Tenant Protection Act (Rent Control) Full Analysis: An Act Enabling Local Options for Tenant Protections, 191-H.3924-HD.1100
In this article we review the 191st General Court’s version of H.3924-HD.1100, “An Act Enabling Local Options for Tenant Protections” also known as the “Tenant Protection Act,” for rent control and more. This bill, submitted by Representatives Michael Connolly and Nika Elugardo, has an additional 19 cosponsors. (Full text.)
The bill seeks to give municipalities the option do many things: permit municipal rent control, regulate mobile homes, restrict the legal justifications for eviction (just cause eviction), prevent foreclosed homeowners from also being evicted, lower rents in certain existing tenancies, break move-in monies into installments paid during the tenancy, and/or provide for cities and towns creating new administrative districts within their borders.
We review each section of the Tenant Protection Act in detail and offer references for further reading. At time of writing, this bill was not yet law.
H.3924-HD.1100 Sections 1 through 3: Preamble, Timing, and Drafting Notes
H.3924-HD.1100 would rename MGL Chapter 40P from the “Rent Control Prohibition Act” to the “Tenant Protection Act.”
The bill is broken into sections, with the intent that a city or town may adopt one or more sections a la carte. A la carte options under local control may be politically appealing, but for this purpose the bill is poorly drafted. It contains each subject area in a single section, lacks definitions that would apply to each different section, and doesn’t explicitly modify the acts and statutes it aims to amend or add onto. It uses terms that a judge or lawyer reading other laws would find ambiguous or unclear in the context of this bill (explained further below).
The Tenant Protection Act has been drafted with the emergency preamble, which means it would take effect immediately.
H.3924-HD.1100 Section 4: Rent Control
The Tenant Protection Act deletes the contents of MGL Chapter 40P, which was created in 1994 when Massachusetts voters overturned rent control through initiative petition.
It is noteworthy that Chapter 40P currently permits rent control. It permits any town or city to enact rent control provided it reimburses owners for the economic loss caused. Many people incorrectly think that rent control is free. Rent control causes affected owners to receive less rent, reduces assessed values, and reduces investment in properties as a result.
The Tenant Protection Act would exempt owner occupy three’s. “For the purposes of this section the term ‘multi-family housing’ shall not include 3 or less dwelling units in an owner-occupied dwelling.” Why? Landlords living in three-deckers are often the least well capitalized or trained to provide rental housing, maintain it, and comply with the laws. This exemption may be a political concession; it has no merit from a tenant protection point of view.
There is an attempt to fix a major flaw of rent control from the 1970’s, by allowing cities or towns to restrict rent control to means-tested income by household. This would theoretically prevent mayors, judges, and other rich people from occupying rent controlled units. It does not specify the mechanism for means-testing, leaving cities and towns to prevent abuse (or not) as they see fit.
The Tenant Protection Act does nothing to address what would be racist disparate impact resulting from tougher screening practices under rent control.
Rent Control Boards Defined
The Tenant Protection Act would bring back rent control boards. It would exempt board members from the civil service requirement that they be qualified and chosen based on merit. The arbitrary and unqualified rent control boards of the 70’s and 80’s were the subject of many landlord horror stories, including the Bologna story and the death by heart attack of Peter Petrillo.
(The Oregon rent control law stands in contrast to this proposal. There are no rent control boards. Instead, rent increases are tied to CPI and set by the state.)
Although Section 4 creates rent control boards, their specific powers are not granted until Section 5.
H.3924-HD.1100 Section 5: Mobile Home Rent Regulation
Mobile home rent regulation is an important consideration, and very different from rental housing rent control. Mobile home owners invest their life savings in buildings which they place on rented land. The buildings thereafter cannot easily be moved to another plot. If the park raises the rents to unsupportable levels, mobile home owners and their assets are held hostage. This is not the case with rental housing, where renters have no monetary investment in their unit. For more detail, see Last Week Tonight with John Oliver, April 7, 2019.
The poorly drafted nature of H.3924-HD.1100 is front-and-center in this section:
Instead of modifying MGL Chapter 140 Section 32F, which a formally drafted bill would do, it just references those definitions. In the process, the Tenant Protection Act would modify commonly held definitions.
