Are landlord-tenant laws
creating SLUMS?

Housing inspectors tell their experiences
      We did not go to the inner city. We visited small towns in the countryside. We interviewed local housing inspectors. Every day they go into many homes. Usually it’s the worst housing around.
      What turns buildings into slums? Do the laws help or hurt?
      They all agreed: rent withholding, a state law, is actually creating worse housing conditions in their towns.
      Tenants live rent-free as long as bad housing conditions remain. So cash-starved housing gets run rapidly into the ground — literally in many cases.
      All these inspectors support mandatory rent escrowing, which preserves a tenant’s right to withhold rent — but doesn’t let the tenant pocket the money, so that ultimately the landlord will have the money to save the housing.
      Here is what these inspectors told us.

  Quotes from the Inspectors:

      “The code is being manipulated not for public welfare but as a tool for litigation between tenant and landlord.”
      “The lead law has killed many mom-and-pop landlords.”
      “This town is crumbling before our eyes.”
      “It’s a progressive-type problem that turns into a cancer in the community.”
      “We are a tiny town with every single problem that a major city has.”
      “Rent escrowing will remove the landlord mantra that they have no money to
repair their property.”
      “I believe rent escrowing has a lot of merit.”

Inspectors Lisa Hebert ∓mp; Sharon White
Tenants in control, owners immobilized
      “This was a great vent session,” said Sharon White, a roving county inspector who stops once a week in the small town of Greenfield, Massachusetts, population 18,600. “I just dropped ten pounds of frustration.”
      Their frustration is with the kind of tenant-landlord situations that “take up so much of our time,” Sharon explained. “They want hearings. There are accusations and counter-accusations. They refuse mediation. It’s a very time-consuming process for us. Meanwhile, the housing is not getting fixed up.”
      She and Lisa Hebert, Greenfield’s full-time inspector, had been talking for nearly two hours about the problems in Greenfield’s low-income housing. And their sympathy went out to the many little landlords hurt in the process.
      “The majority of landlords are people who have bought one house,” Lisa said. “They don’t know how to treat the property as a business, they don’t know the state sanitary code, they don’t know how to screen tenants, and they wind up in a situation they can’t control.”
      “Yep,” Sharon agreed. “Problems escalate, the tenant basically has control of the property, and the owner can’t afford to do the repairs.”
      Lisa went on to describe the “problem-type” tenant who is not paying rent, claiming code violations and even damaging the property. “The owners are not savvy on how to use the court system,” Lisa said, “and it becomes a major emotional deal for small owners. Their nerves are on edge.”
      “I’ve had landlords in this office crying,” Lisa said, referring to a husband and wife who got cited for lead paint, tried several different methods to finance the lead paint abatement — and failed because there was not enough value in the building to support a loan. The owners asked the tenant to leave; the tenant refused. The problem was only solved when the owners took a radical step: they sold the single-family home they lived in, moved into the rental property, and used the sale proceeds to abate. “It was solved at a very high cost to the family,” Lisa admitted.
      Picking up the point, Sharon said: “The lead law has killed many mom-and-pop landlords.” She was referring to the high cost of deleading that hits at the very moment that tenants stop paying their rent. “The tenants call us and boast that they have lead paint or boast that they have roaches. It kills these small investment owners,” she repeated. “The tenants are thinking: ’Good, now I can live rent-free.’”
      Now Lisa picked up the point: “I think that’s what these tenants are told by legal services. They are pretty much savvy legally by the time they come to us. They have talked to legal services.”
      “Some tenants won’t allow landlords in to repair,” Sharon said.
      Then Lisa told of a case that went on for month and months. “Every time we went,” Lisa said, “there was another code violation to look at. The tenant hadn’t paid rent for a full year. Finally, it was settled out of court with four more months of free occupancy.”
      Sharon continued the story: “It was a tremendous settlement for the tenant, but still the tenant could not drop the code violations. ’I’m earthquake-scared,’ the tenant said to us afterwards. ’What about these floor boards?’”
      How much do tenants deliberately damage? “If it’s filth, like a filthy refrigerator,” said Lisa, “it’s easy to write up the tenant and we do. But broken windows? We can’t determine who. I went into one apartment where every screen was ripped. ’How did this happen?’ I asked. ’I don’t know,’ says the tenant. Even if the tenant did it, the landlord has to fix them, so we write up the landlord. And it happens over and over. That landlord told me ’I want to be there for the reinspection. I’ve fixed that screen three times.’ That’s the part of the system that really doesn’t work. The owner fixes an eave, the tenant pulls down the board. The tenants are owning the building at this point. And I can’t blame the owner. The owner just puts his hands over his face. Some owners don’t even try to evict. They become immobilized.”
      “The balance is off in the laws,” they agreed. Mandatory rent escrowing “would tighten up the system. The only other alternative besides escrowing is receivership, but that’s very hard to do.”
      JOB WELL DONE. Inspectors Lisa Hebert (left) and Sharon White stood before a multi-family house in Greenfield they “rescued” after it went downhill fast. “It was a cute property,” the neighbors said. Then it went into foreclosure. “The tenants were using the system, definitely creating code violations,” Sharon said. “The tenants refused a financial offer to move out.” Lisa and Sharon described how it used to look: five unregistered vehicles in the driveway, including a school bus leaning on the house next door; animals; two dangerous chimneys spewing black smoke; trash all around. And the worst: a basement they would not even walk in. It was filled with raw sewage from a broken pipe. It had to be shoveled out.

