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Real Estate Law Update: Real Estate Investors Be Careful When Interacting with Occupants of Foreclosed Property.

October 23, 2017 Leave a comment

It is a rainy Monday afternoon. It has beenIMG_1873 dark all day long.  I took this picture earlier today and the rain isn’t letting up.

As a way to distract from the gloomy weather I thought it might be a good opportunity to share some of my thoughts about a court case that came out a few days ago involving a real estate investor, property manager, and a hold over occupant of property.

This case illustrates ways that real estate investors and property managers can go wrong when dealing with occupants of foreclosed property.

 

The Case:

Anderson v Great Lakes Property and Investment, Inc.

Facts: 

“This case arises from defendants’ actions in removing plaintiff and his personal belongings from the rental property, on two occasions, without resort to summary  proceedings in the court.” Id. page 1.

  • In 2008 Plaintiff entered into a month-to-month lease with the property owner.
  • Owner lost the property to a tax foreclosure in 2015.
  • Real Estate Investor purchased the property at tax sale in the fall of 2015, and hired defendant Great Lakes to manage the property.
  • After the purchase, Investor and Property Manager, sent a letter of ownership to all occupants of the property, including plaintiff, which gave plaintiff 10 days to vacate the property.
  • Thereafter, defendant Great Lakes’s sole shareholder, defendant McMorris, came to plaintiff’s unit and demanded that he vacate within 3 days.
  • When plaintiff did not vacate the premises, defendants came to the property on January 15, 2016, and removed plaintiff’s personal belongings from his unit.
  • After defendants left, plaintiff returned to the property, purchased and installed a new lock on his door, repaired the door, and placed his personal belongings back into his unit.
  • The next day, defendants returned and once again, removed plaintiff’s possession from the property.
  • Plaintiff filed a six-count complaint against defendants for a violation of the anti-lockout statute. Id. Page 2.

 

Law:

Anti-Lockout Statute – MCL 600.2918 

Any landlord who has gone through the process of evicting a tenant knows that, in the residential leasing context, there are heightened duties of landlords, and heightened rights of tenants.  Tenants have the right not to have their possessory interest in the property interfered with, without the proper court procedure being complied with (Summary Proceeding Action in District Court)

The Anti-Lockout statute provides damages for forcible ejectment from property or unlawful interference with a possessory interest in property.

 

Subsection (1) (forcible ejection) applies to any person. 

Subsection (2) (unlawful interference) applies to any tenant in possession.

Violating the statute can cause a property owner/landlord to be liable for statutory damages (3 times the amount of actual damages or $200.00 whichever is greater.)

 

Here, the District Court sided with the new Owner – basically holding that the Plaintiff was simply “a squatter”, entitling him to no rights or protections.  Id. page 2.

The Court of Appeals REVERSED!

 

As the Court of Appeals noted, “[t]he Michigan anti-lockout statute, MCL 600.2918, “virtually eliminates the self-help remedy in Michigan in favor of judicial process to remove a tenant wrongfully in possession.” Id. Page 3 citing Deroshia v Union Terminal Piers, 151 Mich App 715, 719; 391 NW2d 458 (1986).

The Court also held that “There is no statutory or caselaw definition of squatter.” Id. Page 4.

The Court also questioned whether the Investor or its Manager gave proper notice to terminate. It was questionable whether the “Notice” mailed to each tenant satisfied the requirements to recover possession of property under Michigan law. MCL 554.134(1) – (holding that “[a] tenant is entitled to one month’s notice to quit in order to terminate a month-to month tenancy at will” Id. Page 4.

 

 

In short – if you purchase property that is occupied, you need to properly use the court systems to remove tenants.

 

Lesson:

 

To avoid any unfounded claims by holdovers, it always makes sense after purchasing property at foreclosure, when there are any occupants present, to go through the lawful channels for a court proceeding to extinguish any possessory rights and to make sure any personal belongings are handled appropriately.

You don’t want to expose yourself to undue liability.

 

Questions? Comments?

E-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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Real Estate Investors and Property Managers Should Keep Track of this Bill to Make Veterans a Protected Class in Housing Discrimination.

