Maryland’s Supreme Court recently clarified what charges or costs a plaintiff may include in complaint for possession due to failure to pay rent.
6/18/2024 The case is Westminster Management, LLC, et al. v. Tenae Smith, et al. (“Westminster”), and applies to both landlords and cooperative housing corporations in Maryland. Westminster explains what can be included as “rent” when bringing a failure to pay rent action against a tenant/member and how to allocate payments in calculating what they owe for the lawsuit.
What charges can be included
Under Westminster, regardless of how it is defined in a lease, rent is only the “fixed, period payments a tenant is obligated to pay for use or occupancy of the leased premises.” While someone may also owe other fees under a lease, such as utilities, parking, or other costs, these can no longer be included as rent when a landlord/cooperative is seeking possession of the property. As a result, only the monthly rent and any applicable late fee on said rent may be used as the basis for a failure to pay rent case.
Late fees and penalties
If a tenant/member is untimely in paying their rent/carrying charges, then a landlord/cooperative can only charge a one-time late fee for that amount. Landlords cannot charge more than 5% for a late fee. Westminster does not expressly limit housing cooperative’s ability to charge a 10% late fee under the Maryland Cooperative Act. Further, landlords/cooperatives cannot place on a tenant’s ledger other fees or penalties, such as attorney’s fees or court costs, due to the late payment or failure to pay. A landlord/cooperative can only collect court costs awarded if the landlord wins in the lawsuit.
How are payments allocated
Westminster also details how payments must be allocated to a tenant/member’s ledger. When a landlord/cooperative receives a payment, you must first apply the payment towards the monthly rent, then to late fees, and lastly to other fees. This means that if the payments received equal the amount of rent that is owed for the applicable months, even if the member/tenant has failed to pay the other fees, you cannot file a failure to pay lawsuit for those months.
What about the other charges owed?
While the other outstanding fees and costs cannot be the basis for a failure to pay rent lawsuit, these are still monies that the member/tenant owes to the landlord/cooperative under the lease/Occupancy Agreement. Those monies could form the basis of a different lawsuit, such as a case to obtain a money judgment against the tenant/member.
Next steps
In light of these changes, we are now recommending to our Maryland clients to maintain two ledgers for each member/tenant. One ledger will only include rent and late fees (“Rent Ledger”) and a second ledger will detail all other charges (“Other Charges”) that might be permitted under the lease agreement. Any payments received would first be applied to the Rent Ledger. Then, any money left over would be applied to Other Charges ledger. Going forward, our office will only be able to rely on the Rent Ledger for an eviction case based on someone’s failure to pay.
If you have questions about how this new ruling effects your operations, please do not hesitate to contact any of the attorneys within the firm for clarification.
DC and MD Covid-19 Legislation: Impact on Community Associations and Rental Properties
Written by: Jessica Blumberg, Esq.
District of Columbia
9/29/2020 - On September 22, 2020, DC Council voted to give Mayor Bowser the power to extend DC’s public health emergency through December 31, 2020. DC’s moratorium on evictions continues for sixty (60) days after the end of the public health emergency, which may be extended beyond December 31, 2020. Landlords in DC cannot evict a tenant for any reason, which goes beyond the Centers for Disease Control and Prevention’s recent Order preventing evictions only due to failure to pay rent. DC Council is considering additional pieces of legislation which would increase rent control and limit tax credits for landlords. Further, the counsel voted unanimously that landlords cannot issue notices telling tenants to vacate their units until the current eviction moratorium ends. The emergency is currently set to expire on October 9, 2020. If Bowser does extend the emergency until the end of 2020, this would extend the eviction and eviction notices moratorium until the end of February 2021.
9/3/2020 -Effective September 4, 2020 through December 31, 2020, the Centers for Disease Control and Prevention (CDC) issued an Order under the Public Health Service Act to temporarily halt residential evictions to prevent the further spread of COVID-19. Under the Order, a landlord cannot evict “a covered person” (which includes a tenant, lessee, or resident) due to failure to pay rent if the covered person provides a declaration attesting that they are unable to pay rent because they will not receive government assistance for rent despite their best efforts; they won’t earn more than $99,000 in 2020; or they are unable to pay full rent due to loss of income or out-of-pocket medical expenses. The declaration must also state that the tenant is using their best efforts to make timely partial payments and if they are evicted it is likely they would become homeless or live in close quarters in a shared living setting.
The Order does not remove tenants’ obligation to pay rent or otherwise obey their lease, and Maryland and Virginia does not prevent evictions due to failure to obey a lease. D.C. has placed a moratorium on evictions of any kind until at least March 2021.
While landlords are not required to provide copies of the declarations for their tenants, they must have a system in place to collect any declarations which tenants submit. If a landlord is found to have evicted a covered person due to the person’s failure to pay rent and that person then dies from COVID-19, an individual landlord could be fined $100,000, be sentenced to a year in jail, or both; an organization could be fined $200,000 per violation if the tenant does not die or $500,000 if the tenant does die from COVID-19.
