Major Impact To College Rental Market: Landlords Cannot Rent To 4 or More Unrelated Adults In One Unit Without Lodging License

In a decision which will significantly impact landlords renting apartments to students near local colleges and universities and perhaps beyond Boston and Amherst, the Massachusetts Appeals Court ruled that renting to 4 or more unrelated students in one apartment unit is an illegal “lodging house” unless a special license is obtained.

In City of Worcester v. College Hill Properties LLC (Mass. App. Ct. Nov. 8, 2011), several landlords renting to Holy Cross students challenged the legality of the Massachusetts lodging housing law. The law requires a lodging housing license for any unit rented to four or more unrelated adults. City of Worcester officials cited the College Hill landlords for renting to 4 students in each apartment unit, without a proper license and without sprinkler systems. The students all signed a 12 month lease. The Housing Court sided with the city, and when the landlords balked, found them in contempt.

Lodging Housing Law

Although enacted nearly a hundred years ago in 1918, the court found that the lodging house law has relevance today with respect to the common practice of overcrowding persons in an unsuitable space and fire prevention. To obtain a lodging house license, an applicant must have sprinkler systems in the premises, which most landlords find too expensive to install.

The landlords argued that a group of four college students was a “family unit” not lodgers. While the landlords get credit for creative lawyering, the court didn’t buy the argument, holding that “we have no doubt that four or more unrelated adults, sharing housing while attending college, is not an arrangement that lends itself to the formation of a stable and durable household.”

Impact Outside College Towns?

Prior to this decision, housing authorities typically allowed 4 or more unrelated adults to occupy single apartments as roommates without a lodging license provided that minimum space requirements were met: 150 s.f. of living space for the first person, 100 s.f. for each additional person (3 occupants = 350 s.f. of living space); 70 s.f. of bedroom space for 1st person, plus 50 s.f. for additional person (120 s.f. for 2 persons in one bedroom).

After the College Hill decision, however, this generally accepted interpretation is now in question. The court did not mention adult roommates, nor did it make any distinction between undergraduates or adults. In my opinion, using the College Hill ruling, housing authorities, who want to crack down on unruly, crowded apartment dwellers, may seek to require lodging licenses for apartments occupied by 4 or more unrelated persons.

Boston: Rule Is 5+ Undergrads

In the City of Boston, a new zoning ordinance went into effect in 2008 prohibiting 5 or more undergraduate students from living in one apartment unit. We will see how the Boston Inspectional Services Dept. interprets the College Hill ruling.

________________________________________

Richard D. Vetstein, Esq. is an experienced Massachusetts real estate and landlord-tenant attorney. Please contact him if you need legal assistance with rental property legal issues.

In a few weeks, the *quiet* streets of Allston, Brighton, Cambridge, Boston and other Massachusetts tenant friendly cities will turn into the zoo that is known as student moving week. So it’s time to review frequently asked questions for Massachusetts landlord tenant rental law.

Screening Prospective Tenants

Landlords can legally ask about a tenant’s income, current employment, prior landlord references, credit history, and criminal history. Your rental application should include a full release of all credit history and CORI (Criminal Offender Registry Information).  Use CORI information with a great deal of caution, however, and offer the tenant an opportunity to explain any issues. Landlords should also check the Sex Offender Registry to ascertain whether a potential tenant could be a safety risk to others nearby. Use the rental application and other forms from the Greater Boston Real Estate Board.

Under Massachusetts discrimination laws, a landlord cannot refuse to rent to a tenant on the basis of the tenant’s race, color, national origin, ancestry, gender, sexual orientation, age, marital status, religion, military/veteran status, disability, receipt of public assistance, and children. It’s best to stay away from asking about these topics.

The Boston Undergraduate Rule

Update: Dec. 2011:  Renting To 4 or More College Students Considered Illegal Lodging House. Click Here to Read More.

Under a two year old Boston zoning ordinance, no more than four (4) full time undergraduate students may live together in a single apartment.  The rule does not apply to graduate students or fraternity/sorority houses. The fines for violating this ordinance are stiff; don’t do it.

While on this topic, landlords should ensure that all roommates are signatories to the lease and are “jointly and severally” liable for rent. That way, if one tenant skips out, the remaining tenants remain liable for the full rent.

Students often create problems for landlords. Meet with students personally before signing the lease and firmly explain a “no tolerance” policy against excessive noise, parties and misbehavior. An ounce of prevention is worth a pound of cure here.

Pets

Subject to some restrictions, landlords may prohibit pets altogether or use reasonable rules to control them on rental property. Under federal law, a landlord cannot prohibit a qualified disabled tenant from using a service pet such as a seeing eye dog. There are also restrictions on prohibiting household pets for federally subsidized elderly and disabled housing project.

