Governor Perdue Signs Landlord/Tenant Bill Into Law

North Carolina Governor Bev Perdue signed House Bill 493 into law this week and the law will go into effect October 1, 2012. Among other things the bill:

  • Closes a loop hole that enabled tenants to not pay their agreed upon rent during an appeals process.
  • Allows landlords to proceed with an eviction even if the tenant has made a partial rent payment.
  • Allows the NC Security Deposit Law to be modified to allow unpaid late fees, damage to smoke and carbon monoxide alarms, and costs of re-renting the premises to be taken out of the security deposit.
  • Allows, but does not require, landlords to remove and store the possessions of a deceased tenant so that the landlord can re-lease the rental unit upon filing an affidavit with the Court. The landlord may try to collect the costs of storage through the estate.

The Apartment Association of North Carolina, with the participation of its affiliates including PTAA, has lobbied the state legislature on behalf of its members for years for these changes.  Thanks to all the members who worked to promote these much-needed changes to the state landlord/tenant laws.

Proposed Amendment to Raleigh’s PROP Ordinance

Last summer North Carolina’s legislature passed a new law that would limit the ability of municipalities to enact rental registration and inspections ordinances.  The city of Raleigh is considering changes to its PROP ordinance as described in a recent issue of NAA’s Hotsheet:

The Raleigh City Council is considering amendments to its existing Probationary Rental Occupancy Permit (PROP) ordinance program. The changes, based on recommendations from the City Attorney’s office, would increase permit fees significantly and would allow the city to revoke an owner’s permit to operate, prohibiting the owner from renting out an entire property for the violations of a single unit.

A property owner is required to have a PROP permit if the property receives repeated violations, such as nuisance, occupancy, or inspections violations. In the program’s current form, a property owner may apply to have violations removed—to avoid the PROP permit requirement—if he or she evicts or removes the problematic tenant(s). The proposed revisions would limit an owner’s ability to contest violations. Other onerous provisions include:

  • Expanding the types of violations included in PROP, such as failing to register a rental property, underage drinking, or if a tenant is otherwise engaged in several forms of criminal activity;
  • Revocation of owner’s PROP permit if a unit receives 3 violations within a 24 month period; and
  • Permit fee increases from a $200 administrative fee, a $300 permit fee for the first year and $500 for any additional year to a $500 non-refundable deposit and tiered system of permit fees ranging from $1,000 for 1 to 4 dwelling units to $10,000 for 20 or more dwelling units.

The City Attorney’s office has been charged with rewriting the PROP ordinance to comply with a newly enacted state law. The new law, Senate Bill 683/Session Law 2011-281, limits the ability of cities and localities to enact rental registration and inspections ordinances. The city of Raleigh claims that the law would reduce revenues from the PROP program. The City Attorney’s revisions would increase the number of properties flagged by PROP, raising revenues and offsetting the shortfall created by the new law. The Triangle Apartment Association plans to work with the City Attorney’s office as it plans further revisions.

Please contact < href=”mailto:nicole@naahq.org“>Nicole@naahq.org to request a copy of the ordinance. (Raleigh Public Record, North Carolina League of Municipalities, Triangle Apartment Association)

Apartments’ Increasing Popularity a Cultural Shift?

We’ve seen a few articles about renting as the “new American dream,” but this article is particularly good at exploring the factors behind this cultural shift.  Here’s a sample:

Honey and Bryan Stempka, 36 and 31, are among the new skeptics of ownership. The couple bought a three-bedroom house in Mankato, Minnesota in 2008 for $145,000. They renovated three rooms, repainted, re-landscaped, made energy-saving improvements, and paid ahead on their mortgage, cutting their repayment time to 28½ years from 30. But earlier this year the Stempkas decided to move to northwestern Pennsylvania to be closer to family. Just one problem—the Minnesota house won’t sell. In a neighborhood surrounded by foreclosures, it’s been on the market for 8 months for $139,900, and the Stempkas are thinking of dropping the price by $20,000. Honey Stempka says she never wants to own again: “I struggle with that. I have this vision of having my own space for a garden. But I regret buying our house.”

Laura Seitz, 60, is another former homeowner who doesn’t want to own again. She bought her house in west Los Angeles in 1998. But last year a burst pipe in the house caused $18,000 in damage and she lost her job, so she decided to sell. Living in a desirable neighborhood helped her—she got 10 percent more than the asking price. Even so, she says that “the burden of owning and caring for a home as a single woman was weighty, much more than I had anticipated.” Now she rents in the same neighborhood and says, “it’s a great feeling to be liberated.”

