It’s Crunch Time If You Are a Cook County Landlord
If you have been following GC Realty & Development, LLC or the Straight Up Chicago Investor Podcast, you are aware of the impact the proposed Residential Tenant Landlord Ordinance (RTLO) in Cook County will have on current and future Cook County Landlords. Below is the Call To Action recently released by our friend Mike Glasser at the NBOA. Your help can make a difference.
Implications of RLTO
As presently written, this ordinance would extend Chicago’s Residential Landlord Tenants Ordinance (RLTO) to most parts of Cook County (not Evanston or Mt. Prospect, which have their own ordinances governing landlord-tenant relations) and add a few more whammies, such as:
- a $10 ceiling on late fees,
- elimination of move-in fees,
- an extension of the 10-day eviction notices for material non-compliance to 30 days, and, most the harmful of all,
- a continuation of the RLTO’s unfair “strict liability” requirement that prevents judges from using their discretion when awarding damages and attorney’s fees. This provision leaves us no room to negotiate even if we committed only an unintentional technical violation of the ordinance that caused no harm to the tenant.
We are urging every housing provider, Real Estate professional, and folks who simply respect traditional notions of property rights and want to sustain our property tax base, to oppose this ordinance. You may do so by reaching out to at least three Cook County commissioners this week-the sooner the better.
We encourage you to do this in one of two ways:
- Call the commissioner’s office and express your opposition to the ordinance. It’s even better if you can engage the commissioner or his or her staff member in a discussion explaining why you oppose the ordinance, or
- Send the commissioner an email expressing your opposition to the ordinance and explaining why.
Below we offer some ideas (talking points). We ask that you express yourself in your own words and to share with them your own RLTO horror stories if you have them.
Also, remind the commissioner that this ordinance, which takes effect June 1st, has almost nothing to do with the COVID epidemic. Rather, the ordinance has tremendous long-standing consequences. It will dramatically diminish the quality of housing in the County and discourage investment, especially in the areas of the County that need it most. As much as we understand and support the need to protect the rights of tenants, this proposed ordinance represents a dramatic overkill.
Reaching Cook County Commissioners
Cook County is divided into 17 County Board districts with elected commissioners The two commissioners sponsoring the RTLO, Scott Britton and Kevin Morrison, represent districts in the far north and northwest suburbs.
Which commissioners should you contact?
Assuming you live in Cook County, you will want to call the commissioner who represents the district where you live (and vote). You should also call the commissioners who represent the districts where you own your properties.
In addition, we are asking you to reach out to three other commissioners (or more). All commissioners presumably look out for the interests of the entire county, not simply their districts and hopefully are open to hearing about your experiences with the RTLO.
Take your pick and feel free to reach out to commissioners on the other side of the county. Call us if you want some ideas.
Impact on housing stock
This proposed ordinance will hurt the ability of housing providers to maintain their properties, especially the small and midsized owners operating on small margins. The proposed ordinance is replete with “gotcha” violations that subject housing providers to mandatory double-rent fines, the tenant’s attorney’s fee, and your own attorney fees This does not include the fact that the tenant is often allowed to vacate his or her lease with less than 30 days notice. These gotcha violations include, for example, failing to attach a bedbug addendum or a copy of the updated summary to a lease. This resulting loss of income may prevent you from upgrading an apartment, paying your increased taxes, procuring adequate insurance, or providing needed services to your other tenants.
Timing of the ordinance
We are all struggling right now due to the COVID-19 pandemic and many of us housing providers are struggling to pay our bills, taxes, and mortgages. In short, we risk losing our properties. What is the urgency with this ordinance? Why now? What are the consequences to the County if we depart?
Reduced property values
The RTLO adds greatly to the risk of investing in properties. Some people voice concern that these provisions will cause us to increase rents. But more likely than that, this ordinance will, over time, impact the value of our properties. This ordinance-coupled with added tax burdens-lessens the value of our properties, which impacts our neighborhoods and disrupts the County’s tax base. Is this what we want?
- Eliminate the mandatory penalty provisions that deprive judges of their ability to use their discretion when assessing penalties and attorney fees. Most of the penalty and attorney fee provisions in the ordinance are mandatory, depriving judges of the ability to distinguish between serious and intentional violations of the ordinance and violations that are minor, unintentional technical mistakes that do little to no harm to the tenant (so-called “gotcha” provisions). For the same reasons we shun mandatory sentencing in criminal cases, we should not restrict a judge’s ability to mete out fair and just penalties and determine if attorney’s fees are warranted.
- Restore the ability of housing providers to assess move-in fees. Parties should have the freedom to enter into contracts and negotiate terms. Tenants often prefer paying move-in fees as an alternative to security deposits as they offer less upfront cost than requiring a security deposit equal to one or two times the first month’s rent.
- Restore the 10-day notice requirement for material breaches of leases. The ordinance’s proposed 30-day notice requirement unnecessarily prolongs the misconduct that resulted in the material breach and causes more disruption to other tenants in the building, the surrounding community and the owner of the building (e.g., an unauthorized “guest” engaged in illegal conduct can cause more damage and disruption in 30 days than in 10).
- Eliminate the across-the-board $10 late fee limit and instead adopt the Chicago RLTO formula, which imposes a $10 fee on the first $500 in rent and a 5% fee on rent above $500. A $10 late fee, regardless of the amount of rent owed, serves as a disincentive to tenants to pay their rent on time, hurting housing providers’ ability to maintain their buildings and cover their other expenses. It also discourages housing providers from renting to those whose credit history reveals a higher risk of late payments.
As you can see this is a monumental time in Chicago real estate. In addition to reaching out to your local Cook County Commissioner please also share this call to action with people in your network and on all social media networks.
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Originally published at https://www.gcrealtyinc.com.