Inspector Charlie Kaniecki
A cancer in the community
      About once every six months, Charlie Kaniecki boards up another multi-family house in Easthampton, Massachusetts, a small town of 17,000 population where Charlie is the health inspector.
      Typically, there is a non-paying tenant, a tenant who is “withholding” their rent. But when a house gets boarded up, all the tenants get evicted including paying ones. They are being evicted by Charlie’s Board of Health, not their landlord.
      And as Charlie said, “the town is losing housing stock.”
      What kind of housing is it? It’s all woodframe housing. Usually, it’s housing in the center of town, originally built for working-class and immigrant families, with four to ten units in each building. “Rarely do you see duplexes turn into slums,” Charlie said.
      What kind of tenants? Charlie described them as lower-income families, usually three or four children, living somewhat crowded, earning a living in machine work, warehousing, manufacturing.
      What kind of owners? We thought we’d hear about high-income speculators. But Charlie said most of them were long-term owners, typically in their 50’s, usually a husband and a wife working together full-time in the rental business.
      “This section of the community has become stagnant,” Charlie explained, “and it affects the entire neighborhood.”
      Many of these tenants are left out of the current economic boom, Charlie went on, so tenant incomes limit how much these landlords can charge for rent. As a consequence, the owners, too, are missing out on the economic boom, and that limits their maintenance and repairs. There is no equity to take out loans to do capital improvements. So the only work done on these properties is “response-type” repairs or “crisis management.”
      These owners do “some repairs,” Charlie said, like fixing broken hot water heaters, keeping furnaces operating, basic plumbing repairs. They do their own repairs themselves (because they can’t afford to hire tradesmen), and they do “zero capital improvements,” Charlie said. Of course, there’s no money for capital improvements either.
      “For example, they won’t change an electric hot water heater into a gas hot water heater that’s more efficient for everyone,” Charlie said. “And they’ll tack up a piece of No. 2 grade pine instead of higher-quality moulding wood.”
      So the quality of the unit gradually goes down hill. “It’s a progressive-type problem that turns into a cancer in the community,” Charlie said.
      The real killer of this marginal housing is, finally, the rent-withholding tenant, Charlie explained. When there is suddenly no income from rent, “this only magnifies the repair problems,” he said. “That’s what’s causing the landlord to fall into the ’slumlord’ category.”
      Most of the time, rent withholding does not start with code violations. It starts with tenants who can’t pay their rent. Charlie explained: “The first comment I get at the door from the tenant is: ’I’m going to withhold my rent.’ They don’t even talk about code violations. The bulk of the calls come in after they get the eviction notice.”       Do the tenants actually damage their apartments? “It’s hard to call that issue,” Charlie said. “Coming in two days later, I’ve got no way of knowing whether the tenant did the damage.”
      But deliberate damage or not, Charlie was very clear: “The code is being manipulated not for public welfare, but as a tool for litigation between tenant and landlord. I believe rent escrowing has a lot of merit. It would free up my time for bona fide cases.” Charlie estimated that maybe 5% of rental housing is marginal, “but it takes up 50% of my time.” Charlie also has to inspect restaurants and septic systems, do “perk” tests for new septic systems, and other responsibilities.
      Then Charlie outlined the typical scenarios that follow rent withholding, as the housing goes, in most cases, rapidly to its death.
      “You’ve got a non-paying tenant and orders to do repairs,” Charlie explained. “The landlords can’t do the repairs without any money and no equity for loans. So the Board of Health must take the owners to courts as ’criminals.’ Finally, the Board of Health must condemn the buildings, evict the tenants including the paying ones, and board them up. Condemnation is the ’kiss of death’ in most cases.”
      “The property sits there for a time,” Charlie went on. “There are several scenarios. Maybe the owner finally finds money for repairs. Maybe the abandoned building attracts vagrants and squatters and becomes a public nuisance. Maybe the city takes it for back taxes and puts the building up for auction. If nobody bids, the city must pay to tear it down.”