More topics, including last month/security deposits and illegal lease clauses, to follow next!

Breaking News (8/10/10): Two Local Real Estate Firms Fined By Mass. Attorney General For Lead Paint Housing Discrimination

My Boston.com fellow blogger, buyer’s agent Rona Fischman, has fielded several questions recently regarding the Massachusetts Lead Paint Law. Prospective renters have called apartment listings only to be hung up on abruptly with a “It’s not deleaded!” if they hear a child in the background or if they answer truthfully about having children. Mothers have received termination notices when the landlord discovers they are pregnant – usually of course for tenancies at will. Finally, there is a listing this week in a local paper for an owner occupied 2 family rental which states “Unit Not Deleaded” right in the ad.

The short answer is these are all likely violations of the Massachusetts Lead Paint Law, and could expose the offending landlords to stiff penalties and damages.

Under the Massachusetts Lead Paint Law, whenever a child under six years of age comes to live in a rental property, the property owner has a responsibility to discover whether there is any lead paint on the property and to de-lead to protect the young children living there. A property owner or real estate agent cannot get around the legal requirements to disclose information about known lead hazards simply by refusing to rent to families with young children. They also cannot refuse to renew the lease of a pregnant woman or a family with young children just because a property may contain lead hazards. And property owners cannot refuse to rent simply because they do not want to spend the money to de-lead the property. Any of these acts is a violation of the Lead Law, the Consumer Protection Act, and various Massachusetts anti-discrimination statutes that can have serious penalties for a property owner or real estate agent.

As the stories above show, landlords routinely flaunt, or are just plain ignorant of, the law. The issue becomes what to do about it and is it worth the time and aggravation? I guess that depends on your situation. Certainly, if you are being threatened with a discriminatory eviction, your first step should be to contact the Massachusetts Commission Against Discrimination (MCAD) and your local Fair Housing Commission. In a recent case, the MCAD hit a property owner with $25,000 in damages and fines for evicting a young family to avoid de-leading. Next consider hiring a housing discrimination attorney. If you are low on funds, the attorney may agree to take the case on a contingency because violations of the lead paint law and discrimination laws provide for the reimbursement of attorneys’ fees and enhanced damages.

As for the “Unit Not Deleaded” ad, while may be truthful, it might as well read “Children Under 6 Not Wanted.” I would advise a landlord to avoid this sort of indirect discriminatory preference.

Lastly, the law is conflicting regarding owner occupied two family homes.  Chapter 151B, the state anti-discrimination law, exempts owner occupied two family homes from the prohibition of discrimination against children. However, there is no such exemption written into the lead paint law. So if a child is born into a owner occupied 2 family, it must be de-leaded. Vacation/recreational rents and short term (31 days or less) rentals are also exempt from the lead paint law.

As always, contact me, Attorney Richard Vetstein with any questions.

Massachusetts Attorney General Martha Coakley today announced that her office has settled 20 cases against landlords and real estate agents accused of violating state anti-discrimination laws across Massachusetts. The companies allegedly made discriminatory statements in online rental advertisements on Craigslist.org which stated “no children” or “no Section 8.” Section 8 is a rental subsidy program of the U.S. Department of Housing and Urban Development. Under Massachusetts law, landlords and realtors cannot refuse to rent to families with children under the lead paint law or because someone receives a housing subsidy to aid in paying their rent. Both the settlements and lawsuits came as part of a statewide investigation into reports of widespread discriminatory internet advertising. The case involved properties in Suffolk, Middlesex, Norfolk, Essex, Bristol, Plymouth, and Hampden counties.

Housing discrimination is a serious problem in Massachusetts. Particularly as more families face tough financial times and have no choice but to rent, landlords and real estate professionals must recognize that the rental market is a regulated industry and compliance with our anti-discrimination laws is among their most important obligations, Coakley said. While we hope that this enforcement initiative will have a deterrent effect, our office will continue to monitor Craigslist and take action against persons and entities that violate the law.

The property owners and real estate agents are collectively required to pay Massachusetts $18,250 with $8,750 suspended pending compliance with the agreements. They must also attend trainings on state and federal fair housing laws and remove lead paint hazards from rental units. The defendants are also required by the agreement to advertise any future rental property as “Equal Housing Opportunity” properties, to maintain a record of rental applicants submitted by prospective tenants and to to report all discrimination complaints received to the attorney general’s office. The defendants will also place more than 60 postings on Craigslist to inform the website’s uses that the attorney general monitors the site for discriminatory advertising and that it is against Massachusetts law to state a discriminatory preference against families with children or against recipients of housing assistance subsidies.