For instance, in Tenant Protection Act Section 8, “owner” is defined to also mean “manager.” It seems likely that towns or cities adopting this or other sections could create legal confusion. The Hatcher decision, for instance, recently established that managers are definitely not owners, and do not have legal standing for owner actions like eviction. Does this bill intend to override Hatcher? There is no obvious answer.
The Tenant Protection Act sections are meant to be separate, but you can’t have Section 5 without Section 4. Section 5 empowers the rent boards created in Section 4. If a town or city adopted Section 4 without Section 5, they would have rent boards with no powers. If they adopted Section 5 without Section 4, they would have powers without a board to wield them.
We will read the Tenant Protection Act as if a future bill editor will put the Section 5 powers into the Section 4 rent control provisions, such that rent boards would behave the same in both mobile home parks and in rental housing.
Rent Control Boards Granted Powers
The rent boards of the Tenant Protection Act would be given broad discretion, including the power to squeeze political enemies:
“The rent board may make such individual or general adjustments, either upward or downward, as may be necessary to assure that rents for manufactured housing communities [or apartments] in the municipality are established at levels which yield to owners a fair net operating income” (emphasis added). Use of the word “may” instead of “shall” implicitly authorizes a rent board to do nothing when an owner requests an increase to return a building to profitability. Use of the word “fair” (not defined) could be used to justify rent decisions that result in a property becoming unprofitable, for instance, against owners with past code violations or other transgressions.
The Tenant Protection Act establishes a 10% rent cap, like Oregon, only its formulation is less fair because it doesn’t recognize changes in the consumer price index. To understand the importance, consider the high inflation 1970’s.
Under the Tenant Protection Act, rent boards would be granted status as agency of the Commonwealth. On the face of it, this seems like a major and unclear cession of state power to the towns and cities. Can a city or town rent board obligate the Commonwealth to incur debts? Can a rent board issue its own bonds or collect revenue? Is it subject to public records requests, or open meeting laws? The question and purpose of agency are unclear.
Rent boards may issue orders to stop eviction, but the Tenant Protection Act doesn’t say how. Stays of execution are at the discretion of the judiciary, which is not formally retasked or subordinated by the text.
Rent boards would not be subject to Chapter 31, the basic merit requirements of civil service personnel. They can be stuffed with political partisans to go after other property owners, or anyone else who speaks their mind.
Bringing Back Zombie Laws
Although the Tenant Protection Act is labeled as a local option, Section 5(g) as written could be read to immediately return rent control to Cambridge, Somerville, Boston, and other communities that still have rent control laws on the books. In modifying Chapter 40P, which blocked local rent controls, this section undoes the blocking. To the extent the underlying municipal laws were never formally repealed or nullified, the Tenant Protection Act brings them back with immediate effect. H.3924-HD.1100 specifically recognizes preexisting rent boards:
“Any city or town, which has adopted an ordinance or by-law for the purpose of regulating units, minimum standards for use or occupancy of manufactured housing communities [or apartments] and eviction of tenants therefrom pursuant to the authority conferred upon such city or town by general law or special act prior to the effective date of this section may continue to exercise such authority.”
As the act takes immediate effect, the rent control boards in these municipalities could be expected to begin hearing cases immediately.
H.3924-HD.1100 Section 6: Condo Review Boards
All of the undefined and overreaching powers of a rent control board could also be granted to a condo review board, which can prevent selling units of a multifamily building.
H.3924-HD.1100 Section 7: Just Cause Eviction
This section defines the reasons a landlord may seek to recover possession and thereby eliminates tenancies at will (just cause eviction).
The stated intent of the Tenant Protection Act is to extend protections to every renter, but for some reason it would let the city or town adopting Section 7 exempt anyone it feels doesn’t deserve protection, in its sole discretion. This is cold comfort to whole classes of largely disenfranchised and forgotten renters, who already have a hard time getting into and staying in certain neighborhoods of opportunity.
The Tenant Protection Act would establish the following “just causes,” which are different from Session 190 Jim Brooks Act just causes. A landlord may evict a renter if the court finds:
1.) Failure to pay the rent to which the lessor is entitled. (Note that it doesn’t say contract rent. Entitlement would be determined by the unelected rent control board, and automatic rent increase provisions may be struck down as unlawful even if the renter agreed to them, based on rent board discretion.)
2.) Any violation of MGL Chapter 93A, the law which just says “unfair practices shall be illegal”. (MGL Chapter 93a is already a capricious law, whose impact is defined by the attorney general in their sole discretion.)
