May 2022

It's all just money, right? rhino!UP for May 1, 2022

When you give a landlord money, you need to know the terms of the exchange. Too many tenants are paying too much because they didn't understand the differences between a fee, a deposit, a security deposit, and a fine or penalty.

Let's start with fees and deposits.

A fee is a charge for a service provided by the landlord. For example, when you fill out a lease application, the landlord may ask for a screening fee. That's a payment so the landlord can obtain a credit or screening report. Fees are not refundable. If the report comes back negative and the landlord denies your application, you're not entitled to a refund.

What about a "deposit to hold the unit? Sometimes landlords will ask prospective tenants to give them a deposit when they take an application. The deposit is a pledge that the tenant will sign the lease, if the application is approved. At that point, the deposit to "hold the unit" is applied to the first month's rent or to the security deposit. If the application is denied, the landlord must return the deposit to the prospective tenant. The key thing is that both parties should agree in writing to the terms of the agreement. Both parties sign the agreement and both have copies.

A security deposit is an amount of money that the landlord holds during the tenancy to assure that the tenant pays the rent and doesn't damage the property besides "normal wear and tear." Unlike a deposit to hold a unit, the terms and conditions of a security deposit are governed by law (ORC 5321.16). Still, some caution is required. Tenants should do a "walk thru" to determine what conditions were present before the tenants sign the lease or take possession. If the landlord says that the unit is currently occupied and so the prospective tenant can't do a walk through, then walk away.

What are pet deposits? A landlord may also want a pet deposit which protects the landlord against damages caused by Fido. Since Fido is not a party to the rental agreement, a pet deposit is really just an extra security deposit, subject to the same terms as a regular deposit. In Ohio, landlords are required to pay 5% interest on any amount of a security deposit that is in excess of one month's rent. Say the rent is $600, the security deposit is $600 and the pet deposit is $150. The landlord would be obligated to pay interest on the $150 that is in excess of one month's rent.

WAIT! What about a pet fee? Sometimes landlords will charge a monthly pet fee in addition to the rent. Pet fees are not refundable. Can a pet fee be discriminatory? Maybe. For example, a landlord can't charge a pet fee for a service or support animal required by a person with a disability. Tenants with a disability may request a reasonable accommodation of a rental policy or procedure if they can show that there is a medical need. Support animals are not pets...therefore no pet deposit or pet fee. Examples of support animals could include a specially trained animal like a seeing-eye dog, but may also include a companion animal that is needed by a person with a mental health disability. Fair housing laws for support or service animals in housing settings are pretty broad. No special training required, but a landlord can ask for some proof of disability and the need for an animal. Years back, a child with ADHD got a prescription from his therapist for a companion dog, while other tenants in the same complex without out a diagnosis were required to pay the pet fee. On the other hand, in a small town in SW Ohio, everyone in town knew about the "dog doctor" who would write a prescription for anyone who came in for an appointment. Solution? The landlord can ask for more details about the connection between the disability and the accommodation. (HUD-DOJ Joint Memorandum on Reasonable Accommodations, (Question 18, page 13.) What if a service animal causes a damage and there's no pet deposit? The same memorandum states that the landlord may charge a fee for the damage caused by a service or support animal (Question 11, Example 2, page 9)

Landlords generally can't charge a fine or penalty, but sometimes a fee feels like that. In Russells Point, Ohio, each townhouse tenant is responsible to replace a burned out porch light. Typically, maintenance people would go through the property at dusk and when they saw a burned out porch light, they'd replace it and management would send the tenant a bill for $5. When tenants complained that the light bulb only cost a buck, management said it cost money to have the maintenance guys out checking. It felt like a penalty to the tenants. Lockouts are a common form of fee that absent minded tenants get charged for. Remember that fees have to be reasonably related to the cost of the service. In a case out of Lakewood Ohio, a landlord deducted $300 from a security deposit because he removed two bags of garbage left behind when they moved. Landlord argued that he was an attorney and his hourly billing rate was $100/hour, so he was entitled to charge for the travel time from his home, to the unit, to the tree lawn, and home again. The tenants won.

Stories beneath the headlines rhino!UP for May 8, 2022.

