and the public alike, our program will include the following features: it will entail three tiers of certification with digital decals and lapel pins, plus, for members who elect to make themselves visible online, a publicly searchable directory.

Ensuring Value: What a Certified Massachusetts Landlord™ Will Do

In order for the public to trust that our program reflects and embodies genuinely high standards, we will need to protect the brand. That means adopting some aspects of the franchise approach.

With a famous brand, you know what to expect. For example, franchisors Roto-Rooter, Subway, and the UPS Store (to name just three) all use binding agreements to ensure that the people who operate businesses using their name do not dilute the value of the trademark or tarnish the brand in any way. If one franchisee earns a bad reputation, this affects not only that individual company but all the other franchisees as well. Franchisors protect themselves and all their franchisees by spelling out thoroughly the thou-shalts and thou-shalt-nots, and the process for terminating the relationship in the event of a breach.

Because that contractual model has been proven to work well in a variety of commercial spheres, we will use that core characteristic in our voluntary program. So MassLandlords members who wish to apply to be a Certified Massachusetts Landlord™ will need to sign a contract.

To be cML Level One™, for instance, members will have to agree to implement a set of best practices. For instance, “I agree to inspect each unit at least annually and fix everything that’s broken, leaking, or loose.” Not only is this a good thing to advertise, but also this is a good business practice. The levels are designed to be achievable and worthwhile.

cML Level Two™ will involve passing a multiple-choice exam. For instance, “A landlord has how long to return a security deposit after occupancy ends? a.) 14 days, b.) 30 days or one full rental period, c.) 30 days, or d.) until the repairs are complete.” If you aren’t sure, you can take our Crash Course, which will prepare you for the exam. (Or in this case, read to the end for the answer.)

cML Level Three™ will involve meeting continuing education requirements, ten hours per year including networking time. We can’t guarantee networking time is well spent, but we know that we talk to one another, share plumber contact details, and talk about all manner of issues even outside of the formal presentation. Many of our members will greatly exceed Level 3 requirements for event attendance. And many of our event attendees are the most knowledgeable in the industry.

Brand enforcement will be simple. If a certified member fails to stick to the contract for their level, MassLandlords will revoke that level of certification. The contract will provide an opportunity to fix any problems before revocation, and will offer due process to make sure that nobody loses their certification without having had a fair and impartial hearing. But the bottom line – which is necessary to protect the value of the credential – is that non-compliance will lead to de-certification.

Members will be able to adopt the level of certification that fits their business and goals. You will be able to remain a Level One indefinitely, or not certify at all. The program will remain voluntary. We hope all will choose to participate.

A Certified Massachusetts Landlord™ will know about maintaining their property, providing good service, and preventing injury. Do you know what temperature your hot water must be?

Certified Massachusetts Landlord™ Conclusion

We believe that our voluntary certification program will satisfy a clear demand from members for a way to advertise their high standards. That has certainly been the message our Executive Director has received after describing the concept at member meetings across the Commonwealth. At time of writing, the Board of Directors have approved the three-level certification described here, with the ability to add on additional levels in the future.

We will continue drafting the program components over the summer and welcome your suggestions, especially on the set of best practices Level One landlords will be following. Even before we get to beta-testing, we will have sought input from experienced members and devised a way to evaluate the program’s effectiveness as it develops. We are confident that with the benefit of your wisdom, it’s going to be great! And the Board of Directors are sure that this new initiative will greatly further our mission to create better rental housing and advocate for better laws.
(Oh, and the answer to our security deposit question? It’s “c”, 30 days!)

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