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Community Spotlight: Next Step of West Michigan – walking alongside the most vulnerable

March 27, 2019 1 comment

Yesterday I visited with Jonathan Peerboom – Program and Development Director of Next Step of West Michigan (Next Step) – a faith-based nonprofit employing people coming out of prison or rehab and providing them with a community of support that will help them integrate into the workforce, regain hope and empower themselves to create a better future.

Jonathan Peerboom, Program and Development Director, Next Step of West Michigan

John’s Story.

What really impacted me about my visit was meeting “John” and hearing his story.

John is an employee of Next Step. John was putting together crates and stopped to talk with me and greeted me with a huge smile and an enthusiastic handshake.

Like many of us, John has experienced many struggles and hardships over his life, starting with a traumatic childhood which caused ripple effects throughout his adult life. John ended up spending 10 years in prison.

As many of us know, the barrier to employment and re-entry into society after a felony conviction and extended prison sentence is often times insurmountable.

When society is telling the Johns of this world that they have nothing to offer this world, that they are only valued if they have the right looks, status, job, house, money, family, etc… Next Step is telling those, like John, like me once as a kid, the opposite.

John has inherent value.

He is worthy to be loved because he is a person, made in the image of God.

Next Step gave John a job – the integrity of working for a living – and through words and acts tells John that is loved and inherently valued. Now, John, 7 years removed from prison, is a changed man.

A Sustainable Non-profit.

Next Step states on its website that
it is “a nonprofit that aims to make a real impact in the lives of its employees, while maintaining a financial model anchored in sustainability.”

Approximately 85% of its revenue is through a delivery of services or goods. The remaining 15% are investment gifts that fund administration costs, provide for new initiatives and increase capacity.

Next Step operates like a social enterprise – it has a self-sustaining business model that employees

Relationships Change lives.

Yesterday after meeting with Jonathan at Next Step, we traveled not too far down Division for luncheon held at Mel Trotter Ministries, another community partner along with Next Step serving the most vulnerable in our community.

I love this quote that is often spoken of at Mel Trotter Ministries – “People don’t become homeless when they run out of money. They become homeless when they run out of relationships.”

That is our job.

Being those relationships for the most vulnerable.

Not just “one-way relationships” but truly reaching out in community in a sustainable way.

Keep up the good work Jonathan and Team at Next Step! Next Step would love to partner with you if you want to learn more about the work they are doing in our community. I encourage you to check out their website or email Jonathan

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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Real Estate Law Update for Investors and Landlords when Holding Security Deposits.

March 22, 2019 Leave a comment

Happy Friday, all!

Last weekend I was in Chicago for the Big Ten Tournament and got to see the river turned green. It was an amazing sight – particularly if you are a Spartan fan like me.

Downtown Chicago, coloring the river for St. Patrick’s Day on March 16, 2019



I was reviewing a recently published Court of Appeals decision that affects any real estate investor, property manager or landlord who rents out residential real estate and holds onto a security deposit.

The law provides for some procedures to follow, and penalties for failing to abide by the law.

Check out the March 7, 2019 decision of Tree Hill Properties, LLC v Perkey

Neither the Court Appeals nor the Michigan Supreme Court has ever interpreted the double penalty provision in MCL 554.613(2) until this case.

in Tree Hills Properties, LLC the Court of Appeals reversed the lower courts, holding the lower courts both misinterpreted and misapplied the double penalty provision in MCL 554.613(2).

The Landlord Tenant Relationship Act

As the Court noted, ” The Landlord Tenant Relations Act (LTRA), MCL 554.601 et seq., regulates relationships between landlords and tenants relative to rental agreements and the payment, repayment, and use of security deposits. ” See, Tree Hill Properties, at page 1.

Double Damages.

Failure of the landlord to comply fully with certain requirements concerning a tenant’s security deposit constitutes waiver of all claimed damages and makes him liable to the tenant for double the amount of the security deposit retained.


Summary of Facts:

  • Plaintiff owns and manages several rental properties.
  • In May of 2013, defendant signed a lease to rent one of plaintiff’s rental properties from September 1, 2013, through August 20, 2014.
  • Pursuant to the lease, Defendant paid a $2,150 security deposit.
  • In August of 2014, defendants signed a lease to rent the same property from August 20, 2014, through August 20, 2015.
  • Defendant’s previous security deposit was transferred to the new
    lease.
  • Defendants moved out of the rental property on or before August 20, 2015.
  • Plaintiff’s agent inspected the rental property after defendants’ departure and thereafter sent defendants a letter claiming that that it was entitled to retain the entire $2,150 security deposit because of
    physical damage to the rental unit, unpaid utility bills, late fees, multiple check charges, and nonsufficient fund charges.
  • Defendants objected to almost all of the charges that plaintiff
    proposed to make against the security deposit.
  • On October 2, 2015, plaintiff filed in  small claims court , seeking a judgment against Defendant in the amount of $2,186.55. 
  • The matter was transferred to district court and the parties could not agree on the late fees, the multiple check charges, and the nonsufficient fund charges, all of which totaled $1,480. 
  • The court held that plaintiff was not entitled to collect the late fees or the multiple check charges but was allowed to recover the nonsufficient fund charges of $90.
  • The court further found that plaintiff, because it wrongfully withheld $1,390 from the security deposit, was subject to the double penalty provision of MCL 554.613(2).
  • The Court entered a judgment directing plaintiff to pay defendants the $1390 and an additional $1390 penalty.

