Today I want to talk politics. I know we all hate politics in this day and age, with the constant barrage and divisive rhetoric thrown at us from all sides everywhere we look.
But if you’re a landlord in the state of Georgia, you need to read this because it might well affect you.
And if you’re a landlord in Florida, you’d do yourself a favor by reading this too. The Sunshine State already has similar legislation on the books. Forewarned is forearmed, as the old saying goes.
So what are we talking about here?
We’re talking about Georgia House Bill 346 (HB 346) that Gov. Brian Kemp signed into law on May 8, 2019.
Under Georgia state law, because the Governor signed HB 346 on May 8, 2019, it became effective on July 1, 2019 so as of now we are living with it.
Again, what are we talking about here? Explain what this HB 346 is, please.
According to the official blurb, copied verbatim from the Georgia General Assembly’s website, HB 346 seeks to “amend Article 1 of Chapter 7 of Title 44 of the Official Code of Georgia Annotated, relating to landlord and tenant generally, so as to prohibit retaliation by a landlord against a tenant for taking certain actions; to provide for circumstances that are not considered retaliation; to provide for remedies; to provide for related matters; to repeal conflicting laws; and for other purposes.”
In plain English, that means Georgia law now prohibits retaliation by landlords against their tenants for filing complaints with code enforcement or insisting tenants honor their rights on the lease.
In a nutshell, the law now penalizes landlords for evicting bad tenants.
On the surface, this law seems legit. I mean, there shouldn’t be anything wrong with protecting tenants from the whims of bad landlords, slumlords even, who don’t like them complaining.
But the more likely scenario here is that landlords will get sucked into lengthy court battles with bad tenants who will invoke this law to avoid eviction or to get money.
According to the law, landlords who try to evict their tenants “wrongfully” will have to pay them their rent for one month plus their legal costs.
Oh, and another $500 on top just because.
We can envisage this new law filling up Georgia courts with frivolous litigation between tenants and landlords. This will delay evictions and end up costing you, the landlord unnecessary time and money.
Here in Georgia, we should all expect better from our state representatives.
Georgia is a conservative, pro-business state. It’s not often we have to deal with this type of anti-landlord legislation like we see in California or Oregon.
That this legislation sailed through the Georgia State House and Senate, and onto the desk of Governor Kemp pretty much unopposed, surprised and disappointed us.
To be fair, legislators made some changes to the bill after industry lobbyists took their case to state senators.
As such, it’s less onerous to landlords than the original version proposed. But make no mistake, this is still a bad bill for landlords in Georgia, with negative repercussions going forward.
We’ve been struggling to come to come up with a reason why state legislators passed this bill.
One reason could be about votes. As homeowners become a smaller part of the population and the number of renters increases, perhaps lawmakers are now more interested in pandering to renters rather than landlords.
This is something to watch out for down the line.
In the meantime, let’s look at the new law to determine what it means for you, the landlord.
HB 346 creates a giant loophole for tenants to claim that a landlord is “retaliating” against them.
The definition of what “retaliation” is, varies. Under HB 346, courts can consider the following acts as landlord retaliation:
- Filing eviction
- Depriving the tenant the use of the premises
- Decreasing services to a tenant
- Increasing the tenant’s rent
- Terminating the tenant’s lease
- Materially interfering with the tenant’s rights under the lease
Do any of the above points sound vague to you? Well, join the club! Some of these points are part and parcel of life as a landlord.
But now we must be extra careful about doing our jobs because tenants and attorneys of low ethical standards can use these points to exploit HB 346 and get money out of their landlords.
It’s a total mess and should never have been signed into law. But it’s pointless to harp on about what lawmakers should or shouldn’t have done. The governor signed HB 346 and now we have to live with the consequences.
So let’s look at some positives (there aren’t many, but we’re trying to be glass-half-full here, at least for now).
Well, as mentioned, the original version of HB 346 was far worse.
Thanks to industry lobbyists, you’ll find a lot of language in this law that creates exceptions when a landlord commits any of the acts listed above. This language can help prove a landlord has committed none of these acts as “retaliation” against the tenant for anything.
So there’s hope for landlords who end up in court under this new law. Because of the exceptions in HB 346, it’s not a total whitewash for landlords, and they’ll have a defense in court.