August 31, 2017 Leave a comment

On August 16, 2017 HB 4872 was introduced into the Michigan House of Representatives.

The Bill amend the “Elliott-Larsen civil rights act,” and would provide that veterans are included in the list of those protected by Michigan law against housing discrimination.

The Bill would define Military Service as:

IMG_1768“STATUS OF BEING AN ACTIVE DUTY MEMBER OF THE ARMED FORCES OF THE UNITED STATES OR A VETERAN WHO RECEIVED AN HONORABLE OR GENERAL
ADMINISTRATIVE DISCHARGE FROM ACTIVE DUTY WITH THE ARMED FORCES OF THE UNITED STATES.”

 

The Bill brings two thoughts to mind:

  1. Our Veterans and those who served our country deserve to be treated fairly in housing and all other areas of life.
  2. This Bill brings up a fundamental question: are Veterans being discriminated against in housing? Does it happen?

 

 

According to statistics recently published in the Bridge with insight from Dennis Van Kampen of Mel Trotter Ministries, there are fewer homeless veterans than ever in Michigan today, but more homeless youth.

The Bill was sent to the committee on Military and Veteran Affairs. I will be tracking this bill.

 

I look forward to hear comments from the public on this issue: are we in Michigan protecting our Veterans access to fair housing?

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Real Estate Investors and Property Managers Should Keep Track of this “Bed Bug Bill”

2015-11-05 11.34.56During the school year I mentor students at a local school in the West side of Grand Rapids. This school has a great supportive community behind it – as you can see from the photo I took a few years back.

I recall a conversation with one student whose family was transient – moving quite often and usually under unfortunate conditions.  This student recalled to me the time that he and his mom lived in an apartment for a brief time and had to leave because of bed bugs. The emotion on the kid’s face as he recalled the story was evident.  It was not a pleasant experience.

Last year a class action case against a Real Estate Owner reached a settlement involving payment of over $2 Million to 100 tenants – ABAJournal reported that story here

One of the primary complaints was that “the 26-unit building had a massive cockroach infestation.

Infestations can be an issue that every property manager or owner of residential investment real estate may face.

One June 9th Michigan House Bill 4719 was introduced – by Representative Brandt Iden -himself a Developer and Property Manager in South West Michigan. check out the text here – the Bill would amend the Michigan statute governing landlord tenant relationships to include addressing the control of certain pests – including bed bugs.

What the Bill seeks to do:

Impose certain duties on landlords regarding bed bugs:

1. Mandates specifically that the Landlord is to keep the rental space free from bed bugs and provide educational literature about bed bug infestations to new tenants.

2. Prohibits Landlords from renting out space that the landlord knows is infested with bedbugs

3. Provides specific requirements for a landlord to respond to a complaint of bed bugs:

  • within 7 days of receiving a complaint, Landlord shall order an inspection for bed bugs;
  • within 7 days of confirming infestation, Landlord shall begin control and schedule inspections of adjoining rental units.

4. Limits damages against Landlord for infestations unless caused by Landlord’s Negligence.

 

Impose certain duties on tenants regarding bed bugs:

1. Tenant shall inspect for bed bugs when first occupying the space;

2. Tenant shall not move “infested property” into a rental unit

3. Tenant shall notify Landlord within 2 days of notice of infestation.

4. Tenant responsible for damages due to bed bugs caused by Tenant, or guest.

 

 

The bill was referred to the Committee on Law and Justice.

 

My thoughts:

Bedbug infestation is a problem. It can cause tenants problems.  Unhappy tenants who withhold rent can cause landlord problems that end up in court.

 

This type of bill could provide clarity to landlords and tenants on their reciprocal duties and rights in such circumstances.

 

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

News for Residential Real Estate Investors: DOJ receives Verdict against Landlord Disability Discrimination.

img_1417Here’s a profound truth those in the real estate industry will readily acknowledge:

Owning and Managing Real Estate is uniquely challenging.

I hear it from my Property Owner/Manager clients. I experience it when I am involved in negotiating in landlord/tenant disputes.

I believe that is why, at least in West Michigan, there is an opportunity for good property management companies – and a handful of companies I work with locally do it really well.