 

Wow. as a Landlord, the threat of potentially being penalized if, after a hearing, the Judge determines that you were not entitled to all of the security deposit withheld – that is a stiff penalty.  

But is that what the law requires?

No.

 

According to the Court of Appeals:

  • There was no dispute that plaintiff complied with the statutory notice requirements with respect to its intent to retain defendants’ security deposit.
  • It is also undisputed that plaintiff filed its claim to retain defendants’ security deposit in the small claims court within the 45 day time frame required in MCL 554.613(1).
  • The only disagreement was whether the lower courts erred in finding that plaintiff was liable to defendants for double the amount of the security deposit wrongfully retained. 
  • The Court of Appeals found that the trial court erred.

MCL 554.613(2)

According to the Court of Appeals: “The provision relied upon by the lower courts appears in subsection MCL 554.613(2), and holds a landlord liable to a tenant for double the amount of the security deposit retained if the landlord fails to “comply fully with this section.”

As the Court of Appeals held: “This” is defined as a term “used to refer to the person or thing present, nearby, or just mentioned.”

“The term “this section” is plainly self-referential and is thus read to mean that compliance with MCL 554.613 is required and that it is the noncompliance with the requirements of MCL 554.613(1) that creates the double penalty liability set forth in MCL 554.613(2).

The language is clear and unambiguous, the plain meaning of the statute reflects the legislative intent, and judicial construction is thus not permitted. See, Univ’l Underwriters Ins Group v Auto Club Ins Ass’n, 256 Mich App 541, 544; 666 NW2d 294 (2003).

The record reflects that Tree City complied with and did not violate MCL 554.613.

Accordingly, because it complied with the strictures of MCL 554.613(1), the double penalty provision prescribed in MCL 554.613(2) plainly did not and does not apply.

There are some lessons to be learned for landlords, property owners, managers, and real estate investors.

Two takeaways from this Court Decision:

1. The Double Penalty Provision Does Not Apply if Landlords Comply with MCL 554.613(1).

Providing the requisite notices to the Tenant, and commencing a legal action within 45 days. That is what is required.

2. Residential Real Estate Investment is highly regulated.

If you are a landlord leasing out “residential” property as opposed to purely commercial property (business tenant), you are under much more stringent regulations. You must comply with Federal laws, like the Fair Housing Act and state laws, like the Michigan Truth in Renting Act, and Landlord Tenant Relationship Act. Make sure you are operating lawfully.

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Rent Control is now a Law in Oregon – But is it a Proper Response to an Affordable Housing Crisis?

March 12, 2019 Leave a comment

Good afternoon, all. This week I am back in the office after taking some time to recover from a cornea transplant. My eyes are still pretty sensitive to the light, but it was great to see the sun rise over Grand Rapids this morning.

Rent Control as a way of Combating Affordable Housing Crisis?

Today I saw a headline from the Rental Property Owners Association – check it out here RPOA reports:

During the last week of February, Oregon became the first U.S. state to pass comprehensive statewide rent-control legislation which aims to be the latest solution to an affordable housing crisis already exacerbated by previous regulatory burdens such as urban growth boundaries and overly restrictive zoning.

Real Estate Investing Today reports on the story in more detail. According to Oregon’s Governor:

 “this legislation will provide some immediate relief to Oregonians struggling to keep up with rising rents and a tight rental market.”

However, according to Real Estate Investing Today, “Oregon House Republicans had a far more realistic take on the new law:”

“Passage of this bill also raises a more serious question: If a property owner can’t decide who lives in their apartments and houses, who really owns the property? Certainly, it is no longer the one who pays the property taxes.”

Michigan’s Affordable Housing Crisis

It seems pretty evident to me that Oregon’s passage of the Rent Control Bill was in response to an Affordable Housing Crisis that we have been experiencing across the U.S.

In fact, two years ago a Rent Control Bill was proposed in the Michigan House of Representatives- you can check out my post on that here

That Bill made no traction. It died in the Local Government Committee.

The Bill was presumably a response to Michigan’s Affordable Housing Crisis.

It has been several yeas since the Grand Rapids Chamber hosted an Issue Summit on the Housing Crisis in Grand Rapids.

The Summit brought speakers representing many community stakeholders, including representatives from Grand Rapids Urban League,Rockford ConstructionICCFMSHDA, and many local non-profits, including Mel Trotter MinistriesHQHeartside Ministries, on the lack of affordable housing, what is as Mayor Bliss emphasized, admittedly, “a complex issue”.

I have previously offered my own perspective, both as a lawyer representing real estate developers/investors, and as Board Chairman at Mel Trotter Ministries.

Private and Public Community Stakeholders Doing Their Part

A few years have gone by since Kent County was first acknowledged to have an affordable housing crisis. The crisis is still present. There many community stakeholders that are actively playing a role in being part of the solution: providing housing for the most vulnerable. I think of a company like Urbaneer and Bruce Thompson and applaud Bruce for his work. We need more companies like Urbaneer – providing innovative solutions to a housing crisis.

I also think of the non-profit sector – organizations like ICCF and Mel Trotter Ministries finding unique ways through social enterprise to house the most vulnerable.

Kent County has provided several unique tools, including the Eviction Prevention Program.

I don’t think rent control is the answer.

I believe we all have a role to play.

We should all ask ourselves: Am I working to build a better community?

E-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

Twitter: @JeshuaTLauka