But here’s the problem (back to glass-half-empty again). If your tenant flies a claim against you under HB 346, having a defense in court still means you need to go to court. And going to court, as we’re sure you know, is time-consuming and expensive. It’s not cheap to hire an attorney to go to court and make a defense for you.
This is bad new for landlords who don’t have a property manager looking after their rentals for them.
If you’re a landlord without a property manager, if your tenant flies a claim against you under HB 346, you’re on your own. You can spend a fortune on the best attorneys to argue your case, but they can’t testify on your behalf. So you must go to court yourself.
This is one more reason to have a professional property manager looking after your investment for you.
If you hire a property manager like Revolution Rental Management, formerly known as GTL Real Estate, you won’t need to show up yourself to testify in court, as we’ll take care of everything for you.
Although we’re glad Georgia House Bill 346 has exceptions, some of them are confusing or poorly written.
One exception in particular springs to mind. This exception says the law can’t consider a rent increase a retaliation against a particular tenant if it’s part of a pattern of increases for an entire multi-unit residential complex.
Let’s break that down.
It means if you own a multi-unit residential complex, say an apartment building, and one of your tenants takes you to court under the new law for increasing their rent, then the tenant will lose if you can prove you’re increasing the rent for everyone else in the building too as a matter of course. Fine.
But what about everyone else? What if you own multiple rental properties that aren’t part of a single complex? What if you’re a property management company running hundreds of units all over the city? If you can prove a pattern of rent increases across the board, why don’t you receive the same protection?
Was this an oversight by the lawmakers who wrote the bill?
Or did they omit most landlords Ã¢â¬â single-family landlords who don’t own apartment complexes Ã¢â¬â on purpose to screw them over?
We don’t know.
It appears lawmakers rushed through this exception, leaving the wording open to interpretation. Which lawyers love because open interpretation means lengthy court battles.
Either way, we can see this argument often surfacing in court.
But it’s not all bad news.
If you have a property manager looking after things for you, you’re in a much better position than if you didn’t. Like we said, we’ll be in court for you, ensuring you need not be, if one of your tenants makes a claim against you.
We’re lawyered-up, too. We have a small army of attorneys on retainer in both Georgia and Florida. This puts us in a great position to protect you should you find yourself with a claim against you.
And here’s more good news. Most tenants won’t know about this new law and won’t use it in court against you. Also, most tenants are decent people with no interest in trying to screw you over. Remember, going to court costs them money, too.
But you will need to worry about the occasional bad tenant, and we’re in the best position to help you should that happen. Some of you will face this situation, for sure.
So what can we do?
Well, nothing we can do about HB 346 now. That ship has sailed and we’re living with the new reality.
But we can work together to ensure no more anti-landlord legislation comes down the pipeline from our lawmakers.
Here’s what we suggest for starters. Write to both your State House Representative and your State Senator. Oh, and write to Governor Kemp, too.
Tell them how unhappy you are with HB 346 and you want it repealed. The chances of this are zero, but tell them anyway. Make them aware of how you feel and how landlords are voters too, not just tenants.
Remind them landlords are not all a bunch of rich one-percenters and don’t have unlimited funds to deal with this stuff.
Most landlords own one or two rental homes and they rely on their rental income to live their lives. Tell them exactly that to make them aware.
Tell them you can’t afford the legal fees to fight frivolous lawsuits caused by needless regulations from the state legislature.
Again, don’t expect any of this to affect HB 346. It’s here to stay. But if lawmakers hear how upset landlords are, they may think twice about further legislation.
Lawmakers just need reminding that landlords are a sizable voting block.
We know how much of a pain this is to get active and start writing to your local lawmakers.
But it’s important that we, as landlords, stick together to preserve the value of our rental investments.
We need to prevent our state from becoming so weighed down with anti-landlord legislation like in California. Trust us, nobody is going to California to buy rental property as an investor due to their laws out there.
If Georgia and Florida end up weighted down with the same regulations as California, soon enough no-one will invest in rental property in our states either. That will be a disaster.
So let’s get active and demand our representatives look out for our interests as landlords.
As usual, if you have questions about HB 246, or any other aspect of property management, please shoot us an email at email@example.com. We’ll be happy to respond.
Until next time.