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Baltimore City Licensing for One and Two-Unit Rental Properties

2/19/18 8:51 PM Brian Wojcik Legislative Topics, Maryland Rental Property Owners, Affordable Housing, Baltimore City

Baltimore City County Council Bill 18-0185: 

On Monday, January 22nd, the Baltimore City Council introduced a licensing bill that has been in the works for some time. Some may recall an article I wrote last year on the topic. Mounting mayoral political pressure and a March 2017 report by the Center of Community Progress  were catalysts for what was an inevitable rental regulation strategy for the city - a licensing bill for one and two-unit rentals. It wasn't a question of if, but when.  The City Housing and Community Development Leadership Team deserve a ton of credit for their outreach and overriding goal to be inclusive in their aim to create responsible legislation.

As a member of the Maryland Multi-Housing Association, and a voice for the small business and independent landlord, there were two occasions  to meet in person and help give this bill some shape. There was also an opportunity to provide feedback on the drafts. Many suggested elements have been incorporated in some way, shape or form. The language drafting and thoughtfulness that went into creating   Bill 18-0185  was a measured and methodical approach in an attempt to create responsible legislation.

Is it without concerns? No. However, it could be a lot worse.

Let's look at the big picture: 

Why is the city looking to license one and two-unit rentals? 

  • These properties make up 50% of all rentals in the city; and
  • These properties account for 93% of the increase in rental  housing citywide over the past decade.
By excluding these units from the licensing system, the City is effectively permitting abusive landlords to operate in many of the city’s most  distressed areas (such as East Baltimore, where more than  90% of the rental stock is one and two-family properties).

What is good about this proposed piece of legislation?

It simplifies and mitigates the confusion of "registration," and offers an incentivized approach for good landlords.

  • Aligns Registration with Licensing, merging the two requirements as one piece of legislation
  • It will live online
  • There is no additional cost from the old registration requirements (licensing has no cost adder)
  • Incentivizes responsible landlords with a three tier system
  • Calendar year based, with expiration on December 31st
  • Better measures on landlord performance will begin to re-shape the over-generalizations  and fallacies that all landlords are evil and take advantage of the poor
  • It can be baseline legislation to promote further incentives for good landlords

* Many of the attributes above have the likeness of Baltimore County licensing.

What are the requirements for a new license or a renewal license? 

  • Registration for a license and fee paid (no additional charge from the old registration system); and
  • Pass a recent inspection (either by a government program, or a licensed home inspector); and
  • No violations (90 days for abatement).
  • The ordinance, if passed, will take effect on August 1st, 2018

Annual "Registration" and fees remain in effect; $30 per dwelling unit for one and two dwelling units, and $35 per dwelling unit for miltiple-family dwellings (3 units or greater), plus $25 per rooming unit. No change to cost.

Details of the three-tier system: 

**Initial license term will be two years.** It will require renewal prior to December 31st of the second year. The 1st Renewal of the Initial License (and subsequent renewals)

  • 3 year term: violations abated within 60 days
  • 2 year term: violations abated within 90 days
  • 1 year term: if not qualified for a 2 year or 3 year renewal.

If you're a good landlord, then the inspection will occur once every three years. 

What we are NOT  loving  about the current legislation: 

Some aspects could be fodder for a technicality for potential abuse, including: 

  • Having to post a license accessible to occupants and housing inspectors
  • A "Sanitation Guide" must be prepared and posted by the landlord

Each of these requirements should be part of the lease signing, with tenant initials, and produced on demand by the landlord showing a tenant initial if requested by a government  authority. It's highly likely that tenants may be inclined to remove said license or guide. If so, it could be a technicality that causes delay.

Biggest concern and recommended improvement:

What is the Inspection Checklist and Criteria to be adopted under this regulation?

  • Criteria requirements are undefined. If there are too many requirements, inspections may be cost prohibitive.
  • As regulations, they could be more easily changed by un-elected officials

Our recommendation is to have criteria or a reference with a pass/fail standard of a dozen or so items, as is the case in Baltimore County. 

General Concerns:

Landlord Remedies for Nuisance Properties

  • Under § 5-15 (A)(3) and CITY CODE ARTICLE 19, SUBTITLE 43B: The Landlord defense is limited to Breach of Lease. Provisions should be made to allow for other causes of actions in Article 19: Wrongful Detainer, Tenant Holding Over, and Petition for Warrant of Restitution, or allowance made in this bill.

Legislation is not a panacea and should not hinder the landlord's ability to conduct business

  • Good landlords are going to adopt the new legislation. The city needs to   apply appropriate enforcement resources on the minority of serious chronic offenders.
  • According to the Center for Community Progress, experience has shown that simply enacting an ordinance does not lead to compliance. A systematic outreach is needed and should be part of an overall implementation  strategy.

Our view (Prior to March 20th, 2018):

An overview was presented to Landlord 411 members. An overwhelming majority believed that the legislation seemed reasonable, with a couple of exceptions. 

  1. Landlord 411 supports this legislation with our recommended  improvements and noted concerns listed above.
  2. This bill is an opportunity for good landlords to demonstrate they can support responsible legislation.

MORE CONCERNS AS OF March 20th, 2018:

The 2nd Reading Work-Session was held (was not a work session): 14 amendments were voted on

On Tuesday, March 20th, at 10:10am the Baltimore City Council held what was supposed to be a work session.  They didn't accept any comments from the public, and they voted on 14 amendments that were submitted at 11pm the night before. They jammed through the amendments so quickly that it wasn't even possible to take notes.

Since then, we've received a copy to show context of the amendments. We have new concerns:

  • § 5-7.(B)(1)(III)(B)(2): Requires a Financial Disclosure Statement for home inspectors. The issue is that it's a hassle, and it will discourage good home inspectors from participating, attracted those who may be less scrupulous and less qualified, which defeats the purpose of the legislation to begin with. While we understand the intent to prevent them from inspecting properties they may have a financial interest in, they are already bound to licensing criteria through DLLR that mitigates that risk. 
Removes the difficulty to encourage inspector participation, which will allow for more inspectors, and more competition, and be less costly due to free market pricing. 
  • § 5-7.(B)(2)(II) and § 5-7.(E)(2)(II)(B); There should be one standard for multi-family along with one and two unit properties, and be kept at 90 days. The amendment changes the requirement to 30 days for an inspection prior to renewal for a one or two unit property. 

Ways to Get Involved: 

    Stay on top of this and other issues affecting you by joining Landlord411, our advocacy  group dedicated to small business and independent landlords. Our mission is to proactively empower small business and independent landlords through education, legal compliance and risk mitigation.

    If you have any questions, please do not hesitate to reach out to me at brian@diyrealty.co
Brian Wojcik

Written by Brian Wojcik