Landlord Group Suing Three Local Governments to Collect Rent Increases and Late Fees

Zafar Shah, in light blue mask, an attorney with the Public Justice Center, joins other advocates calling for rental relief at a press conference outside District Court in Baltimore last month. Photo courtesy of CASA.

A group of landlords is suing three Maryland jurisdictions, saying some recently enacted local laws that prevent rent increases during Maryland’s state of emergency are unconstitutional.

The 23 property owners  — which rent thousands of housing units in Baltimore, Salisbury and Howard County — say local governments overstepped when they passed laws designed to protect tenants in the midst of the coronavirus pandemic.

Those laws, enacted in the three jurisdictions in May and June, prohibit landlords from charging late fees or increasing rent for more than two months after the late July end of the state of emergency order that Gov. Lawrence J. Hogan Jr. (R) issued. The landlords contend that the laws are unlawful “regulatory takings.”

“They include no exceptions, and they provide for no individualized adjustment mechanisms to ensure housing providers receive reasonable returns on investments or otherwise avoid confiscatory results in their application,” the complaint reads. “Without any processes for individualized consideration, they are facially unconstitutional.”

The landlords want the laws overturned, and want the Baltimore, Salisbury and Howard County governments to pay for the lost income.

Michael E. Blumenfeld, an attorney representing some of the landlords, emphasized that the lawsuit is challenging the local laws, not Hogan’s statewide moratorium on evictions. He said the three local laws are unconstitutional because they apply to rent increases tenants already agreed to.

“The acts as written are unconstitutional because they cancel out contractually agreed upon rate increases, which in some cases went into effect many months before the COVID-19 emergency was declared,” Blumenfeld said.  “Many of those rent increases were agreed to as early as November and December of 2019, which was approximately three months before the COVID-19 emergency was declared.”

The Baltimore Sun reported that Baltimore City’s law postponed any rent increase that was set to take place after Hogan’s state of emergency.

The landlords’ effort to charge late fees and rent increases comes as estimates show some 274,000 Marylanders are at risk of eviction due to the financial hardships caused by COVID-19. Fair housing advocates slammed the lawsuit, calling it “cruel.”

“From a legal perspective, it’s incredibly short sighted,” Matt Hill, an attorney with the Public Justice Center, a nonprofit legal center that advocates for tenants, said, “and just cruel to want to raise the rent on tenants in the middle of a pandemic, when we know that some Between 25 to 30% of tenants are facing eviction at this point.”

Hill, who has warned about legal loopholes in Hogan’s moratorium on evictions, said local governments in Maryland have a legal right to impose rent controls and restrictions in their jurisdictions.

“The Court of Appeals has already held that Baltimore City in particular … has the authority to impose rent control, Hill said. “That was decided many years ago. That’s within the states and the city’s general policing power, and so to impose some sort of rent stabilization in the middle of a pandemic, is perfectly consistent with providing for the public good and public health in the middle of an unprecedented emergency.”

Other advocates blasted the lawsuit.

“Despite the economically precarious situation, these landlords in this lawsuit pour gasoline into the fire, insisting on increasing their revenue,” said Cathryn Paul, a research and policy advocate at the immigrant rights group CASA, in a scathing statement.

“The money-grabbing behavior shows us that they don’t care about the implications of the pandemic on working families. Too many face fiscal devastation, and if these landlords get their way, homelessness, bankruptcy, and more is on the horizon,” Paul said. 

Carol Ott, tenant advocacy director for the Fair Housing Action Center of Maryland, said raising the rent in the midst of an economic disaster could be an attempt to clear out tenants who are already behind on payments.

She said tenants and their advocates are already fighting an uphill battle with limited resources to prevent mass evictions. A federal moratorium on evictions expired last month, and Maryland courts are set to begin hearing failure to pay rent cases again on Aug. 31 – although some eviction actions may resume even before then.

Rent increases, may be an attempt to avoid an eviction altogether, Ott said.

“If the tenant doesn’t agree to those terms, then the tenant has to move,” Ott said. “And to me, it just seems like a cheap ploy to get tenants to move out.”

Hill said that tenants and landlords are rarely on even ground when it comes to negotiating for rent and the terms of a lease. When faced with the option to let their lease expire or the option to renew with rent they can’t afford, Hill said many tenants will likely vacate.

The Baltimore Sun reported that a U.S. District judge had already denied a request from the 23 landlords for a temporary restraining order. The judge wrote in an opinion that “this court is understandably reluctant to disturb legislative enactments, intended to address the needs of Marylanders during a time of sincere desperation.”

Howard County officials declined to comment on pending litigation, and officials from Baltimore City and Salisbury did not respond to a request for comment by press time.

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