MA rent escrow bill

Rent Escrow Bill Heads Back Up To State House

by Rich Vetstein on September 25, 2017

in Landlord Tenant Law, Leasing, Rental Housing

Public Hearing Scheduled For September 26, 1pm

Small property owner groups are saying that this may finally be the year when state legislators pass a Rent Escrow bill on Beacon Hill. The bill is designed to reform tenant abuses of the rent withholding law and level the playing field with landlords.

Under current law, if a tenant is being evicted, she may report the landlord to the health department and withhold paying rent if an inspection reveals any sanitary or building code violation  — even if very minor. Evictions often last for months, and therefore, the rent withholding gives tenants incredible financial leverage to gain advantage during the process.

Unlike most other states, there is no requirement in Massachusetts that a tenant post the withheld rent into some form of escrow account. There have been many instances where tenants have intentionally inflicted property damage to claim code violations or just made them up altogether.

A rent escrow bill would simply require any tenant who withholds rent to pay ongoing monthly rent into a court ordered escrow account until the eviction case is heard on the merits by a judge. Fairly, the bill has a carve out giving judges discretion to not require an escrow deposit if it would result in “undue hardship” to the tenant. This way, the tenant has some “skin in the game,” and is less likely to financially cripple the landlord over a minor code issue.

The leading bill is House Bill 980, sponsored by Rep. Chris Walsh. The text of the bill is as follows:

Notwithstanding the foregoing, in the event that the originally scheduled trial date is continued for any reason, and upon motion of any party, the court after hearing shall require the tenant or occupant claiming under this section to deposit with the clerk of the court, the plaintiff’s attorney, or other secure depository each month (or at such other intervals as the court deems just) the amounts due for use and occupancy, calculated according to the fair market value of the premises, which amounts shall be held in escrow pending final disposition, unless the court determines that such requirement would result in undue hardship to the tenant or occupant. In the event that a tenant or occupant fails to comply with an order requiring deposit, the court upon motion shall order the matter to be scheduled for bench trial at the earliest date available and make such further orders as the court deems just.

The bill, along with several other rental housing bills, will be heard on September 26, 2017 at 1pm in Hearing Room B-2 at the State House. All members of the public are welcome to testify in support or against the bill.

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Legislators Take Up Rent Escrow Bills Once Again

by Rich Vetstein on May 7, 2015

in Housing Court, Landlord Tenant Law, Leasing, Rental Housing

cls-6State House Hearing Set For May 12, 1pm, Joint Committee for Judiciary Hearing Room A-2 

For the last decade, Massachusetts landlords have been lobbying for a tenant rent escrow bill which would prevent tenants from using the infamous “free rent trick” in evictions. The free rent trick works like this:  Tenant stops paying rent for various reasons, such as economic hardship or by design. After receiving a 14 day notice to quit for non-payment of rent, the tenant will immediately call the board of health to get the owner cited for minor or cosmetic code violations such as a hole in a window screen. Under current Massachusetts law, any code violation cited, however minor, allows the tenant to withhold rent until the eviction case is resolved. What usually happens is that the tenant skips out of town or agrees to a move out but never pays the months of accrued unpaid rent, leaving the landlord stuck with thousands of lost income to pay their mortgage and expenses.

Even the liberal Boston Globe recently published a compelling piece on how the Massachusetts legal system unfairly penalizes small landlords in these situations.

Unlike most other states, there is no requirement in Massachusetts that the tenant post the withheld rent into some form of escrow account. There have been many instances where tenants have intentionally inflicted property damage to claim code violations or just made them up altogether.

Bill Would Level Playing Field Between Small Landlords and Tenants

Hopefully, this will finally be the year that the Legislature passes this much needed reform to curb tenant abuses of the eviction process. Three bills will be discussed, H.B. 1654, H.B. 1663 and H.B. 1664. Landlords are urged to come and testify before the committee and otherwise support the bill by contacting their local representatives and senators.

A mandatory rent escrow law would require any tenant who exercises their right of rent withholding to pay the withheld rent into an escrow account until the unsafe conditions or 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 on average three months to resolve, much-longer-delayed evictions and the free rent trick will be stopped.

The bills will most benefit small landlords and owners-occupants of multi-family residences who rent out apartments. These property owners are typically on strict budgets, and any lost rent and attorneys’  fees will prevent them from paying their mortgages, real estate taxes and property expenses, potentially leading to default and foreclosure.

For more information on how you can support these bills, please contact the Massachusetts Rental Housing Association and the Massachusetts Small Property Owner’s Association.

________________________________________

100316_photo_vetstein (2)-1Richard D. Vetstein, Esq. is a vocal advocate for Massachusetts landlord rights and can be reached at [email protected] or 508-620-5352.

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Massachusetts Tenant Rent Escrow Bill Set To Pass This Term?

by Rich Vetstein on February 17, 2014

in Housing Court, Landlord Tenant Law, Leasing, Massachusetts Real Estate Law, Real Estate Litigation, Rental Housing

eviction-notBill Would Curb Tenant Abuses of Eviction Process | State House Hearing Set For Feb. 25

For the last decade, Massachusetts landlords have been lobbying for a tenant rent escrow bill which would prevent tenants from using the infamous “free rent trick” in evictions. This may finally be the year that the Legislature passes this much needed reform to curb tenant abuses of the eviction process. Two bills, H.B. 1131 and H.B. 1110, have made their way to public hearing at the State House for a February 25th hearing before the Joint Committee on Housing. Landlords are urged to come and testify before the committee and otherwise support the bill by contacting their local representatives and senators.

The bills are designed to reform tenant abuses of the rent withholding law, including the infamous “free rent trick.” The free rent trick works like this:  Tenant stops paying rent for various reasons, such as economic hardship or by design. After receiving a 14 day notice to quit for non-payment of rent, the tenant will immediately call the board of health to get the owner cited for minor or cosmetic code violations such as a hole in a window screen. Under current Massachusetts law, any code violation cited, however minor, allows the tenant to withhold rent until the eviction case is resolved. What usually happens is that the tenant skips out of town or agrees to a move out but never pays the months of accrued unpaid rent, leaving the landlord stuck with thousands of lost income to pay their mortgage and expenses.

Unlike most other states, there is no requirement in Massachusetts that the tenant post the withheld rent into some form of escrow account. There have been many instances where tenants have intentionally inflicted property damage to claim code violations or just made them up altogether.

A mandatory rent escrow law would require any tenant who exercises their right of rent withholding to pay the withheld rent into an escrow account until the unsafe conditions or 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 on average three months to resolve, much-longer-delayed evictions and the free rent trick will be stopped.

The bills will most benefit small landlords and owners-occupants of multi-family residences who rent out apartments. These property owners are typically on strict budgets, and any lost rent and attorneys’  fees will prevent them from paying their mortgages, real estate taxes and property expenses, potentially leading to default and foreclosure.

For more information on how you can support these bills, please contact the Massachusetts Rental Housing Association and the Massachusetts Small Property Owner’s Association.

________________________________________

100316_photo_vetstein (2)-1Richard D. Vetstein, Esq. is a vocal advocate for Massachusetts landlord rights and can be reached at [email protected] or 508-620-5352.

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