Common sense reforms needed to protect Oklahoma tenants

Preston Brasch was an OK Policy Spring intern. He is studying law at the University of Tulsa School of Law.

Oklahoma faces a significant affordable housing shortage (see e.g. the 2016 Oklahoma Housing Needs Assessment and A Housing Strategy for Tulsa). Wait lists for programs that provide affordable housing can last anywhere from several months to several years. So what do these low-income families do? They often end up in unsafe and poorly maintained housing — an astounding 75 percent of low-income tenants in Oklahoma live in properties with at least one “housing problem” as defined by the U.S. Department of Housing and Urban Development.

This matters because evidence shows poor housing conditions have tremendous impact on health.  Children are especially vulnerable: one study found that 39 percent of asthma cases in children under six were linked to their homes. In the most extreme cases, tenants experience sewage backing into the home, leaking roofs, and infestations that can cause infectious disease.

It is important to note that most cases are not so extreme, and most landlords try to provide safe homes to their tenants. However, some landlords abuse the flaws in Oklahoma laws to profit off of our state’s most vulnerable citizens. Due to some unintended consequences of Oklahoma laws, local communities face an uphill battle in trying to improve housing that endangers the health of tenants. Fortunately, a few simple fixes could shore up these problems.

The “Protect Property Rights Act” prevents cities from uncovering serious health hazards

The “Protect Property Rights Act”, passed in 2014 in Oklahoma as HB 2620, prohibits Oklahoma cities from registering and pre-emptively inspecting rental properties. Under the Act, municipalities are prohibited from screening rental properties for safe living standards before they go onto the rental market. Real estate lobbyists pushed the law due to legitimate concerns about municipalities collecting sensitive data, such as social security numbers, or publishing addresses of abandoned homes. Unfortunately, the Protect Property Rights Act went too far.

Now, instead of a proactive inspection process, the Act shifts the burden of screening serious code violations onto tenants. By preventing inspection processes, communities must rely upon tenants to report concerns after they have signed a lease and moved into a home.  Many low-income tenants fear reporting serious problems because they have few options when it comes to housing and fear their home being condemned.  Additionally, without laws to protect tenants from landlord retaliation, landlords are free to evict tenants if they find out that they reported a serious issue.

[pullquote]“Many low-income tenants fear reporting serious problems because they have few options when it comes to housing and fear their home being condemned.”[/pullquote]

A growing number of cities are implementing rental registries across the nation. These registries have helped cities mitigate serious issues and reduce the number of housing complaints. At least fourteen cities in Texas have successfully implemented such registries. In Ft. Worth, the program is funded through annual registration fees of $10-$25 per rental unit that only apply to landlords with three or more units. Even if registration costs are passed on to tenants, that would mean an increase in rent of only $1-$2 per month.

Oklahoma should allow rental inspections to protect tenants. To address landlord concerns, Oklahoma could restrict registries from collecting sensitive data like Social Security numbers and limit required repairs to issues proven to cause health problems. Amending the Protect Property Rights Act would allow Oklahoma municipalities to adopt or reinstate low-cost, high impact programs to ensure that all rental units are safe for human habitation.

Property Auctions: Still the Wild West

In Oklahoma, various auctions list foreclosed properties for pennies on the dollar. A preliminary search yielded 2- and 3-bedroom homes for as little as $2,500 in Tulsa County. Although most landlords would invest heavily in needed repairs for such homes, others pay for mere patch jobs to hide issues from plain sight before renting them to families.

These properties are often far from habitable, but because of the Protect Property Rights Act, local communities are completely prevented from inspecting rental properties before they enter the market. Tenants who rent the most extremely uninhabitable units face serious health hazards and significant legal hurdles to break free from their leases, if they discover problems after moving in.