 

Some of the pitfalls property owners/managers have to watch out for are illustrated in a recent press release announce by the Department of Justice.

Yesterday the Department of Justice announced that it obtained a verdict in a disability discrimination case against a Landlord

 

 

According to the press release,

The lawsuit, filed in U.S. District Court in Butte, alleged that Jaclyn Katz, the owner and manager of rental properties in Bozeman, discriminated against Kristen Newman, a tenant with physical and psychiatric disabilities, by charging her a $1,000 deposit as a condition for allowing her to keep her service dog, Riley.  At trial, Newman, her treating therapist and an independent expert testified that Riley assisted Newman in living with the symptoms of her disabilities, including providing emotional support, helping to predict migraines, and reducing suicidal thoughts.  Newman also testified that she repeatedly informed Katz that charging a deposit for a service animal was illegal and that Newman understood that she would have to pay for any actual damage caused by her service dog.

 

 

Not good.

A right to a Service animal is legally protected under the Americans with Disabilities Act.

Michigan Law requires a public accommodation to permit the use of a service animal by a person with a disability.

Among other things:

“A public accommodation shall not ask a person with a disability to remove a service animal from the premises due to allergies or fear of the animal. A public accommodation may only ask a person with a disability to remove his or her service animal from the premises if either of the following applies:

(a) The service animal is out of control and its handler does not take effective action to control it.

(b) The service animal is not housebroken” MCL 750.502c

 

Landlords and property owners should heed the warning of General Deputy Assistant Secretary Bryan Greene of the U.S. Department of Housing and Urban Development’s Fair Housing and Equal Opportunity.

“Many people with disabilities require the assistance of an animal to carry out major daily activities,” said  “Complaints alleging disability discrimination now account for the majority of the complaints HUD receives. HUD will continue to enforce the law and educate the public on the rights of people with disabilities in housing.”

.

I wonder, did the landlord/property owner ever consult with legal counsel on its practices?

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

 

Two takeaways from this news headline:

 

1. It is worth being proactive and engaging legal counsel. 

Issues arise. When in doubt, e-mail or call your attorney.

 

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. Make sure you are operating lawfully.

 

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Real Estate Law and Affordable Housing Issues: Lawsuit Alleges Landlords Discriminating Against Families.

Here’s a profound truth those in the real estate industry will readily acknowledge:

Owning and Managing Real Estate is challenging.

I hear it from my Property Owner/Manager clients. I experience it when I am in court litigating or negotiating landlord/tenant disputes.2017-02-04-08-16-38-2

Here’s another profound truth:

In many parts of the country, including Grand Rapids, Michigan, we have an affordable housing crisis.

Some of the pitfalls property owners should be mindful of are illustrated in a recent Department of Justice Press Release.

The Department of Justice issued a press release today concerning a lawsuit  filed in the U.S. District Court for the Western District of Washington “alleging that the owners and manager of three Edmonds, Washington apartment buildings refused to rent their apartments to families with children, in violation of the Fair Housing Acts.”

(The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.)

According to the press release, the Federal government alleged in its complaint that the “in March 2014, defendant Appleby told a woman seeking an apartment for herself, her husband, and their one year old child that the apartment buildings were “adult only” and therefore not available to her family. The complaint also alleges that at various other times from April 2014 to November 2015, defendants advertised their available apartments as being restricted to adults only

Not good.

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.

As stated by Attorney Annette L. Hayes of the Western District of Washington
. ““Many families already face challenges finding affordable housing, and they should not also have to deal with unlawful discrimination.””

“Particularly in our tight housing market, landlords must follow the law and make units available without discrimination based on race, color, religion, sex, national origin, disability or familial status.

The lawsuit makes allegations that must be proven in court. However, I wonder, did this Landlord consult with legal counsel on renting practices before posting advertisements for rent?

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

Two takeaways from this news headline:

1. Before renting, it is worth engaging legal counsel. 

Issues arise. When in doubt, e-mail or call your attorney.

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 some stringent regulations. To be sure, these rules are there to protect consumers. You must comply with Federal laws, like the Fair Housing Act and state laws, like the Michigan Truth in Renting Act. Make sure you are operating lawfully. Make sure your lease is lawful.