We’ll have to file this one under “I told you so!” In my prior post, Massachusetts Landlord Tenant Law: A Legal Refresher Course For Landlords, I warned landlords about the consequences of an illegal policy of refusing to rent to families with children or to tenants receiving federal or state rent subsidies. I’m disappointed these landlords are apparently not avid readers of the Massachusetts Real Estate Law Blog!

Rona Fischman, a buyer’s agent and co-author of Boston.com’s Real Estate Now Blog asked me to answer a couple of questions regarding condominiums on her Boston.com blog which I’ve reprinted here:

Is an individual unit owner liable if someone gets hurt in the condominium’s common areas?

The answer is most likely not. This is good lead in to the concept of “common areas.” When someone buys a condominium unit, they also obtain an undivided share of the condominium’s common areas and facilities. Common areas typically include obvious things such as building entrances and exits, lobbies, interior stairways, pools and workout rooms. They also include not so obvious areas such as the space between adjoining units, telecommunication wires, and the roof. As outlined in the “master deed,” each unit owner “owns” an undivided share (expressed as a percentage) of all the common areas. But the condominium association has responsibility over managing and maintaining the common areas. Recognizing that unit owners have very little control over common areas, the Massachusetts Condominium Act provides that only the condominium association can be sued for claims related to common areas. The condominium association should have a master liability insurance policy in place in case anyone gets injured on common area property. If however, the claim is so substantial that all common funds, property and insurance proceeds have been exhausted to pay the claim, individual unit owners could be held liable for the balance due, if any, but only up to their respective percentage interest in the condominium. Now, if your unit has a private deck or porch (which is not a common area) with a faulty railing, you could be held responsible if someone fell. For all these reasons, unit owners should absolutely obtain an “HO-6″ policy for their own liability and an umbrella policy on top of that.

I own a condominium unit and rent it out to students. Am I responsible for my tenant’s noise and disturbance problems?

The answer is yes. While a precise response would depend on the provisions of the condominium’s bylaws, typically, a unit owner is responsible for the actions of tenants. Most often, a condominium’s bylaws and house rules are binding on unit owners, resident family members and tenants. If a tenant violates a house rule — by making excessive noise — the unit owner is responsible for all consequences. The condominium association can require the unit owner to evict the tenant; if the unit owner fails or refuses, the condominium association may be able to take separate legal action against the owner and levy stiff fines. If the bylaws provide, the unit owner may be responsible for reimbursing the condo for legal fees and other expenses incurred in connection with his tenant’s eviction. Disgruntled unit owners can also pursue “nuisance” claims against unit owners who rent to noisy tenants. This is a tricky issue with an absentee unit owner who cannot verify the nature of the complaints. Surely, however, renting to noisy tenants will earn you no favors with your fellow unit owners.

Condominium Living 101

My advice to folks considering purchasing a condominium is to recognize that you are buying into a rather unique form of ownership and community. You will be giving up certain rights taken for granted in single family dwelling life — the right to absolute silence, privacy, and control over all aspects of the property — in exchange for perhaps more amenities, convenience, less maintenance, and better location and price. In some cases, you will also be entering into the uniquely democratic (or in some condos, totalitarian) form of governance, rife with politics, fighting and name-calling–think that Seinfeld episode down at the Del Boca Vista Condos. But seriously, the majority of condominiums are well run. But before you buy, it’s imperative that you and your real estate attorney thoroughly review the condominium documents and budget to ensure you’re not buying into a Seinfeld-esque nightmare.

The Massachusetts Supreme Judicial Court ruled last week that a landlord was liable for breaching the implied warranty of habitability when a tenant’s guest seriously injured himself falling from a defective porch. The case is Scott v. Garfield, and can be found here.

What’s the Implied Warranty of Habitability?

The implied warranty of habitability is a multi-faceted legal concept that encompasses contract and tort principles, as well as the State building and sanitary codes. It imposes a legal duty on a residential landlord, in the form of an implied agreement, to ensure that a rental unit complies with the State building and sanitary codes throughout the term of the lease. If a tenant is injured due to the premises being in violation of code, the landlord can be held liable under the implied warranty of habitability. The implied warranty cannot be waived by a lease provision.

The Decision: Extending the Doctrine

In Scott v. Garfield, the SJC extended the reach of the doctrine from tenants to the guests and lawful visitors of any tenant. The injured victim in the Scott case was a friend of the tenant helping out with a move when a defective second story porch railing gave way, sending him falling and seriously injuring his shoulder. The Court upheld a $450,000 jury verdict in the victim’s favor. The Court reasoned:

Our conclusion that lawful visitors, like tenants, may recover for personal injuries caused by breach of the implied warranty of habitability rests, in part, on the expectation that a tenant might invite a guest into his home, and the concomitant expectation that the tenant’s home must be safe for a guest to visit — which together go to the very heart of the landlord’s contractual obligation to deliver and maintain habitable premises that comply with the building and sanitary codes.