Inspector Joan Barry
Saving the housing
      The town of Montague, Massachusetts, has a population of just 8,300, but its health inspector, Joan Barry, complains: “We have every single problem that a major city has, right in our center.”
      Those problems are drug activity, domestic violence, poor housing, abandoned housing, and businesses that have closed out of fear of crime.
      “This town is crumbling before our eyes,” Joan said. “It feels hopeless sometimes.” Just a couple blocks from her town hall office, Joan pointed out two abandoned houses and one former “wreck” she helped save.
      Her description of the housing at the center of the problem was very similar to Charlie Kaniecki’s description for Easthampton: 4-to-10-unit woodframe buildings originally built in the town’s former industrial center. It’s occupied, Joan said, by tenants who pay little or no rent, whether it’s because of low incomes or — in the case of “professional tenants” — a pattern of rent withholding for code violations.
      “I’ve been in the houses, it’s all the same people, it’s all one package,” Joan said.       Joan’s goal is to “recapture” the housing. When a rent-withholding situation gets to the point where the Board of Health wants to condemn it, Joan knows the housing is on the brink of the downward spiral to destruction and abandonment.
      “The last thing we want to do is go to court,” Joan said. “It never helps anyone. It is our last resort. If someone is interested in fixing up their property, we work with them, even if it takes time. We are 100% supportive.”
      Rather than condemning a property or putting it into receivership, Joan has worked out a device called non-occupancy agreements. The city negotiates a period of non-occupancy with the owners, who get time to fix the property up or sell it to someone who will fix it up.
      Another device Joan would like is mandatory rent escrowing. “The system supports ’professional tenants’ who have nothing to lose and everything to gain by not paying rent,” she said. “Rent escrowing will discourage them.” And she added: “Rent escrowing will remove the common landlord mantra that they have no money to repair their property.”
      BEFORE INSPECTOR Joan Barry came on the scene, a house one block from the town’s center had rotting back porches, junk cars parked in back, dogs tied up to fences, a dumpster overflowing with trash, a garage with no doors filled with debris for all to see, and no grass or flowers. Joan worked with the owner, letting him take time. “The owner is now grateful,” Barry said. Tenants living rent-free could stymie an owner’s efforts to fix a place like this up and force the owner to walk away.
      Just two blocks away, on the town’s main street, no one was paying rent in a Montague commercial/residential building when a fire broke out, killing one person and seriously injuring another. Doesn’t public health require something be done?

The state and our cities and our towns spend millions paying housing inspectors to keep housing in good shape. And then the state cuts off their legs — by encouraging rent withholding that makes it impossible to improve (or even save) the housing.