Effective July 28, 2019, the legislature has added new protections for tenants who are having difficulty paying their rent. Landlords and tenants alike should be aware of this new law, Engrossed Substitute Senate Bill 5600. The bill adds protections in two primary areas: the required notice to tenants when rent is late, and the court eviction process.
The bill lengthens the notice time period before eviction proceedings can be started for non-payment of rent. For residential tenancies, the landlord must give the tenant notice of 14 days to pay the late rent or vacate the property. The prior notice period was 3 days, as it is still for commercial property. Oddly, the period of time given a tenant to correct all non-rent violations of a rental agreement is now shorter–10 days–than the period of time given to catch-up on rent. The bill now specifies what this new “14-day notice” must say. Landlords should consult with the new statute when drafting this notice.
The bill also, for the first time, defines “rent.” The term “rent” no longer can include non-recurring fees such as late fees and legal costs such as attorney fees. Rent can include anything “recurring and periodic,” including utilities. This definition is important because the bill specifically disallows evicting a tenant who catches up on “rent” within the 14-day notice period but does not pay a late fee or other non-periodic charge. If a tenant does not pay a non-recurring charge, the landlord can only sue for a judgment and cannot terminate the rental agreement.
One exception to the exclusion of non-recurring charges from the definition of “rent” is a security deposit or other nonrefundable fees paid in installments. The installments are treated as “rent.”
In an unlawful detainer suit to evict a tenant, the bill adds additional protections for tenants. Upon application by the tenant, a judge can delay an eviction by as long as 90 days after considering several factors including the tenant’s financial circumstances, good faith, history, ability to pay the past-due rent, and hardship if evicted. The tenant must stay current on future rent and repay the past-due rent within the additional time given by the court. The tenant must pay at least one-month of past-due rent per month. In addition to past-due rent, the tenant must pay any late fees, court costs, and attorney fees due before the end of the extension. A tenant who has had three or more notices served on him for late rent cannot apply for this extension. The procedures in this portion of the bill are extensive and complicated, and landlord and tenant should study them carefully.
When a tenant applies for this extension, the court must consider whether the tenant is “low-income, limited resourced, or experiencing hardship.” If so, the court may require the landlord to apply for reimbursement from the landlord mitigation program run by the Department of Commerce. This has the effect of delaying proceedings by as much as 30 days. If Commerce declines to grant the landlord’s application, the landlord can re-initiate proceedings to evict the tenant.
The bill also restricts the circumstances upon which a landlord can obtain attorney fees from a tenant that the landlord is evicting. The landlord can no longer get attorney fees if the tenant fails to appear for the proceedings and a default judgment is entered against the tenant, or if the judgment is for two months or less of rent. The bill has a curious additional restriction that states, “If a tenant has filed a motion to stay a writ of restitution from execution, the court may only award attorneys’ fees to the landlord if the tenant is permitted to be reinstated.” (A writ of restitution is the court’s order to the Sheriff to remove the tenant and his property.) This sentence could be interpreted to mean that the landlord gets no attorney fees for the entire unlawful detainer suit if the tenant moves to stay restitution and ultimately loses the property. But, I believe this provision is meant to address only the attorney fees incurred defending against the tenant’s motion to stay restitution by not penalizing a tenant who tries and fails to get an extension of the time he has to catch-up on rent by imposing additional attorney fees. Notice that the landlord and tenant cannot contract around the restrictions explained in this paragraph.
There are other changes to the landlord-tenant act in this bill that I have not covered. But most of those changes are in the details of the eviction process itself.
Like many things in our modern society, the legal relationship between landlords and residential tenants is only getting more complicated. It is important to understand the rules to avoid financially unpleasant situations. Landlords especially should build in some allowance for legal advice into their budgets.
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