What’s wrong with ‘pay to play’ argument

October 2007

Legal services lawyers frequently argue to state legislators that a rent escrow law would require tenants to pay before they can get their “day in court.” In other words, they have to “pay to play.” What they would have to pay, of course, is their monthly rent – to the court instead of to their landlord.

This argument sounds sympathetic. Most court proceedings do not require large fees (other than to a lawyer).

But we must remind state legislators that a rent escrow law is simply a modification of the state’s current rent withholding law (MGL Ch. 239 Sec. 8A). That law authorizes tenants to WITHHOLD rent to pressure landlords to make neglected repairs. They are to keep the rent for eventual payment to the landlord after repairs are done. They are not to spend the rent or otherwise keep it. When repairs are finally done, a judge may award the tenant some portion of the withheld rent as compensation for living in a defective apartment, but that amount can only be determined after repairs are done and is almost always a small portion of the amount withheld.

Prove it’s withheld

Obviously, the problem is that tenants do spend the rent money. Or they never had enough money to pay the rent in the first place, so they turn to the rent withholding statute, point to some code violations (or create them), and claim they are withholding the rent. They are in fact not paying their rent and won’t pay or won’t be able to pay the allegedly withheld rent when repairs are done.

Rent escrowing just guarantees that tenants do have the withheld rent that the law requires them to hold. It is not a court fee. Moreover, failing to escrow does not deprive the tenant of their day in court. They are always, always, always entitled to a trial before they are evicted, without paying any fee. They can argue that the landlord has made a mistake and they did pay the rent.  If they have not escrowed, however, they cannot argue that they are withholding rent for code violations.

What if a tenant who can’t pay the rent lives in a defective apartment? The tenant still gets his day in court on both issues (rent payment and bad conditions) without paying any fee. The issues are divided up into two cases. The eviction case is about whether the tenant has paid the rent, and if he escrows, that counts as paying the rent. If he doesn’t escrow and has not paid the rent owed, he is evicted. Meanwhile, the tenant can start his own case against the landlord for damages from living in a defective apartment.

Supreme Court okays it

This two-case outcome is exactly what the U.S. Supreme Court ruled is acceptable in its 1972 Lindsey v. Normet decsion: “The Court has twice held that it is permissible to segregate an action for possession from other actions arising out of the same factual situation….The tenant is not foreclosed from instituting his own action against the landlord and litigating his right to damages….There are unique factual and legal characteristics of the landlord-tenant relationship that justify special statutory treatment inapplicable to other litigants. The tenant is, by definition, in possession of the property of the landlord; unless a judicially supervised mechanism is provided…, the tenant would be able to deny the landlord the rights of income….Holding over by the tenant beyond the term of his agreement or holding without payment of rent has proven a virulent source of friction and dispute. We think [the State] was well within its constitutional powers in providing for rapid and peaceful settlement of these disputes.”