Beneath the news of war, courts, and midterms, some interesting rental housing stories have gone underground. This week rhino!UP digs them up for you.

Roommates barred! The Kansas City Star reports: Co-living rentals banned in this Johnson County city after unanimous council vote. "On Monday, a Johnson County city unanimously voted to ban a living arrangement aimed at helping tenants decrease the amount of rent they pay. The Shawnee City Council voted 8-0 to ban co-living, becoming among the first Kansas City area municipalities to prevent the practice, which has gained popularity in recent years as rent and home prices have soared. The new ordinance defines a co-living group as a group of at least four unrelated adults living together in a dwelling unit. The ordinance stated that if one adult is unrelated to another adult, then the entire group will be classified as unrelated." More here. Exclusionary zoning in single family small towns and suburbs is a common, if subtle, form of discrimination. If single family home owners can't prevent an influx of new people into the US, at least they can keep them out of the neighborhood by restricting occupancy.

Echos of a rhino!UP story Organize to Own from January, 2022. The New York Times (via Yahoo News) reports: A Landlord ‘Underestimated’ His Tenants. Now They Could Own the Building. Facing gentrification of their Bronx apartment building, a diverse group of tenants is on the verge of buying their apartment homes. "A nonprofit organization paid the landlord $2.6 million for the property in February and plans to eventually hand it over to the tenants, who will be able to buy their apartments for $2,500 each. Over the past five years, only 11 rental buildings have converted to this type of limited equity co-op, called a Housing Development Fund Corporation co-op, where tenants buy their apartments at prices set by the city and can sell them for a limited profit." It's important to note that the tenants benefited from an outside organizer to hold the group together and a non-profit organization to provide financial assistance to make the transition a reality.

How will higher interest rates affect rents? It's easy to understand that higher mortgage rates will cut into single family home purchases. But since the emergence of corporate homeownership of the Single Family Rental (SFR) market, the impact of mortgage rates is harder to predict. Under the simple laws of supply and demand, many first time buyers will be looking for single family rentals. With much of the SFR market controlled by Wall Street landlords, rents get a double whammy. There's more demand from wannabe home buyers and higher financing costs for corporate landlords who need to show a profit every quarter. Rents go up!

At the other end of the economic spectrum, low and moderate income homeowners who have not recovered from the Pandemic Recession are increasingly at risk of foreclosure. ATTOM reports: "States with the highest foreclosure rates were Illinois (one in every 791 housing units with a foreclosure filing); New Jersey (one in every 792 housing units); Ohio (one in every 991 housing units); South Carolina (one in every 1,081 housing units); and Nevada (one in every 1,090 housing units)." An increase in foreclosure will bring more rental homeseekers into an already overheated market.

Build Back Better could have made a difference and speedy action by Freddie Mac and Fannie Mae (Regulating Housing Investors Feb 22, 2022) could have capped corporate speculation a year ago, but here we are now. Is there any wonder why many voters are in a "throw the bums out" mood?

Will eviction reforms keep eviction rates lower than before the pandemic? Right now there's a catastrophe chorus of articles about the next impending eviction crisis. Remember the early days of the pandemic, before there was rental assistance and everyone was predicting an eviction avalanche or tsunami? RHINO wonders if housing reforms adopted in anticipation of the 2020 eviction tsunami, might now mitigate an eviction surge back to pre-pandemic levels. Innovations like Pay to Stay, Right to Counsel, and rental assistance suppress the number of involuntary displacements. These pandemic innovations have also made many courts more sensitive to the economic and social impacts of involuntary displacement. And, finally, the pandemic innovations have given tenants hope that offering a defense can reduce the worst impacts of eviction.


05/10/22. The Hill. Renters are the overlooked victims of big investors. "Mega-landlords — institutional real estate investors that own and rent out thousands of single-family homes — have quietly operated under the radar over the last ten years as they have gobbled up huge numbers of single-family homes. Families desperately trying to buy houses are losing out to institutional investors who can out-bid them, offer all-cash deals, and waive mortgage and inspection contingencies. But as the mega-landlords have exploded in size, so has the legion of families who rent single-family homes from them. And renters are calling attention to neglected maintenance, excessive rent increases, and capriciously non-renewed leases by the mega-landlords. While we must attend to their stifling effect on homeownership, we must also take this moment to protect the growing contingent of renters from mega-landlords’ egregious practices." I couldn't have said it better myself...I know...I tried.

