32
votes
US increased number of limited liability company landlords leads to difficulty requesting repairs, increased evictions
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- Title
- Hidden landlords: renters' woes soar as property owners hide their identities
- Published
- Nov 16 2023
- Word count
- 1190 words
See, this is the kind of loophole that shouldn't exist. LLC's should be directly tied to real people, so that they can be held properly accountable for breaking laws. I support the idea of an LLC preventing total destruction of the owner's home and assets...but maybe they should be able to be held accountable enough that if they violate housing laws as the owner of an LLC they should be barred from landlording and be liable for at least a portion of the gains made as a result of those violations?
What exactly is to stop an LLC in the face of tenant lawsuits for neglect from selling off the property to another LLC for the exact amount owed to lenders, and then declaring bankruptcy and dissolving..absolving the first LLC of liability? Genuine question.
If the first LLC was sued, and the fact that all of their assets were transferred to another company held by the same people for the purposes of evading losses, the new LLC might be roped into the lawsuit as a defendant. Might.
Question: Can you prove easily the LLC was owned by the same people?
IIRC LLC's can exist behind a lawyer proxy to avoid tying to real person.
The court's discovery process would turn up a lot of that. If the property was transferred without cash compensation, that would leave a paper trail to the other LLC, and cause a lot of questions to be asked about why that happened. The lawyer proxy would be summoned to explain the situation. The true owner may get away, but the assets probably wouldn't. Of course, while that may narrowly be defined as justice, in that the individual lawsuit may provide appropriate compensation to the tenants, it does nothing to resolve the underlying issue.
What a limited liability company is being used to escape from liability? Preposterous!
Of course, there is one sure-fire way to make sure that landlords - individuals and LLCs alike - actually fulfill their legal obligation to repair your housing unit. Simply stop paying rent. You'll want to check your specific situation, but chances are they have either breached the rental agreement or broken a law if you have notified them of the issue and they have not taken steps to repair it promptly. If you're paying by check, just replace that piece of paper with another that says "I am withholding rent payments until my issue has been fixed".
IMHO the entire housing market is fucked up from a legal perspective. Renters don't even know their rights because there is so much convoluted law around it that it's basically impossible for most people. The last time I signed a rental agreement it took something like two hours just to read through and make sure I understood the document - it was something like 20 pages long. And much to my chagrin one of the clauses in it was an arbitration agreement, which waived my rights to take them to court. They would not remove that section or otherwise allow me to opt out, and given that we were talking about housing it was effectively extortion. If I didn't want it, where else was I going to go? There wasn't a lot of housing stock, and even if I went somewhere else, everyone has those clauses now.
Housing should probably be socialized. If you're not a landowner, you're open to so many more ways to be taken advantage of.
You answered why this isn't done with your next paragraph:
Even if a renter knows their rights, they likely don't have anywhere else to go, the time or money to defend themselves against eviction for breach of contract by the landlord, and they'll just end up with an eviction on their renter's credit report, barring them from renting elsewhere.
I've said it before, but I had 6 landlords before I was able to save up enough to buy a home.
Of those 6, I only got my initial deposit back 2 times. 3 of them made up bullshit excuses and 1 had a legal right, but was kinda bullshit...we bailed 5 months early because there was black mold in the basement and we couldn't wait for repair because my future-wife was having daily asthma attacks and no health insurance. 6 months after moving out she stopped having attacks altogether. Yea we broke contract, but felt we had good reason.
But we didn't seek legal recourse because the amounts were low enough and we had no way to prove they weren't full of shit.
No, no, no. Never do this:
Since Wisconsin was called out in the article, I took a look at Wisconsin’s renter’s rights as it relates to repairs. Check out Step 6 - Option B (Risky): Withhold Rent. So, the general advice there is it’s risky and, if you do it, notify your landlord in writing of the need for repair, and have proof you had the withheld portion of payment when it was due in an escrow account.
Minnesota next door seems to have a formal Rent Escrow Process with helpful instructions and requirements on the first page.
That’s general info for 2 of the 50 states. Every state is different, but the answer is never as simple as
#yolo + withhold rent.I mentioned notifying the landlord right before that sentence you quoted.
Yes, but it’s bookended by the portion I quoted above and this:
I’m not going to check every state, but I’m not aware of a single state where it’s as simple as “simply stop paying rent” and I feel obliged to make sure anyone who comes across this doesn’t walk away without paying attention to:
I’m all about renters rights, and in a previous role advocating for renters was a portion of my work. Fuck slumlords all day.
But, it’s never quite as simple as notify and don’t pay rent. And that can’t be emphasized enough.
https://www.mass.gov/info-details/tenant-rights
It can be that simple here as long as you notify in writing (which you always should anyways), though obviously it's a major escalation and really a last resort because you'll majorly piss off your landlord.
Escrow account would be an extra CYA step, but as long as you're holding on to the money and pay in full as soon as repairs are made, you should be okay.
Just to clarify, when I say “it’s never quite as simple as notify and don’t pay rent,” I’m referring both to actions taken by the renter in an effort to force repairs and preparing for possible retaliatory action by the landlord.
Thanks for the link. That seems pretty simple, but:
What’s the nature of the repair? Is it a quality of life issue or a habitability issue? Has the landlord failed to maintain the dwelling in a habitable condition?
Unfortunately, “deciding how much to withhold is based on each situation.”
Escrow account, savings account, any sort of documentation that the withheld funds were available for payment on the day the payment was due might be an “extra CYA step.” But it’s the kind of CYA step that helps prevent unexpected homelessness, difficulty renting in the future, etc.