3.) Nuisance, substantial damage, or substantial interference with safety or enjoyment. (Does the bill mean “quiet enjoyment”? What is substantial? This wording is an invitation to long, drawn out litigation.)
4.) The lessee has used or permitted a leased unit to be used for any illegal purposes.
5.) The lessee has refused to pay a rent increase that meets the just cause standard.
(Here the Tenant Protection Act reinforces rent control by allowing towns to set a maximum allowable rent increase as percent of CPI. This is a strange construction. Instead of “percent of CPI,” we might expect to see “multiple of CPI.” Can you have 110% in the law? How about 300%? Although mathematically valid, this again sets up lawyers to argue over intent. Some will surely argue that percentages never go above 100, and therefore this section only authorizes rent increases below CPI.
This part of the Tenant Protection Act is good in the sense that a CPI-based rent index would be objective, but bad for the above ambiguity, and also bad in the sense that the CPI would be set outside of state control. If the federal government shuts down, and CPI is not recalculated, are there to be no rent increases?
Also, in terms of drafting, if this is the way rents are to be regulated, why is this wording not under the rent control section? Why are rent control boards even necessary, if a formula has been established? This is all evidence of poor drafting and ill conception.)
6.) The lessee has refused reasonable access. (This reflects an increased understanding of owner concerns. Refusing access one time would be grounds for termination.)
7.) Occupant is a sublessee. (Note, the wording does not say that landlords can terminate for an unauthorized occupant. Unauthorized occupants must be tolerated. Only a bona fide sublessee, presumably with a documented, written sublease, could be evicted under this wording.)
8.) You want to move in yourself or family. (To utilize this provision, owners would have to give 180 days’ notice and pay at least three month’s rent for relocation. This amounts to a shake-down of owners, and can greatly complicate meeting the needs of senior parents after a sudden decline, of dependent children after their own tragedy, or of other life events that come without warning.)
9.) Any other “just” cause. (This ought to mean rental agreement violation, including offenses like prostitution, drugs, and gang activity. In practice, courts cannot prove these offenses without witnesses, and in many cases, witnesses are afraid to testify. It is up for debate whether any prostitution, drug, or gang activity would ever be considered adequately documented and “just” grounds for termination.)
The Tenant Protection Act would require landlords notify the city or town at the moment eviction is started. This is the same issue that made just cause eviction fail last session. Federal and state fair debt collection practices acts prohibit disclosure of nonpayment to anyone but the courts or your counsel. This provision is unlawful as written.
A fine of $5,000 per renter will be applied if a landlord seeks to recover in violation of this section, or fails to notify the city.
Cash for keys or other non-court mutual settlements, including mediated agreement for judgment, would likely be disallowed under the Tenant Protection Act as worded.
H.3924-HD.1100 Section 8: Foreclosure Protections
The net effect of this section is as follows: if you get foreclosed on, you still get to live there as a renter paying rent indefinitely. The foreclosing owner cannot take possession.
This is the first section in the Tenant Protection Act with definitions. The definitions reflect a lack of collaborative input from owners. For instance, “entities” specifically exempts nonprofits by defining them as a “business organization”. Nonprofits are notoriously not immune to human frailty, and should be included as “entities.”
“Notice to quit” is redefined without reference to the existing statute that already defines notices to quit.
Ownership is redefined to include managers and landlords. This flies in the face of the recent Hatcher decision, or overturns it, by granting managers the rights of owners. Whether it’s a drafting error or intent to override is unclear.
H.3924-HD.1100 Section 9: Rent Rollback
If passed, the Tenant Protection Act would set rents back to what they were one year ago, prior to passage. If any real estate taxes were increased since then, landlords would file for immediate abatements, and should expect to have them granted.
H.3924-HD.1100 Section 10: Elimination of Move-in Monies
The Tenant Protection Act would eliminate monies required to take possession, and mandates that security deposit and last month’s rent be paid in four payments, equivalent to additional rent in the first four months of tenancy.
The language reflects a lack of understanding of the law where it references “non-refundable move-in fees”. Move-in fees are already illegal in Massachusetts.
The elimination of move-in monies takes three complicated forms:
If a rental agreement is for a term of six months or longer, six equal payments must be permitted.
If an agreement is for less time, up to four equal payments must be permitted.