Experts on tap...not on top. rhino!UP for May 15, 2022

This week's story of a groups of tenants seeking legislative changes underscores the role played by "outside experts." Tired of Mold, Mice and Bad Management, Chicago Tenants Take a Stand tells the story of a fledgling tenant leader and a supportive organizer. After years of fighting for piecemeal repairs, a group of Chicago tenants shifted from complaining to campaigning. "According to the Chicago Department of Building records, Jamerson’s apartment building failed four city inspections since January of 2020. An inspection from late April marks the building as “partial passed” without any other information. A July 2021 inspection showed that the building had missing fire extinguishers, peeling paint, shattered glass windows on doors, leaking toilets and a lack of hot water." Now the tenants are making the city's department of housing the target of their change movement. The organizer from Metropolitan Tenants Organization provided information and connections with other buildings managed by the same company.

Last week rhino!UP shared a snapshot of some Bronx tenants who are buying their building under a rarely utilized urban homesteading program. The New York Times (via Yahoo News) reported: A Landlord ‘Underestimated’ His Tenants. Now They Could Own the Building touched on the key roles of their outside organizer and their financial advisors. rhino!UP recommends you read both stories to get the details. Right now rhino!UP wants to focus on the relationship between tenant activists and advocate/experts.

During his lifetime, Saul Alinsky was always pretty clear about keeping grassroots leaders (and members) in charge of organizing campaigns. Alinsky Rule #2 is "Never go outside the expertise of your people." However in his later years Alinsky became a "celebrity" and after his death he became an "icon." Many wannabe change agents emulated the icon, not the real practitioner. For organizers whose primary interest is a social change goal which is outside the experience of the people, there's a temptation to use community people as foot soldiers in a larger campaign. A revealing 2020 webinar entitled Realizing Democracy: Turning Participation Into Power captures the challenges facing motivated and sincere organizers who could be riding on the backs of activists' discontents.

Two simple organizing techniques can help guide an empowering practice that keeps "outside organizers" from calling the shots and owning the victories.

  • Organizers can link tenant activists with the experiences of other tenants in the "community" or with the legal framework of tenants rights. In the case of the Chicago group cited above, the grassroots leaders were introduced to tenants in other buildings who were facing the same problems with the same landlord. They provided information about code enforcement. Similarly in NYC, organizers linked disgruntled tenants with the United Housing Assistance Board. This kind of mentoring/nurturing takes time, but it is critical to permitting activists to make informed choices about strategy.

  • Organizers can promote opportunities for grassroots activists to discover their skills and values. A classic example is the emergence of Cesar Chavez and Dolores Huerta from the Alinsky-inspired Community Service Organization to the leadership of the United Farm Workers. Self actualization of activists through engagement in a citizen's campaign is a common phenomena.

Too often, advocate/experts are in a hurry and looking for a "client" (a victim with a problem) that can be solved by legal or social action without first building relationships with the community and engaging with them in interactive learning. A grassroots group which gets an attorney to "take their case" inevitably faces years of litigation, during which time they have little to do except wait for an outcome. Winning a Right to Counsel law for tenants facing eviction, or a Pay-to-Stay ordinance means little to tenants facing the prospect of homelessness.

The corporate/philanthropic advocates who lobbied for the passage of the Ohio Landlord Tenant Law in 1974 recognized that a new law meant nothing without the capacity of tenants to exercise the rights in the law.They created the Cleveland Tenants Organization in 1975 to work directly with the community at risk. Likewise, creating the Cleveland Housing Court in 1980 was an important reform only after CTO sponsored debates between Judicial candidates for grassroots activists around the city.

Can advocates and experts utilize their skills to "lead from behind?" It's a tricky ambiguity that journalist Ryan Lizza explores in the context of Barack Obama's use of the concept to describe foreign adventurism. Keeping experts on tap requires that activists and experts be in a constant dialogue over their respective roles in making change. Mandela, who was an expert first, then a leader, captures the ambiguity when he said "It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership.”