Maryland judges differ on ‘what is rent?’

BALTIMORE (AP) - It seems like a fairly straightforward question: What is rent?

But judges across Maryland who preside over eviction requests are struggling with the answer.

For decades, landlords in Maryland have been able to file failure-to-pay-rent actions that threaten eviction not just for delinquent rent, but also for overdue water bills, utilities and other expenses.

But an opinion by the state’s highest court this year is upending that tradition by doing what Maryland’s real estate statute does not: defining “rent.”

The state Court of Appeals concluded that rent “denotes the periodic charge for use or occupancy of the premises, but not the various other payments that the tenant may owe to the landlord from time to time, even if the lease characterizes them as ’deemed rent’ or ’additional rent.’”

The decision has drawn different interpretations from different judges.

Landlords say the definition does not apply to the eviction process because the Court of Appeals defined rent only for the purpose of calculating damages for tenants who win retaliatory eviction cases they file against landlords.

“The actual decision of the court does not” rule out failure to pay water bills, utilities or other charges as grounds for eviction when judges are deciding summary ejectment cases, said Kathy Howard, a lobbyist for the Maryland Multi-Housing Association, a landlords organization.

Advocates for tenants disagree. And increasingly, judges are siding with their interpretation.

“Despite what landlords are saying, it’s a significant gain for tenants,” said Zafar Shah, an attorney for the Public Justice Center.

The center represented Felicia Lockett in her lawsuit against a property management company that attempted to evict her, allegedly in retaliation for her advocacy on behalf of tenants of Bristol House in Baltimore.

In Lockett v. Blue Ocean Bristol, Lockett argued that her landlord twice tried to evict her for raising concerns about the building’s utility billing system. She won her first claim but lost the second because her landlord showed she was not current on the rent.

She argued that she had paid “the fixed, monthly amount.” The landlord had labeled disputed utility charges as rent.

The Court of Appeals sided with Lockett, ruling that the landlord could not count the utility charges as rent.

Shah, who represents tenants throughout the region, has seen judges struggling with the decision.

“I’m seeing a wide variety of interpretations,” he said. “Some judges are saying that they’re just not going to consider (utilities as rent). Others are saying they will consider your utility bill under certain circumstances.”

Mark F. Scurti, chief judge of the civil divison of Baltimore District Court, said “judges are interpreting (Lockett) in different ways.”

For Scurti, the narrow definition of rent in Lockett v. Blue Ocean Bristol is not restricted to retaliatory eviction cases.

“When I sit in rent court, I’ve interpreted the Lockett decision not to include water bills” and other expenses as rent, Scurti said. “I’ve let the landlords know that.”

Maryland District Court Chief Judge John P. Morrissey said he cannot tell judges how to interpret the Lockett decision.

“That’s their discretion,” Morrissey said. “Every case is going to be different.”

He said the Court of Appeals decision can reasonably be interpreted differently by different judges.

“I wouldn’t say there’s confusion among the judges,” Morrissey said. “But you could read that (decision) as you only limit it to retaliatory evictions and that’s the definition of rent, or read it that it extends to failure-to-pay-rent cases.”

Steve Cromwell, a Baltimore landlord, said more judges are prohibiting landlords from using the eviction process to seek repayment of water bills.

“They could care less about the landlords,” Cromwell said.

He said tenants are learning there’s no penalty for failing to pay their water bills, and inviting friends and relatives over to shower and wash clothes.

“I don’t allow washers and dryers in my units,” Cromwell said. “It’s abused.”

Scurti said landlords can still file small-claims lawsuits in District Court to collect overdue utility bills.

“They just can’t access the summary ejectment proceedings” for such bills, he said.

Landlords say small-claims actions are more expensive than failure-to-pay-rent proceedings and do not provide the type of leverage that the threat of an eviction carries.

In addition, Howard said, a small-claims judgment can ruin a tenant’s credit history.

Other legal actions, such as breach-of-lease cases, do not give tenants the same “right of redemption” that the eviction process guarantees, Howard said.

Tenants’ redemption rights allow them to “pay and stay” up until the moment a sheriff’s deputy is knocking on their door to evict them, Howard said.

“If you file a breach-of-lease action, there’s no right of redemption for the tenant,” she said. “I think that’s pretty damned harsh. The legislature intended for the tenant to have the right to pay and stay. Do we want tenants to be evicted without the right of redemption because they haven’t paid a water bill?”

Advocates for tenants say landlords abuse the process by assessing water bills that tenants have little power to dispute.

“I can’t tell you how many of my clients have excessive water bills,” said Matthew Hill, who heads the Public Justice Center’s Human Right to Housing Project. “And they can’t dispute them because they’re not the owner.

“The landlord has no real incentive to dispute the bill because they can just collect it as rent from the tenant.”

Landlords have long pointed to lease language to argue that utilities are collectible as rent.

But leases may run afoul of state rules, such as when the documents say tenants agree to occupy the property “as is”- regardless of any violations of lead paint rules or uninhabitable conditions.

“The argument that lease language governs everything is categorically rejected in Lockett,” Shah said. “Certainly courts can refer to the lease but not defer to the lease. That’s what landlords are unable to acknowledge.”

Advocates, landlords and judges all expect the General Assembly to address the issue in the 2017 session.

It’s clear landlords are eager to regain the power to launch eviction proceedings against tenants who fail to pay utilities.

Del. Stephen Lafferty, a Baltimore County Democrat, introduced a bill this year that would have required landlords to disclose to tenants how they calculate utilities.

Lafferty said he introduced the measure because apartment complexes charge tenants for water and utilities regardless of actual consumption.

After the Court of Appeals ruled in Lockett, Lafferty’s bill was amended without his knowledge by the House Environment and Transportation Committee with an out-of-context line that would have nullified the court’s ruling: “A landlord may recover payment of an arrearage due for utilities as rent.”

“When I realized what was added, I had the bill withdrawn on the Senate side,” Lafferty said.

Hill said the change to Lafferty’s bill “shows how much anxiety the landlords have about the Lockett case.”

Landlords were unapologetic about the maneuver.

“When the Lockett case came out, that threw some questions out there about whether water and other utilities could be collected as rent,” Howard said. “We very quickly got someone to sponsor an amendment to say that it is collectible as rent.”

Hill and Shah worry that the legislature could reverse Lockett. They believe the court’s decision is clear enough, and that judges are coming to that consensus.

“Whether we like it or not, it’s going to be an issue in Annapolis,” Shah said.

Landlords want a definition of rent that includes all other expenses.

“Could we legislate what Lockett already says? We probably could,” Shah said. “I think the problem is that there are so many monied interests to push for an expansive definition.”

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Information from: The Baltimore Sun, https://www.baltimoresun.com