8/11/2020 - On July 22, 2020, D.C. Mayor Muriel Bowser issued Executive Order 2020-079, which extends D.C.’s COVID-19 public health emergency until October 9, 2020. D.C.’s moratorium on evictions will continue until 60 days after the end of the public health emergency. If the public health emergency is not extended further, the eviction moratorium will end on December 8, 2020. However, in light of the proximity of the end of the moratorium to the holidays, it is likely the D.C. government will extend the moratorium at least through the end of 2020.
Mayor Bowser also issued Executive Order 2020-080, which requires persons to wear a mask when they are in the common areas of apartments, condominiums, and cooperatives. The requirement to wear a mask has some exceptions, including if someone is a resident or guest in a private home or apartment; a person who is eating, drinking, or legally smoking; a person in the water at a swimming pool; a person who is younger than two (2) years old; and a person who is unable to wear a mask due to a medical condition or disability, or is physically unable to remove a mask.
5/12/2020 - On May 5, 2020, the DC Council passed the Coronavirus Omnibus Emergency Amendment Act of 2020. The Act applies as of March 11, 2020, but does not take effect until Mayor Bowser signs it or, if the Act is vetoed, an overriding vote of the DC Council. Since this is an Emergency Act, it will be in effect for no longer than 90 days after it is officially passed. The following portions of the Act will affect the practices of community associations, landlords, and tenants during the declared public health emergency:
Remote meetings: Annual and special meetings of members of cooperative associations may be held remotely, regardless of whether the cooperative’s bylaws or articles of incorporation provide for such a procedure.
Rent payment plans: Landlords must permit “an eligible tenant” to enter into a rent payment plan. An eligible tenant is one who demonstrates financial hardship as a direct or indirect result of the public health emergency and agrees in writing to make payments under the payment plan.
The landlord needs to waive fees and penalties for the tenant arising out of the payment plan and cannot report delinquent rent payments under the payment plan to a credit bureau. If the tenant agrees in writing, a landlord may use a tenant’s security deposit, last month’s rent, or other amount held on behalf of the tenant to satisfy amounts owed under the payment plan.
Landlords need to notify tenants of the availability, terms, and application process for the payment plan program, and establish procedures for application to the program. Applications need to be made available online and by telephone. If a residential tenant’s application is denied, that tenant may file a written complaint with the Rent Administrator. If a commercial tenant’s application is denied, that tenant may file a written complaint with the Department of Consumer and Regulatory Affairs.
Evictions: During the public health emergency, and for 60 days thereafter, landlords cannot file a complaint for eviction under Section16-1501 of the District of Columbia Official Code.
Amenity fees: If a housing provider temporarily stops providing an amenity which a tenant pays for in addition to their rent, then the provider shall refund a pro rata fee for the amenity. If the cost of the amenity is included in the tenant’s rent, then no refund or rent reduction is required.
Residential cleaning requirements: The owner or representative of the owner of a housing accommodation shall clean common areas of the housing accommodation on a regular basis, including surfaces that are regularly touched, such as doors, railings, seating, and the exterior of mailboxes. A “housing accommodation” includes buildings in D.C. that have one or more residential units that are not owner occupied, including
apartments, cooperatives, homeowner associations, and condominiums.Commercial tenant rent increase: Rent increases are prohibited for commercial retail property, not all commercial property.
On May 4, 2020, Mayor Bowser signed COVID-19 Supplemental Corrections Emergency Amendment Act of 2020 into law, which expands and clarifies the COVID-19 Response Emergency Amendment Act of 2020, effective March 17, 2020. The following portions of the Act will affect the practices of community associations, landlords, and tenants during the declared public health emergency:
Tenant rights: Deadlines for tenants and tenant organizations exercising rights under the Rental Housing Conversion and Sale Act of 1980 are tolled for the duration of the public health emergency and for 30 days thereafter.
Notice to landlords: Any notice of intent to vacate that a tenant provided prior to the public health emergency shall be tolled for the duration of the health emergency and will restart at the end of the emergency.
Rent: Rent increases are null and void if:
The effective date of the increase is set to occur during the public health emergency, and for 30 days thereafter;
The notice of rent increase was provided to the tenant during the public health emergency, or;
The notice was provided to the tenant prior to, but takes effect following, a public health emergency
Debt Collection: A credit or debt collector cannot file a new collection lawsuit, including debts connected to purchase or lease of real property, during the public health emergency and for 60 days after its conclusion.
Evictions: A landlord cannot evict a tenant during the public health emergency, and for 60 days thereafter.
Maryland
On March 16, 2020, Maryland’s Governor Hogan signed an order entitled Temporarily Prohibiting Evictions of Tenants Suffering Substantial Loss of Income as a Result of COVID-19. On April 3, 2020 Governor Hogan passed an additional order amending and restating certain provisions of the March 16th order which apply to all of Maryland.