She may be onto something: many experts now challenge the conventional wisdom that owning is a necessarily a sound life choice. Forbes contributor James Altucher argues that buying a home is a trap—houses are illiquid investments that drain their owners’ time, energy, and cash and force them to stay put. Another skeptic is Yale economist Robert Shiller, co-creator of the Case-ShillerHome Price Index. He compiled data in 2006 showing that between 1890 and 2004, the return on investing in houses was just 0.4 percent a year—a period when the stock market grew at 9.6 percent annually. And in a paper this June in the journal Real Estate Economics, two researchers calculated that over the past 30 years, most often it would have been better to rent than buy. Renters who invested in stocks and bonds instead of home equity came out ahead 75 percent of the time.

Read more: http://www.thefiscaltimes.com/Articles/2012/01/04/The-New-American-Dream-Rent-Dont-Buy.aspx#page1#ixzz1iiXRlZea

It will be interesting to see if this cultural shift will lead to housing policy changes.   Will policies continue to favor homeownership (i.e. mortgage deductions) or will we see a move towards policies favoring renters?  Tax deductible rent anyone?

Fayetteville Considering New Program That Targets Rental Housing

According to this article in the Fayetteville Observer the city is considering a new ordinance that targets “problem” rental properties:

A revised version is called the Rental Action Management Program, or RAMP, and a public hearing on the proposal is set for Monday.

According to the draft, landlords whose properties accumulate more than three code violations in a year – such as trashy lots or substandard construction – would face consequences. So would landlords whose rental houses rank in the top 10 percent of properties getting the most crime and police calls. Police would calculate the crime rankings every six months.

Among the consequences: Property owners would have to attend a meeting with city officials and, if necessary, develop a crime-management plan. They’d also have to pay a $1,000 fee to continue renting the property.

If the problems persist, the city could restrict the owners from receiving rental income from the property for one year.

Representatives of the Cumberland County Apartment Association have some issues with the proposal:

“We have some serious concerns, and we’ll be there at Monday’s night hearing,” said Carey Petricka of the Cumberland County Apartment Association, which has 125 members.

Bill Nye, chief executive officer for Caviness & Cates Property Management, likened the proposal to the city penalizing gas station owners when people drive off without paying. His company owns and manages six apartment complexes in Cumberland County.

“I don’t think bigger government is going to solve the problem,” Nye said Friday. “I just don’t think the city is in a better position to manage our properties than we are.”

Nye said the city should form a task force with people in the industry to re-examine the rental housing proposal. He said his company rigorously screens applicants and pays for on-site security.

The article goes on to compare Fayetteville’s proposal to Charlotte’s existing program and provides more details about the RAMP program.

Governor Signs Residential Rental Inspection Bill Into Law

From the Apartment Association of North Carolina’s (AANC) website:

 In a major victory for North Carolina rental housing providers, the Apartment Association of North Carolina-initiated Bill – Residential Building Inspections – was ratified by the N.C. Legislature on June 18th. Once signed by Governor Perdue, the bill will become law immediately, and will rein in advocacy-minded local units of government who have exceeded – or might want to exceed – their statutory limitations on housing inspections. The Bill:

  • Requires units of government to have reasonable cause to believe that unsafe housing conditions exist in order to inspect private housing, via landlord history, reports, or actual knowledge by a unit of government. This provision allows resources to be used to focus on unsafe conditions, problem properties and irresponsible owners and landlords.
  • Requires government housing inspection programs to be administered in a non-discriminatory way regarding housing type or ownership.
  • Provides local governments the authority to make an exception to the reasonable cause test in order to conduct periodic inspections as part of a targeted effort to arrest blight within designated Community Development or similar zones.  
  • Prohibits local governments from requiring permits as a condition of operating rental housing – unless a property has more than 3 violations in a twelve month period, or falls within the top 10% of local crime or disorder problems.
  • Prohibits local governments from levying rental registration fees unless a dwelling unit has more than 2 violations in a twelve month period, or falls within the top 10% of local crime or disorder problems.

 Context: North Carolina cities have historically been concerned about housing conditions in their jurisdictions, especially in older, poorer neighborhoods, and have appropriately adopted ordinances calling for minimum housing quality codes. The administration of these codes are an important tool in helping North Carolina municipalities fight neighborhood decline while ensuring to housing consumers that minimal health, safety, and sanitation conditions are maintained in residential structures.

Unfortunately, some N.C. municipalities have substantially broadened these programs aimed at stemming blighted conditions and now apply them to all housing, or at least all rental housing, as part of mandatory inspection approaches. Sometimes these programs are tied into required permits and fees as a condition of operating rental property. Programs designed to systematically inspect all rental housing for the purpose of improving housing quality are bad public policy and waste needed resources that could be used to combat problematic housing.

Inspection programs in these environments amount to a “housing tax” with no public benefit. The core of current NC law gives units of government the authority to respond to housing conditions that are unsafe, dangerous, and unfit for human habitation. The new law ensures that units of government don’t exceed their authority.