[pullquote]“Local officials in Tulsa have described a vicious cycle, in which landlords operating under numerous LLCs create a lengthy paper trail that is expensive to follow and allows landlords to simply ignore liens for abatements.”[/pullquote]

Properties that pose serious risks to tenants and neighbors often constitute a public or private nuisance or safety hazard. Fortunately, communities have the authority to require owners to “abate” (remedy) issues that pose risks to their neighborhood. If landlords fail to do so, the local community can fix the problems on the owner’s behalf and can seek repayment for the abatement from the property owner. Unfortunately, especially when a home is worth very little, some landlords simply ignore the fines. In such cases, the community can place a lien against the property to recover the costs, but this process takes significant time and resources.

As a result, local officials in Tulsa have described a vicious cycle, in which landlords operating under numerous LLCs create a lengthy paper trail that is expensive to follow and allows landlords to simply ignore liens for abatements. Instead, these landlords wait out the legal proceedings, collecting rent the entire time. Then, rather than paying off liens or fines, they use that same amount of money to purchase multiple, low-cost properties.

Unfortunately, no mechanism exists to prevent such landlords from purchasing foreclosed/condemned homes from Sherriff or private auctions, creating a toxic cycle in which certain landlords profit off of the poor and evade laws meant to protect everyday Oklahomans. A two-part mitigating fix exists. First, the state could require that every property have an in-state agent or individual designated to receive court summons and orders. Second, Oklahoma could ban persons or entities with outstanding abatement fines from purchasing new homes through property auctions. While this would not stop the problem altogether, it would mitigate at least one source of the issue harming people’s health and costing taxpayers considerable money.

The Landlord Tenant Act gives renters little recourse against negligent landlords

For the unfortunate tenant locked into a sub-standard property, Oklahoma’s Landlord Tenant Act makes it difficult to either break the lease or seek necessary repairs. The Landlord Tenant Act is so skewed in the landlord’s favor that a 2015 Journal Record investigation in Oklahoma County determined that landlords win an astounding 95 percent of eviction cases there. Small adjustments to the law can help ensure that the state protects both landlords and tenants.

First, Oklahoma should raise the cap on the amount that tenants may recover for repairing material defects to a home. Currently, if a tenant has a problem that her landlord fails to fix, she may repair the problem herself and seek to recover the out-of-pocket cost up to $100 per repair (provided she has sent a certified letter to her landlord and waited at least two weeks). This $100 limit is much too low and provides no incentive for landlords to fix legitimate problems.

Second, Oklahoma should safeguard tenants and neighborhoods by requiring out-of-state landlords to designate an in-state agent to receive court summons and orders.  Currently, out-of-state landlords can easily ignore repair requirements.  In most cases, it is too expensive for municipalities to extradite an out-of-state landlord. In other states, absentee landlords have caused serious problems such as fires that have killed neighbors and destroyed property. By requiring in-state agents, the Act would protect both tenants and their neighbors.

Finally, Oklahoma does not protect tenants from landlord retaliation. While many landlords do have legitimate reasons to evict their tenants, in some cases landlords also evict or harass tenants who raise concerns about serious and legitimate problems with their homes. While not a perfect system, many states attempt to prevent landlord retaliation by placing a minimum time period on frivolous evictions for tenants who complain in good faith about concerns with the property. Providing such protections would cost the state nothing and would help protect vulnerable tenants from landlord abuse.

Oklahoma municipalities can work with landlords who want to do better

As mentioned earlier, the vast majority of landlords operate their rental units in good faith. In some cases, the landlord cannot afford needed repairs. Oklahoma cities could help these landlords and their tenants by setting up housing trust funds, providing Community Development Block Grants (CDBG), or issuing bonds to improve stand-alone rental homes in low-income neighborhoods. Municipalities could provide funds to landlords to offset the costs of needed repairs, with the stipulation that properties remain available and affordable to low-income families for a set number of years. Such funding options would benefit tenants, landlords, and communities across the state while reducing financial strain on the public housing sector.

 While these policy recommendations would not completely fix the problem of dangerous homes in Oklahoma, they would be steps in the right direction and would bring Oklahoma closer to protecting our most vulnerable citizens.