Socialist Agenda Drives Activist Assault on Big Landlord

“We can handle the costs, but a smaller landlord would get into serious trouble”

Rent escrow to the rescue

For several years, the tenants of City Realty Group, a large Boston landlord, have been leafleted at their homes, advised not to pay rent or rent increases, coached to report code violations to city inspectors, and pushed to fight their eviction for nonpayment. Tutored by the activists on how to use legal tactics, they could stave off their eviction for two years or longer while refusing to pay a rent increase or pay any rent at all.

City Realty Group is a management company owning 600 rental units, mostly in Boston, mostly in two- and three-family structures, mostly woodframe – the kind of properties owned by most small property owners.

As a result of the outside pressure on their tenants from City Life/Vida Urbana, a tenant-activist group in Boston, City Realty’s owners’ legal costs skyrocketed but their tenants’ ability to find new apartments is compromised.

Most large landlords own high-rise or garden-style complexes with upscale tenants. Here was a company that services low- and moderate-income tenants – and it gets attacked, putting upward pressure on their tenants’ rents.

All was done in the name of “building working class power” and achieving “systemic change and transform[ing] society,” a socialist agenda.

Public hearing continues the attack

Then, on October 20, many of the same tenants along with the activists showed up at a hearing before the Boston City Council that lasted five hours. The topic was “displacement” and “community stability,” in other words, rent control. The Council chamber was packed.  The only landlord present, it seemed, and the only one to testify was a co-owner of City Realty Group.

A long string of tenants offered testimony in which they claimed that City Realty demanded huge rent increases, tolerated poor property conditions, and did other nefarious acts like barging into apartments unannounced. The tenants who testified or sat in the audience let it be assumed that they were Boston tenants. But by a show of hands, roughly half the tenants in the Council chamber were not from Boston and had been bused in.

In reply to the testimony, City Realty co-owner Steve Whalen said that 75% of their units are below the federal government’s HUD “fair market rent” level for Boston, Cambridge, and Quincy ($1,196 for a one-bedroom, $1,494 for a two-bedroom), that 50% are subsidized with section 8 vouchers, and that less than 1% of their units has any code violations at Boston’s Inspectional Services Department (ISD). He said his company was compliant with all the new inspection requirements and were one of the first owners to register as required.

Barging in? Whalen said that in a few cases, tenants called for repairs, appointments were made, and when repairmen knocked on the door, no one answered, so they entered only to discover the tenant was in the back of the apartment, had “forgotten” the appointment, and was therefore “surprised.”

The cast of anti-landlord characters

The tenants testifying and in the audience had been organized by Greater Boston Legal Services (GBLS), Harvard Legal Aid Bureau (HLAB), and City Life/Vida Urbana. (CLVU), who had all joined forces to target City Realty Group and its tenants. These tenant-advocacy groups are a major force affecting Boston rental housing owners and are well-staffed. GBLS defends tenants in eviction proceedings at no cost to the tenants and lists a staff of 107 on its website. “Housing rights” are a major concern for them besides working for employment, welfare, gender, and other rights of the “underprivileged.” GBLS is tax-funded in part.

HLAB is described in its website as a “clinic” in which about 45 law school student-volunteers learn how to be lawyers by attacking landlords. It lists a faculty and staff of 13 and is funded by Harvard University.

CLVU lists a staff of 15 on its website. While the other two groups hide their socialist political views, CLVU openly states on its website that it hopes to be part of a “city, state, national, and international movement” to create a “new world” that “serves the needs of the many rather than the greed of the few” and “guarantee[s] that each person has the right to food, housing, health care, education, meaningful employment, and the right to exist in freedom without fear of displacement [by landlords] or deportation.” In other words, a fully “entitlement” society.

In a private interview, City Realty owner Whalen said “These groups [legal services and City Life] are strongly aligned together, which takes a lot of credibility away from them. They are a huge issue that nobody is really aware of.”  Similar legal services groups work in other cities and towns in Massachusetts.

Tactics, legal and otherwise

What was not mentioned in the hearing is that these tenant-advocacy groups had been aggressively advising City Realty tenants over a period of several years. Initially, they solicited and left flyers advising the tenants to pay no rent at all. City Realty threatened to sue all three groups, and they “pulled back,” according to Whalen. “Then they stuck to flyers and only advised tenants to not pay rent increases.”

“I was shocked,” said Whalen, “when Harvard Legal Aid first solicited our tenants three or four years ago. They went building to building and door to door looking for a problem. They are messing with our business relationship with our tenants. They flag every one of our cases and do not allow the tenant to negotiate, which may not be in the best interest of the tenant. We are forced to hire attorneys when we could have solved the issue quickly through negotiation. They are motivated to make it a controversy and keep the controversy alive.”

Not paying a rent increase triggers a summary process or eviction case. In court, the legal tactic that tenants are advised to use is to demand a jury trial, which any tenant can do for most eviction cases. The Housing Court in Boston has so many cases that it usually takes two years to empanel a jury. During that time, tenants are free to not pay any rent increase or any rent at all.

In the end, Whalen points out, the case is usually settled by negotiation anyway. Usually, City Realty pays the tenant to leave. This tactic costs an owner two years of lost rent, plus attorney’s fees through the long process, plus the cost of the tenant payoff.

“We have to pay for an attorney,” Whalen said, “to be in court for hours waiting for a jury trial that may not convene that day. Hugely expensive. Legal services are a huge obstruction to our productivity. We can handle it, but a smaller landlord would get into serious trouble not knowing how this plays out and take on all those expenses. And then to come up with a settlement payment to the tenant. It’s really unfair.”

The only way these groups get tenant cooperation is to paint a highly derogatory image of landlords to justify the legal but unethical extortion from landlords that allows tenants to live rent-free for months and even years.

Rent escrow to the rescue

The idea of a rent escrow law is to stop tenant legal tactics that rob an owner of rightly owed rent. Under a rent escrow law, the tenant pays the ongoing rent into an escrow account while a court proceeding or trial is pending. In the end, the amount escrowed can be divided up between landlord and tenant in whatever way a judge decides, but at least the owner does not stand to lose as much as two years of rent even when the judge says the landlord wins the case.

Whalen told of a case in which the judge ruled in their favor and ordered the tenant to pay $15,000 in damages (lost rent). But the judge also ordered City Realty to pay the tenant’s legal costs of $15,000. It would have been a washout if the tenant had paid as the judge ordered. But the tenant, who had escrowed none of the unpaid rent, did not pay, as happens in almost every single eviction case in Massachusetts courts. City Realty was stuck paying the tenant.

A rent escrow law would stop this legal tactic – the free rent trick, as SPOA calls it – and bring the case to a quick close. Since 95% of eviction cases are for nonpayment, a rent escrow law would also greatly reduce the court caseload and streamline the eviction process, as should happen in any nonpayment case.