Rent Cancellation bills 191 H.4878 HD.5166, S.2831 SD.2992

There is a bill before the legislature that represents an existential threat to residential real estate rentals:

H.4878 HD.5166 An Act to guarantee housing stability during the COVID-19 emergency and recovery

H.4878 HD.5166 and its sister bill S.2831 SD.2992 would:

  • Cancel, not postpone, cancel rents for the period March 10, 2020 onward until 12 months after the end of the state of emergency (whenever that is);
  • Put the cost of a public health emergency on the backs of mom and pop businesses;
  • Enact just cause eviction rent control, outlawing rent increases, hindering major renovations, and creating permanent tenancies; and
  • Enact eviction sealing, making it impossible to screen tenants adequately, and unexpectedly creating secret courts open to bribery and corruption.

The bill is unimaginable in its shortsightedness and political opportunism. The only crumbs for housing providers would be (1) paltry mortgage forbearance of as little as six months for some owners, and (2) an empty promise of a future fund to raise donations for us.

We must stop this ludicrous bill, which has already embarrassingly attracted over a quarter of the legislature as cosponsors. We could instead accomplish every legitimate objective with our Fair and Equal Housing Guarantee via Surety Bonds.

We have prepared detailed talking points opposed to H.4878 HD.5166, which we need you to use at the earliest opportunity by calling Reps and Senators:

MassLandlords urges all owners and managers to contact their Reps and Senators to oppose the bill using the talking points below. If you have questions before taking action, reply or call 774-314-1896 and leave a voicemail, we will help you prepare.

File Written Testimony By 9am July 28, 2020

Your Rep & Senator Both Want to Hear from You on H.4878 HD.5166 and SD.2992

Legislators depend on a connection with their constituents to get reelected. If they aren’t aware of what’s good and bad, they will make bad choices. You may be the only person who is calling them about an issue. Every voice matters.

1a. Find your Rep and Senator

https://malegislature.gov/search/findmylegislator

First find and call the rep and senator where you live. If you have time, also call where each property you own is located.

https://malegislature.gov/Bills/191/HD5166

Click the bill link to see if your Rep and Senator sponsored the bill.

1b. Recommendation:

Prepare to have the conversation in a flexible order; make notes to hit all your points.

2. Call and Start by Asking Permission to Share Your Viewpoint:

You probably will be put through to the legislator’s aide. This is OK. The aide will tell the legislator what you said. Adjust these to reflect reality:

1. “I’m a MassLandlords member/participant…” or “I’m a landlord…” “…living/working in your district.”

2. “I’m ________ (insert your own adjective but do not swear: concerned; outraged; incandescent with rage) about H.4878 HD.5166 An Act to guarantee housing stability during the COVID-19 emergency and recovery. Can I tell you about it?” (listen for their response; if it’s a bad time, schedule a call back.)

3. Acknowledge their Current Position:

If they sponsored: “This is something you have cosponsored. I’m asking you to reconsider.”

If they did not sponsor: “Please I’m asking you to oppose this legislation.”

Always: “I have 5 reasons why this bill is ruinous.”

4. Share Five Official Talking Points.

1. Say “One:” This bill would cancel my rents. Not postpone them, cancel them, until Aug 2021 at the earliest.

a. There is nothing that requires tenants to pay rent during the emergency.

b. It specifically removes my ability to recover rent in court or by mediated agreement afterwards.

c. In order to collect rent, I would have to prove they can pay.

d. This is impossible. I’m not a private detective! I don’t have access to their bank accounts!

e. COVID-19 is a public health emergency. The public should pay, not housing providers.

f. If the public doesn’t pay rents, the knock-on effects will sharply curtail municipal budgets. For-profit landlords pay real estate tax that funds towns and cities.

g. Say, “that’s one.”

2. Say “Two:” The only cost reduction for housing providers is six to 12 months of foreclosure moratorium, depending.

a. It only apples to owner-occupied properties.

b. Rule of thumb, the mortgage is only half the cost of operating: I still have to pay real estate taxes, insurance, repairs, keep the place up to code, pay for extermination, mowing, utilities, etc.

c. How can I pay for all this with no rent?

d. If I take the mortgage forbearance, I have to give up rent even if I can prove the tenant can pay!

e. Say, “that’s two.” (Keep it moving.)

3. Say “Three:” There is no public funding in the bill.

a. Keeping people housed is necessary for the public interest. The public should pay, not put it all on me.

b. There’s a placeholder, but there’s no mechanism to generate funding.

c. Whatever funding may appear would apply to small landlords (leaving out half the housing) and nonprofits (who pay no tax).