OK, So What?

Whether the implied warranty of habitability is in play in a personal injury case makes a huge difference. Personal injury attorneys love the implied warranty of habitability because the defense of comparative negligence is unavailable, unlike a straight-forward claim for negligence. The comparative negligence defense enables a jury to attribute fault to each party in a personal injury case and reduce liability accordingly. This was a factor in the Scott case as the injured guest had been drinking a few beers during the move, and the jury found him 20% at fault, which would have reduced his verdict by $90,000. (How a couple beers impacted the rotting porch is beyond me, I guess he leaned to hard–juries never cease to amaze me). The verdict remained intact, however, because the jury also found that the landlord had violated the implied warranty of habitability. Thus, in cases where the implied warranty is in play, landlords have one hand tied behind their backs as they can’t point the finger at the plaintiff.

Take-Away: Check Your Porches and Your Liability Insurance

This case is yet another harsh reminder that all landlords must not only check their porches, stairways and railing for defects, but procure general liability insurance with sufficient coverage on rental property. I recommend at least $1 Million/person $2 Million/aggregate which would have covered this verdict entirely, plus paid for the attorneys. Another way to limit risk is to get title to residential rental property out of landlords’ personal names and into a new limited liability company or other corporate entity (not a nominee trust).

This decision is not a surprise in light of the court’s prior decisions eliminating old common law rules of liability for different types of people on property (i.e., tenants, guests, invitees, etc.–notably, trespassers remain a category not entitled to added protection). Given the significance of the case and the fact that it went up to the SJC, the landlord in Scott had liability insurance which covered this verdict and the appeal. But if you’re an uninsured landlord on the wrong side of one of these cases, you got a big check to write or a bankruptcy attorney to see.

As always, email me at rvetstein@vetsteinlawgroup.com with any questions.

My last post on this blog and on Boston.com on Massachusetts landlord-tenant law spawned many questions on the Massachusetts security deposit law.  So, I decided to go into more detail about the topic.

Massachusetts Security Deposits–An Overview

Last month’s rent and security deposits are one of the most heavily regulated aspects of Massachusetts landlord-tenant law and are fraught with pitfalls and penalties for the unwary, careless landlord. Any misstep, however innocent, under the complex Massachusetts last month’s rent and security deposit law can subject a landlord to far greater liability than the deposit, including penalties up to triple the amount of the deposit and payment of the tenant’s attorneys’ fees. This is why I advise landlords not to require security deposits. If a deposit is necessary, take a last month’s deposit, the requirements of which are less strict than security deposits. If landlords insist on taking a security deposit, they must follow the law to the letter.

Requirements For Holding A Security Deposit

The following steps must be followed when a landlord holds a security deposit:

1. When the deposit is tendered, the landlord must give the tenant a written receipt which provides:
   • the amount of the deposit
   • the name of the landlord/agent
   • the date of receipt
   • the property address.
2. Within 30 days of the money being deposited, the landlord must provide the tenant with a receipt identifying the bank where the deposit is held, the amount and account number.
3. Within 10 days after the tenancy begins, the landlord must provide the tenant with a written “statement of condition” of the premises detailing its condition and any damage with a required disclosure statement;
4. The tenant has an opportunity to note any other damage to the premises, and the landlord must agree or disagree with the final statement of condition and provide it to the tenant.
5. The security deposit must be held in a separate interest bearing account in a Massachusetts  financial institution protected from the landlord’s creditors.
6. The landlord must pay the tenant interest on the security deposit annually if held for more than one year.
7. The security deposit may only be used to reimburse the landlord for unpaid rent, reasonable damage to the unit or unpaid tax increases if part of the lease. Security deposits cannot be used for general eviction costs or attorneys’ fees. Within 30 days of the tenant’s leaving, the landlord must return the deposit plus any unpaid interest or provide a sworn, itemized list of deductions for damage with estimates for the work. Only then can the landlord retain the security deposit.

What Do I Do If The Landlord Mishandles My Security Deposit?

First, talk with the landlord about the situation and respectfully remind him or her of the law’s requirements. Many landlords will balk at the potential penalties for a security deposit violation, and most issues can be resolved amicably, usually with the return of the deposit with interest. If that doesn’t work, send the landlord a certified demand letter under the Massachusetts Consumer Protection Act, Chapter 93A. If that fails, take the landlord to Small Claims Court (the limit for these type of claims involving triple damages is $6,000) or contact an attorney.