Landlords Push Back at Attempts to Limit Rental Periods

Tuesday, November 6, 2018, 7:41 am
By: 
Alice Dreger

Above: 157 Kedzie Street, owned by CRMC and rented by Council Member Aaron Stephens as an undergraduate

Several major East Lansing landlords are pushing back against Council Member Aaron Stephens’ attempts to outlaw the practice of having students pay several months’ rent at a time – with one landlord even showing up at City Council last week to show off Stephens’ rental application from when he was a student, apparently to suggest Stephens was misrepresenting landlord practices.

The landlords and their attorneys are suggesting the City Attorney is simply wrong about what State law and case law say about this matter. 

The matter has grown heated enough that, at last week’s Council meeting, Stephens sought to put off formally considering creating a new law regulating permissable rental periods until Council’s December 4 meeting. That delay was met with unanimous agreement.

Putting a possible vote off until December, Stephens told Council, will give more time for him to meet and talk with landlords and MSU students about the matter. He said this would help “to make sure we are doing it the right way.”

Back at the October 23 meeting of Council, Stephens indicated he wanted to ban the practice of landlords asking tenants to pay several months’ rent at a time – typically at the beginning of an MSU semester for an entire semester. He explained that he had been subject to this practice as a student and felt it was onerous.

At that meeting, City Attorney Tom Yeadon told Council that at first he had had “some trepidation” about drafting an ordinance to address Stephens’ concern, because it would seem to be a case of “interference with contractual rights.”

But, Yeadon told Council that, upon further review, he found that the courts have interpreted State law to mean landlords can’t charge more than one month’s rent at a time and can’t charge more than the equivalent of one-and-a-half month’s rent for a security deposit.

To address Stephens’ concerns, Yeadon drafted Ordinance 1444, which states in part, “It is a prohibited lease practice to require the payment of more than one month’s rent in advance.”

Yeadon explained to Council that, even though he believes State law effectively addresses this, having a local law of the type Stephens’ envisioned would help to “publicize illegal practices” and provide “some teeth” to the City “to take this up where a tenant might not have the resources” to challenge a landlord.

Mayor Mark Meadows indicated strong support for the direction in which this was going at the October 23 meeting. The plan was to move this fast – to have Ordinance 1444 on the agenda for November 7, for possible passage then.

But this past week, a number of East Lansing landlords and their lawyers objected to this regulatory move. Attorney Jeffrey Ray submitted a sort of four-page brief, with attachments, arguing the City doesn’t have the power to do what this law seeks to do.

Ray’s letter indicated that in this matter he is representing Hagan Realty Inc., DJH Realty Inc., Prime Housing Group, JKB Management LLC, Spiridakos Property Management, Whiddon Properties LLC, M C Properties LLC, MRK Management LLC, NorLaCoN LLC, John Hauer, David Larrabee, Gutow Management, Cuddeback Real Estate LLC, Kores Property, Don Behm, SRP Management, AMP Rental Properties LLC, and Mark Fisk – Byrum and Fisk Communication.

Ray argued in his communication that students have “plenty of options to choose from with varying payment schedules and ‘rental terms,’” and said that the practice of asking for a semester’s rent differs not at all from what happens with the MSU dorms. He also suggested that State law and court interpretations envision rental periods that may be greater than one month.

At last Tuesday’s Council meeting, Ray and a number of landlords showed up to personally speak against the proposed ordinance. Jeff Hudgins of Hudgins Realty told Council that his company “accommodates as we can” how tenants want to pay.

Hudgins said that “over the years,” the practice of collecting rents in periods other than one month “has been investigated and found sound.” Hudgins noted that people with vacation cottages often rent for a shorter or longer period than one month.

“Let consumers decide how to rent,” Hudgins told Council.

Attorney Andrews Sass, representing the landlord CRMC (Community Resource Management), suggested Yeadon was misunderstanding a case to which he had referred when Yeadon said the law effectively requires landlords to use rental periods of one month or less.

Sass also referred to a Michigan law that specifically addressed leases “payable at periods of less than 3 months,” suggesting that State law recognizes rental periods may vary and may be longer than one month.

Sass warned, “I think if you try to pass it, you will have problems with this ordinance.” He said that if it was not applied to MSU as well as private landlords, “I think you will have a constitutional problem with unequal protection under the law.”

Joe Goodsir, co-owner of CRMC, took the podium following his attorney and proceeded to hand out to Council what he said were redacted copies of Aaron Stephens’ application to rent a house at 157 Kedzie Street, from years earlier, when Stephens was an undergraduate student at MSU.

Goodsir (above) said the application asked whether the applicant could pay by the semester, and that Stephens had checked “yes.” Goodsir then explained that if an applicant checks “no” on that question, his company will find an accommodation.

But, Goodsir said, many of his tenants, particularly in the larger houses, found it more manageable to pay by the semester, and more attractive to do so when offered a discount for paying several months in advance. Goodsir said that offering a pay-by-semester discounted option was “win-win.”

He told Council, “You may not like it, but it is not illegal.”

Meadows asked Goodsir if he turns away tenants who say they can’t pay by the semester, and Goodsir said he does not. Goodsir said it was offered as an option, not a requirement.

In response, Mayor Pro Tem Erik Altmann said he read the proposed ordinance to allow landlords to offer choice to the tenants – that it would only prohibit requiring paying more than one month at a time. Meadows agreed with Altmann’s reading, indicating he thought if the landlords wanted to offer a multi-month rental period, they could still do so under this law.

Altmann also told Goodsir, “You didn’t help your case by outing one of your tenants.” He said the materials Goodsir had just handed out had personal information of some of the applicants unredacted.

Stephens and Council Member Ruth Beier also strongly objected to what Goodsir had done.

Beier also asked Goodsir, if two people applied for the same house, and one could pay by the semester and the other could not, what would happen? Goodsir said many factors are taken into account when a person applies, but that generally his company would accept whoever came first, if they were otherwise qualified.

Matt Hagan of Hagan Reality spoke last on the matter, thanking Stephens for slowing down the move to pass the law and thanking him for coming to have a conversation with his company. He said he appreciated an approach that seeks to “work together on a solution,” and that he looked forward to continued discussions on the matter.

As it stands now, Council is set to take up the matter at its December 4 meeting. At all Council meetings, anyone can comment during the public remarks portion of the agenda. Written communications can also be conveyed to Council by email to council@cityofeastlansing.com.

 

Disclosure: Some East Lansing landlords, including some who have objected to the draft ordinance, are donors to East Lansing Info. See our sponsors here.

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