4. Say “Four:” The bill creates “just cause eviction rent control”

a. Raising the rent will be illegal and punishable even if my rents are already below market, and I didn’t raise them because of COVID-19.

b. Renovation will be illegal. Sometimes buildings need to be sold vacant or tenancies need to be terminated to gut the building, repair major structural defects, eliminate dangerous plumbing and electrical nonconformances.

5. Say “Five:” The bill creates eviction sealing.

a. There’s already a process for the courts to seal someone’s record.

b. Eviction records are relevant for landlords to see. We have an obligation to our current renters to welcome new residents who will be respectful, equally contributing residents.

c. We’re in danger of having secret courts in Massachusetts. You probably didn’t notice, but the Boston Globe sued the Supreme Judicial Court for access to show-cause hearings, and they lost. If we can’t see what happens in the courts, we pave the way for corruption and bribery.

5. Share your Personal Story

Example: “So that’s my five points, let me just add: I’ve been in business 12 years. I run a good property. This bill will ruin me. I’ll sell out to condo converters or a slumlord, I don’t care who buys, I can’t operate free housing for years.”

6. Listen. Talk. Finally ask, “I’d Like to Ask You to Support our Alternative:”

“A Fair and Equal Housing Guarantee via Surety Bonds does everything anyone could want, no one will get evicted, but it won’t bankrupt me or the Commonwealth. The bill isn’t filed, but the text is online, anyone could be first to file it:”

Recommend they “Google ‘MassLandlords Fair and Equal Housing Guarantee,’ or get an email, share our link:

https://masslandlords.net/policy/fair-and-equal-housing-guarantee-via-surety-bonds/

“I’ve taken enough of your time, but in a nutshell, it’s just a guarantee of rental housing paid out of future tax revenue. And it was created with lots of input from landlords and renters, which is the way housing policy should be.”

“Please oppose/reconsider your sponsorship of H.4878 HD.5166. Thank you.”

7. Fill out our Response Form:

https://masslandlords.net/grassroots

8. Forward these talking points

You probably know a housing provider who hasn’t been paying attention. Now is the time to get them to pay attention.

9. Contact the Housing Chairs etc.

Due to the lack of formal hearings during the COVID-19, it is important if you still have energy to also call or email at least the chair and vice-chair on both the house and senate side of the Joint Committee on Housing. Note that anger or hostile communications with the committee will hurt our cause. Please be careful. Only take this step if you still have energy to both call and be restrained:

Following are questions pertaining to H.4878 HD.5166 from the Surety Bond Webinar Recorded July 8

H.4878 HD.5166 is the renter advocates’ alternative to surety bonds. Isn’t their “rebuttable presumption” nonexistent as a reality?

We agree with this assertion. The “rebuttable presumption” of H.4878 HD.5166 means that unless a landlord can prove nonpayment was not due to COVID-19, the renter need not pay rent. In practice, this means no renters will pay rent. The MassLandlords Fair and Equal Housing Guarantee via Surety Bonds does have some moral hazard associated with it, but nowhere near the “rebuttable presumption” level present in H.4878 HD.5166. We have worked hard to make sure rent is paid by the renter when possible.

Which rental units would be within the scope of H.4878 HD.5166 and which outside its scope? What does H.4878 HD.5166 provide regarding the covered unit.

All rental units would be within the scope of rent cancellation, just cause eviction, and eviction sealing. Only some rental units would be within the scope of the placeholder fund to cover owner costs. Roughly, priority will be given to nonprofits and owners with 15 units or less. The details of the fund were not part of H.4878 HD.5166.

In H.4878 HD.5166, there is no provision regarding people trying to sell their properties and deliver the property vacant.

Correct, just cause eviction regulations as proposed for Massachusetts remove the ability to renovate or repurpose a structure.

If rent payments are being canceled, would mortgage payments on the rental properties be canceled as well?

No, that’s a major shortcoming of H.4878 HD.5166.

Rent Cancellation Bill Claims to Promote Stability, but Leaves Landlords Out of the Discussion

By Kimberly Rau, MassLandlords writer

This was the image used on Facebook to promote a July 2 briefing on HD5166. Though supporters of the bill say that it is not rent cancellation or a form of rent control, the image selected includes clear proponents of the latter. Source: Facebook

Massachusetts Representatives Mike Connolly and Kevin Honan have co-sponsored a bill that is intended to provide stability to renters, homeowners and landlords during the coronavirus pandemic and following recovery period. It is titled the Act to Guarantee Housing Stability During the Covid-19 Emergency and Recovery, and as of its publication, there are some points in this bill that need further examination.