Until the state of emergency is terminated and the COVID-19 health emergency is rescinded, the Notice of Intent to Foreclose Electronic System is suspended, and the Commissioner will not accept Notices of Intent to Foreclose. For rental properties, if a tenant can demonstrate, through documentation or other objectively verifiable means, that the tenant suffered a substantial loss of income, then the Court shall not give any judgment for possession or repossession, or warrant for restitution of possession or repossession, of residential, commercial, or industrial real property. For an individual or entity, a “substantial loss of income” relates to a loss of income resulting from either COVID-19 or the related state of emergency and health emergency. For an individual, this includes but is not limited to, “job loss, reduction in compensated hours of work, closure of place of employment, or the need to miss work to care for a home-bound school-age child.” For an entity, this includes, but is not limited to, “lost or reduced business, required closure, or temporary or permanent loss of employees.” Further, a tenant or a person cohabitating with a tenant being diagnosed with COVID-19 shall not qualify as a “clear and imminent danger” of harm to themselves, other tenants, the landlord, the landlord’s property, or other person’s on the property, to constitute a breach of the tenant’s lease.
On April 24, 2020, Montgomery County, Maryland entered the COVID-19 Renter Relief Act, which prohibits landlords from increasing existing tenants’ rent by more than 2.6% after April 24 and during the COVID-19 catastrophic health emergency. Further, all multifamily properties must clean high touch surfaces in common areas at least once a day following the CDC guidelines, with recommendation for more frequent cleaning in high traffic areas.
Changes Coming to District of Columbia Eviction Procedures
Written by: Daniel M. Costello, Esq.
3/12/2019 - As an update to our previous article below, effective March 13, 2019 the law governing Washington DC eviction has changed. The law previously required 14 days advance written notice of the date of eviction. Now the law requires 21 days. Therefore, when securing an eviction date with the U.S. Marshals, the date at minimum should be 21 days in advance to allow time to post the appropriate pre-eviction notice. Please contact our office directly if you have any questions or would like a sample pre and post eviction notice that complies with the new law. The original article is below.
9/7/2018 - The Eviction Procedure Reform Emergency Amendment Act of 2018 (“Act”) is expected to become effective on August 13, 2018 and applies to residential evictions. The coming changes affect what occurs after a writ of restitution (for eviction) is filed with the DC landlord and tenant clerk and requires housing providers to send additional notices to the tenant. A pre-eviction notice must now be sent to the tenant confirming the date of the eviction not less than 14 days prior to the date of the eviction. This notice must be sent by (A) telephone or electronic communication, including by e-mail or mobile text message; (B) First class mail to the address of the rental unit; and, (C) conspicuous posting at the tenant’s dwelling unit in a matter reasonably calculated to provide notice.
The notice shall “(A) State the tenant’s name, and the address of the rental unit; (B) specify the date on which the eviction is scheduled to be executed; (C) State that the eviction will be executed on that date unless the tenant vacates the rental unit and returns control of the rental unit to the housing provider; (D) Prominently warn the tenant that any personal property left in the rental unit will be deemed abandoned 7 days after the time of eviction, excluding Sundays and federal holidays; (E) Include the phone numbers of the U.S. Marshals Service, Office of the Chief Tenant Advocate and the District of Columbia Landlord Tenant Court; and (F) State that it is the final notice from the housing provider before the time of eviction, even if the eviction date is postponed by the court or Marshals.”
Because of the 14 day requirement for the notice, housing providers must receive notice from the US Marshals at least 15 days prior to the scheduled eviction date so the notice can be timely sent and posted.
At the time of the eviction, the housing provider shall change the locks on the rental unit in the presence of the US Marshals, at the housing provider’s expense, and take legal possession of the rental unit by receipt of a document from the US Marshals. This procedure requires that a locksmith to be present. A moving crew is no longer required. Once the locks are changed, any right of the evicted tenant to redeem the tenancy is extinguished. Note that an eviction is now a lockout.
After the eviction the housing provider is required to send a second notice. The Act provides that: “At the time of the eviction, the housing provider shall send by first class mail, to the address of an emergency contact, if provided, and conspicuously post in a matter[sic] reasonably calculated to provide notice to the evicted tenant, a notice containing the following information: (A) the name and phone number of at least one housing provider representative who the tenant may contact and who can grant access to the rental unit on the housing provider’s behalf pursuant to this subsection; (B) The phone number of the Office of the Chief Tenant Advocate; (C) The phone number of the United States Marshals Service; (D) The phone number of the District of Columbia Landlord Tenant Court; and (E) The text of this subsection attached to, or made a part of, the notice.”
After the eviction the evicted tenant’s personal property must remain in the unit for 7 days unless removed by the evicted tenant. Landlord shall grant access to the evicted tenant for removal of personal property during the period that the property remains in the unit. Access shall be for no fewer than 8 continuous hours at times agreed to by the parties, without requiring payment of rent or service fees. After the expiration of the storage period any items remaining in the unit are deemed abandoned and landlord may remove the abandoned property. The abandoned property must be discarded in a lawful disposal receptacle. This means that the items may no longer be placed on the curb as was previously the case.
Based on these new requirements we suggest that landlords prepare the new notices and forms now and make a plan as to how to handle scheduling and coordinating with tenants who come back into the property during the 7 days to remove personal property. Our office is available to assist with the creation of these forms and to answer additional questions.