If the renter proposes anything else, what the renter asks for will prevail.
Landlords take note: judges are wary of landlords asking renters to “propose” different things. This option will likely not be permitted.
Landlords would not be allowed to charge fees for installment payments.
Each violation of the move-in monies law would come with a $1,000 fine plus attorney’s fees.
Since the Tenant Protection Act does not properly modify MGL Chapter 186 Section 15B, it leaves open the possibility that landlords would be subject to security deposit triple damages four or six times more often, since four or six receipts would have to be issued (one for each partial payment).
H.3924-HD.1100 Section 11: Anti-displacement Zones
Here the authors of the Tenant Protection Act lost steam and stopped writing. Although the anti-displacement zones are not defined, presumably they are subjurisdictions within a city or town within which some or all of these laws may apply. This allows well established selectmen and councilors to exempt themselves from onerous tenant protections.
Will the Tenant Protection Act (H.3924-HD.1100) Meet its Stated Purpose?
The Tenant Protection Act aims to help “homelessness, displacement, foreclosure and excessive rent burden” for “all but the wealthiest of the commonwealth’s residents.”
The Tenant Protection Act does not address homelessness. Roughly 15,000 people experience homelessness in Massachusetts each year. H.3924-HD.1100 does not address supportive services, housing first models, landlord-tenant guarantee funds, rental subsidies, addiction counseling, mental health clinics, LGBTQ support, or any of the various issues causing and sustaining homelessness.
The Tenant Protection Act (H.3924-HD.1100) does address displacement. By preventing renovations of any kind, the bill will ensure that the lucky few who have apartments at passage will remain there for life, provided they follow the rules. It will create a disincentive for any developer or new owner to take over an existing rental property, constrain supply, and exacerbate displacement for any renter not covered under the bill’s many exemptions and loopholes.
The Tenant Protection Act does address foreclosure. By preventing a foreclosing owner from using their property for anything except a rental, the bill would have unknown effects on lending in Massachusetts, likely increasing mortgage rates and increasing the frequency of creative alternatives to lawful foreclosure.
The Tenant Protection Act does not address rent burden, in fact it aggravates it. As discussed in our article on rent control, the rent control provisions will reduce supply of regulated units to near-zero, and will increase the rent of unregulated units by as much as 50%. This will bring Boston into macabre alignment with New York and San Francisco, which have had both rent control and nation-leading rents for decades.
What does the Tenant Protection Act (H.3924-HD.1100) Lack?
The lack of housing supply is a primary issue driving the call for tenant protections. The Tenant Protection Act makes no changes to zoning and does not increase housing supply.
Most renters need two things before anything else: 1.) some measure of assurance that their household will be able to pay rent, under any market conditions, and 2.) consistent enforcement of housing quality standards (state sanitary code).
A real tenant protection act would reimagine existing subsidies as guarantee funds. Current subsidies take ten years to get; they’re not a safety net so much as a retirement plan. If a household experiences a market rent increase or loss of income, it should be possible to get help to cover the shortfall, like unemployment benefits. The Tenant Protection Act does not contemplate subsidy reform.
A real tenant protection act would call for equal enforcement of the state sanitary code, perhaps on pains of reduced state aid to the municipality shirking its duties. As recent stories show (see, for instance, the recent story of a Brockton slumlord who is also a West Bridgewater councilor), well connected landlords receive decades-long passes on enforcement. This is ordinary corruption and has no place in Massachusetts, and contributes substantially both to health and wellbeing problems of renters, as well the animosity toward landlords that drives bill drafters to exclude our points of view.
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One Response to Tenant Protection Act (Rent Control) Full Analysis: An Act Enabling Local Options for Tenant Protections, 191-H.3924-HD.1100
I take exception to your statement: “Landlords living in three-deckers are often the least well capitalized or trained to provide rental housing, maintain it, and comply with the laws.”
Many owners of three-family houses are Mass Landlords members (like me) and have plenty of familiarity with the law. It’s true that I am less well capitalized than owners of hundreds of units, but I am able to provide the marketplace with lower rents and better monitored properties. The lower rents supplied by small multi family homeowners is the reason they should be exempted from rent control.
You fail to understand that owner-occupiers of small multifamily homes have invested their life savings, as well as their personal blood sweat and tears into their properties. Rent control is bad for all. Don’t denigrate a valid exemption for three family homes without a valid reason.