The full text of the bill is available here, but some of the main points for tenants include:

  • a ban on evictions for missed rent from the start of the covid-19 pandemic and extending 12 months past the end of the state of emergency;
  • “just cause” eviction protections extending 12 months past the end of the state of emergency; and
  • rent freezes at pre-pandemic rates for 12 months.

For landlords, the bill allows for:

  • if owner occupied, a ban on foreclosures for both the time of the pandemic and 12 months following the end of the state of emergency;
  • the establishment of a recovery fund to help property owners who lost income during the pandemic, with priority given to working-class, owner-occupant and non-profit landlords (as well as landlords who own 15 or fewer units); and
  • the establishment of a governing board to oversee the administration of the recovery fund.

This bill, which was drafted without input from landlords or landlord advocacy groups in Massachusetts, is problematic in the ways it will negatively affect both landlords and tenants. Peter Vickery, an attorney who works with MassLandlords, composed a lengthy testimony opposing several aspects of the bill, which we will highlight here.

Rent Cancellation

Section 2 of the bill calls for rent cancellation, that is, tenants would not have to pay landlords for missed rent, unless the housing provider could prove to the courts that the reason their tenant did not pay was in no way linked to “the conditions and/or events described in the Emergency Declaration.”

As worded, this is unclear whether the bill is addressing tenants who were adversely affected by the reason for the emergency declaration itself (that is, they were directly affected by the outbreak, transmission or symptoms of COVID-19) or if it refers to anyone affected by the entire state of emergency (for example, people who lost their jobs or income due to the stay at home orders). If it’s the first case, then that number of people will be relatively small, but if it’s the second, then that makes anyone in Massachusetts eligible for rent cancellation.

As worded, the act also leaves it to landlords to prove that a tenant was not paying rent for reasons unrelated to the coronavirus. If the initial presumption is that anyone not paying rent was skipping payments because of the pandemic, instead of the other way around, this would make it difficult for landlords to recover control over their rental property.

As Executive Director Doug Quattrochi wrote in an open letter to legislators, “To rebut the presumption of impact due to COVID-19, a landlord would have to meet judicially exacting standards for evidence, including but not limited to subpoenas for renter tax returns and bank statements, dumpster diving in the hope of finding such documents, or hiring a private investigator to track down employers, supervisors, or family to attest to a renter’s financial wherewithal.”

Vickery went on to say that, since the moratorium was enacted by the state, it should be the state’s job to cover the resultant costs that are being placed on the landlords.

“Given the Commonwealth’s central role in depriving so many renters of their jobs, it would be appropriate and socially just for the Commonwealth as a whole to bear the cost,” Vickery wrote. However, the Act as it is written now puts the onus on property owners to bear this financial burden.

“Requiring housing providers to provide free housing to people who cannot afford rent because the government destroyed their livelihoods would violate Article 10 of the Declaration of Rights, which guarantees that when the Commonwealth appropriates private property for public use, the owner will receive reasonable compensation.”

Extending the Eviction Moratorium

Section 2 would also force landlords to wait an additional 12 months after the State of Emergency is lifted before taking their tenants to court for nonpayment of rent. Section 3 of the Act would also ban anything except just-cause evictions. Just-cause evictions under this Act would include nuisance claims, using the property for illegal activities and non-payment unrelated to COVID-19/the State of Emergency, among others.

“Prohibiting no cause/no fault evictions is yet another way in which this bill would erode the right to regain possession of one’s own property. In no way does the COVID-19 pandemic justify this violation of a fundamental right,” Vickery wrote in his testimony.

No fault evictions are commonly used to remove renters whose dangerous and prohibited actions have terrified other residents into refusing to testify. Landlords in this situation are forced to choose between subpoenaing their good customers, or simply declaring to the court “I am not renewing, as is my right.”

A further drafting deficiency disallows any reporting to credit bureaus for unpaid rent. This appears to create another incentive for tenants to continue not paying. But bill drafters are not qualified to be writing this kind of legislation.

“Data furnishers are being asked to report nothing, which for users like landlords who view month-by-month trade histories, will stand out compared to renters who received a good report, rather than no report, during the same period,” said Quattrochi.

Rent Freezes are Rent Control

Research shows that overall, rent control hurts cities and tenants in the long run. You can read MassLandlords’ extensive library of articles on rent control if you need more information on how rent control works.