 

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

A Lawyer’s Year-End Reflections.

December 29, 2016 Leave a comment

img_1338-002It is the end of 2016. I am having “big picture” thoughts as the year ends.

I have a pretty nice “big picture” view out of my office window.

Out of my office window from the 12th floor of 99 Monroe overlooks many ice skaters at Rosa Parks’ Circle in downtown Grand Rapids.

It is certainly a fun time of the year: my kids love Christmas break – being home from school, getting presents, visiting with family.

But right now I can’t help but feel a sense of heaviness in my heart.

My grandmother passed away last week. Traveling home to Saginaw to see her in her last days and attend the funeral was challenging.

The reality is that this time of year is hard for many people, for many reasons.

This week I was reminded specifically of this hard reality when I attended a court hearing for a real estate investor client. FYI, to any real estate owner or manager, a recent unpublished court of appeals case that you might want to check out: Anderson v Chaundy. This case provides a good example of what not to do when evicting a tenant.

If you want to feel depressed, just show up at any local courthouse for the landlord/tenant docket.

Invariably, you will see among those present, individuals whose spirits are down – for all sorts of reasons.

I was in the courtroom this particular day and couldn’t help but notice the hopelessness in the eyes of a particular individual being evicted for non-payment of rent. I also noticed the distinct smell of alcohol on this person, at 9 in the morning.

This person did not dispute that they owed rent. The result? This person would be ordered out of their apartment in ten days.

I’m not ashamed to say that as the current Chairman of the Board of Mel Trotter Ministries, I care very deeply about the homeless, hurting, and hungry.

Walking out of the courtroom, my “Mel Trotter” hat keeps my mind going…

What is going to become of this person?

Maybe they end up sleeping in their car, maybe under a bridge.

Hopefully this person ends up receiving help – to meet them where they are at. Places like Mel Trotter Ministries, that will take in families and individuals to care for them – provide them time to get into affordable housing.

An encouraging statistic – since January 2016, MTM has placed 217 families & individuals into permanent homes.

I’m not trying to bring anyone down during a festive time of year – but as this year ends I wanted to bring two “big picture” realities to the forefront:

  1. The Holiday Season aside, there remains great injustice in this world.
  2. There is great hope.

There are families and individuals that are truly hurting this holiday season.

There are people who have lost loved ones; lost homes. People who are victims of injustice.

The good news is that we can all do something to offer hope to the hopeless.

You can volunteer or provide a year end gift to support organizations locally, like Mel Trotter MinistriesKalamazoo Gospel MissionKids Food Basket, Volunteers in ServiceWestwood Christian ServicesHQ Grand Rapids, Goodwill Industries of Greater Grand Rapids, or globally, like International Justice MissionCompassion International, and many more.

I hope you will join me in this Christmas season and send out gifts and prayers to make an impact in the lives of those hurting.

Community Development: The Tension Between Real Estate Entrepreneurship and Keeping Families In Affordable Housing.

July 25, 2016 1 comment

This morning I read a MIBiz article by Nick Manes titled:

Hungry investors seek Grand Rapids housing deals, rankling longtime residents

The article does a good job of addressing the “tension” that I wrote about in a previous post. New investment in downtown Grand Rapids is exciting. But, as Nick Manes puts it, the flip-side of this new development is the “concern that new investment would lead to displacement of long-time residents.

Nick, in his article, illustrates this tension as articulated through the  interviews of the many interested parties: developers, investors, homeowners, renters, and community stakeholders.

As I’ve mentioned in my prior article, as a business/real estate lawyer and Chairman of the Board at Mel Trotter Ministries – I see this tension. I often find myself advocating on both sides of this tension.

Because of these different “hats” I wear, I have had to ask myself – what do I do with this tension?

I am committed to embracing this tension.

I am committed to ask the question: “Am I working to build a better community?

Just like I ended my previous article on this subject, so I will end this one:

 We should encourage entrepreneurs to revitalize blighted property – we should do everything we can to place families in affordable housing.

Let’s embrace the tension.

E-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

Twitter: @JeshuaTLauka