By freezing rent wherever it was as of March 10, 2020, the Act is essentially implementing rent control at a time when landlords may already be under market, and strapped for cash with at least some renters whose incomes have not been affected. With back rent being difficult to recover, no way to get new tenants if the current ones won’t leave, and mortgage lenders still looking for house payments, this puts rental property owners in a tight spot.

Eviction Sealing Hurts Tenants and Landlords

Section 4 of the act calls for court records related to non-payment of rent to be sealed. It also flies in the face of state precedent, which typically only seals court records in certain cases (for example, cases heard in family court or matters involving juveniles).

“The obvious goal is to prevent housing providers from screening out applicants who have defaulted on their rent in the past,” Vickery wrote. “Conversely, of course, tenants would not know which landlords are trigger happy, i.e., prone to seek eviction for rent that accrued during the emergency. From the standpoint of a renter shopping around for good landlords, this seems like something worth knowing.”

In other words, sealing eviction records could protect a tenant from prejudice (though a reasonable landlord would likely take the circumstances of global pandemic into account when choosing a tenant). However, it also prevents tenants from doing due diligence when researching their potential landlord. No one wants to rent from a landlord who takes people to court at the drop of a hat.

Priority Given to Non-profit Landlords

The act creates a Housing Stability and Recovery Fund that will help property owners with lost rental income (see bullet point 2 of the “landlords” list). Groups that will receive priority for funding would include non-profit landlords.

While giving priority for funding to non-profit groups is typically laudable, in this case, it bears noting that non-profit housing providers already receive subsidization. Non-profit landlords do not pay real estate taxes on their rental housing units. This is a substantial savings, and one that other landlords, regardless of rental unit size, have not been afforded during the pandemic. Therefore, as worded now, this act puts for-profit landlords at a disadvantage when it comes to recouping losses during the eviction moratorium.

Governing Board Does Not Specifically Include Landlords

The act does include the creation of an oversight and advisory board that would make recommendations on administering the Housing Stability and Recovery Fund. According to text from the act’s information sheet, this board will include “members of the Legislature’s Coronavirus Working Group as well as strong representation for people from communities hardest hit by the pandemic and housing crisis.”

What’s concerning is that this wording does not specifically allow for the inclusion of or input from landlords or landlord advocacy groups. As the act was drafted without landlord input, it is a red flag that the group administrating fund dispersal may also exclude landlords from having a voice in the process.

It is already Difficult to Collect Rent Owed

One of the talking points for tenants in the bill is “strong protections against unfair debt-collection activities impacted by Covid-19.” This wording is vague and could cause undue hardship for property owners in the months following the pandemic. This act could effectively extend the eviction moratorium indefinitely.

If the state of emergency was declared over in August, which seems unlikely at present, the earliest landlords might be able to recover their rental units for use would be mid-2021.

“The bill is the kind of ignorant partisanship we hope to eliminate with ranked choice voting,” Quattrochi said, referring to Question 2 on this November’s ballot. “Those who are being asked to solve the housing crisis and the pandemic should first prove themselves capable of finding consensus.”

MassLandlords members and the Board of Directors strongly oppose this bill.

6 Responses to Rent Cancellation bills 191 H.4878 HD.5166, S.2831 SD.2992

  1. Maria Mainini says:

    agreed – this bill is horrendous – the are putting an entire industry out of business! And picking a year?! Where did they get that idea? Do they have no faith in the already “tenant friendly” judges and mediators to do the right thing?! I could go on and on but I need to read your information on how to make some noise before this bill passes.

    Thank you

  2. Maria Mainini says:

    I sent this to as many of the legislators I could find emails for. Hope it helps.

    I am a tax payer, a hard working woman whose spent 20 years in charity and 20 years in real estate; I care about people and want no one displaced. I understand why you might like this bill at first glance because it appears to help the “most vulnerable” as stated by Mike Connolly and Kevin Honan, but take some time and think about how this hurts all your constituents and this state’s economy.
    Mike and Kevin mention that we “don’t know yet the full scale of economic devastation caused by pandemic, but we know it will be immense,” I think this legislation is going to make it so much worse that you will wish your name wasn’t on it in the very near future.

    Ask yourselves why you don’t trust our already “tenant friendly” judges/court system, the laws we have in place, the intelligent and caring mediators, to do their jobs to make sure no one will be displaced due to the covid pandemic? With this bill you will be destroying the lives of hardworking property owners as well wiping out a large segment of an industry that funds our economy on so many levels. You won’t need taxpayers or private funding to support landlords who can’t pay their mortgages if you just leave the decisions to the courts and reject this bill. It doesn’t make fiscal or common sense. Read it again, please.

    Here are some things to think about:

    1.) Some tenants will be hurt by this. They will have the ability to pay and won’t. Hard working middle class people are not going back to work because they are making more money with federal funds than if they go back. This will add to the problem. We are turning this group into welfare thinkers enabling them to become part of the problem. This “across the board moratorium on evictions” may help some of the vulnerable but it’s going to hurt a larger segment of the population.

    2.) Sprinkle in the already “problem tenants” who aren’t working; aren’t paying rent… guess what they will do with their time and extra money? Spend it on their already bad habits. Here are two quick examples. I have a tenant who is drinking herself to death while her dog poops on the floor night after night inside the home. She’s surrounded by debris, her family wants her out so they can get her treatment, but I can’t get her out due to the moratorium. She may be dead in 12 months. Another friend of mine evicted pill poppers from her house, the neighbors were celebrating because they were gone and she was going to fix up the house, and within days of learning about the moratorium, they moved back in and brought some friends with them. So much for social distancing. They are very excited about the bill. More crime; on already taxed police units; more decay of neighborhoods when landlords can’t afford to fix up their homes and get the problem people out. Not good.

    Healthy people who face eviction normally try harder to find work, find other apartment, move in with family members, thus creating flow in the housing market. When there is movement, realtors, lawyers, cleaners, painters, plumbers, roofers, electricians, etc.. are working and people are spending money on materials, movers, etc.. new homeowners are accepting new tenants and the chain starts all over again.

    This a good thing and this will stop with your bill.

    Ask yourself why it offers 180 days of “support” (for only elderly and those who can’t afford mortgages due to unpaid rent) when the moratorium is in place for 365 days? Who decided a year was the right amount of time? Is there science behind this? Where does that leave the rest of us? I’ve saved my entire life since my first waitressing job, I’ve paid my bills on time and made all the right choices. I’m 54 and I’m trying to save for retirement. This bill will probably cost me $50-$100k that I don’t have because I’ll have to carry my tenants for a year and I’m only a small-time investor. I’m sure others have it much worse and are fearing they will be wiped out and they will be in debt for the rest of their lives. This is too much government involvement and will ruin more people’s lives than it will help.

    My letter is long but I’d like to share 2 quick analogies of what can happen with only 2 properties:

    I will be paying $2400 a month for one condo. The guy living in it didn’t pay his mortgage, condo fees or taxes. He had his girlfriend (who lives with him) call him his landlord so she can get section 8 checks and the two of them just spend those checks and pay no one and he doesn’t even own it anymore? They will love this bill; they will be collecting from government, while I pay for it.

    I’ve owned another home since last July. Finally had an execution to remove the tenant on 3/31/20 and Covid hit. This woman works full time but is a serial bill dodger. She lost house to foreclosure and had 5 years in back taxes ($65k which I had to pay). I will spend $50k of my money to carry this house while she enjoys living for free for yet another year.

    As our leaders, you need to make sound decisions and support those people in your communities who support our system as well as protect the vulnerable. This bill is not that. It needs refinement in a big way. By signing it, you agree to all it’s parts and ultimately agree to hurting more people than it helps. Again, why not have faith in our system; the judges will make sound decisions without this bill or write one that focuses on the most vulnerable without hurting the rest of us.

  3. MO says:

    The bill is unacceptable – and unless funded by the govt to pay mortgages should not go through. In a city like boston it will destroy and lower housing prices.

  4. Patricia A Simonetta says:

    This bill is just more insanity. Say 25/30mil people out of work in usa but that leaves 130 mil working including my tenants. How many of those people have been pocketing more money than they normally make thru unemployment.
    Good landlords will lose their income and properties. Are the re taxes cancelled? Can’t wait to see what inept power hungry dummies put this together.

  5. Alexandra Schoolcraft says:

    This bill is not looking at the economic wave it will create thus adding to the economic devastation the pandemic has created. Canceling rent for a year does not help the tenant it just creates a reason to evict them and will not down the already overloaded court system. Eviction sealing only let’s tenants be less accountable for their actions and forces us to rely more on credit scores and previous landlord history. Seal a tenants record and you absolve them of all accountability. This bill is teaching people not be accountable for their rent or actions. The courts are already tenant friendly. Landlords are hard working people who provide housing. I am not a large real estate investor. I can not afford this bill proposal. No one can afford their paycheck to stop for a year while they’re commitments continue and the tenants do whatever they want. This bill will destroy the housing market and create bad credit for everyone landlords and tenants. The domino effect will happen and no one will receive any money eventually the whole economy will be negatively affected.

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