2018 Legislative Update

As we all know, statutes and interpretations of the law change all the time. There have been some recent changes that landlords need to be aware and some of these changes may require some changes in the landlord’s current lease or forms. The following some of the highlights:

  1. CHANGE IN THE RULES REGARDING THE STORAGE OF TENANT’S PROPERTY FOLLOWING AN EVICTION OR AN ABANDONMENT (goes into effect August 6, 2018): The Governor signed SB 1376 which was sponsored by the AMA. This bill modified and combined two different statutes that governed how long landlords have to store tenant’s belongings. The significant change is that the landlord only has to store those possessions for 14 days after a lock out by the constable (previously 21 days) but this same rule applies for items that have been left behind after the abandonment process has been completed (previously 10 days). This new law also states that a landlord is not required to store perishable items or plants and can immediately remove any items that are a health and safety risk. Additionally, they can arrange for any animals to be removed and boarded by a third party for that 14 day period. Finally, if the tenant turns in keys, you can immediately dispose of any remaining items.

  2. STATUTE OF LIMITATIONS FOR SECURITY DEPOSIT DISPUTES: The Governor signed HB 2651 which now means that if a tenant does not dispute the deductions from a security deposit within 60 days after termination of the tenancy, the amount due if final and further claims are waived. This new law will obviously be challenged and it is unclear how the courts will interpret this change but it was designed to eliminate the lawsuit five years after the tenant moves out when the landlord likely will have a hard time gathering the evidence and witnesses.

  3. PROHIBITION ON FRAUDULENTLY MISREPRESENTING AN ANIMAL AS A SERVICE ANIMAL: It is now illegal to misrepresent an animal as a service animal in a public place and there can be a civil penalty imposed for breaking this law. Because HB2276 doesn’t actually impact the Arizona Fair Housing Act, it will not affect landlords who have tenants who want to add a service or emotional support animal to the lease but it is still a significant change in the law that impacts the leasing office. See the overview of issues involving assistive animals on our website under Documents/Fair Housing and the recommended forms a landlord can use for any Accommodation or Modification request.

  4. REINSTATEMENT OF THE PTFA: Effective June 23, 2018, The Economic Growth, Regulatory Relief, and Consumer Protection Act restores the Protecting Tenants at Foreclosure Act of 2009. The original law went into effect in 2009 and contained provisions that were designed to protect tenants facing an eviction action after the rented premises was foreclosed on because the home owner defaulted on the mortgage. That law contained a “sunset” provision and expired on December 31, 2014. President Trump signed into law Senate Bill 2155 which essentially permanently removed the sunset provision, thereby resurrecting the protections previously afforded “bona fide” tenants. This means that there are special notification provisions and other protections granted to renters after a foreclosure. Anyone affected by a foreclosure/trustee’s sale needs to seek legal counsel to determine their rights and obligations under this Act.

  5. SMALL CLAIMS PILOT PROJECT: The Justice Courts are operating a pilot project in five courts around the state until December 31, 2018 with the goal of creating realistic and reasonable rules that will reduce the total time the small claims process currently takes. The courts that are participating are Manistee Justice Court, Hassayampa Justice Court, Casa Grande Justice Court, Maricopa-Stanfield Justice Court in Pinal County and Pima Justice Court in Graham County. The Committee on Improving Small Claims Case Processing has created special rules and forms that must be used on all small claims cases in these five jurisdictions. Small claims cases can be filed by anyone who believes the other party owes them up to $3,500. In the landlord tenant arena, these types of cases are typically filed by tenants against their previous landlords. One of the newest changes that potentially can result is serious harm to the landlord is that the hearing date for the cases filed in these jurisdictions will be set at the time the plaintiff files the case. This change comes with some perils because the plaintiff can serve the landlord by mailing the documents via certified mail, return receipt requested, to the onsite office at the apartment community, the home office that may be located in another state or even the statutory agent and that hearing is set between 45 and 60 days from the filing date. The current rules require the plaintiff to serve the other party and then apply for the entry of default against that party if they do not file an Answer within 20 days (30 days if served out of state) of being served and prove that they mailed a copy to the other party so that there is one final chance for the defendant to avoid the default judgment. All landlords are encouraged to immediately set up protocol for the processing of any certified letters or documents that have been served by a process server, sheriff deputy or constable. With so many staff members that may inadvertently accept service by signing for the certified mail, it is very important for there to be specific protocol and training on the proper steps all employees (including temporary workers) must follow. No written Answer is required but this is the best way to carefully explain the landlord’s position and why it believes that the plaintiff is not entitled to a judgment against the landlord. If the landlord wants to have an attorney represent them, they must file a Motion to Transfer the case to the civil division at least 15 days before the hearing date.

  6. LEASE BREAK FEES: Many Maricopa Justice Courts have adopted a new Best Practices Policy of refusing to award lease break fees to landlords, despite the fact that they are specifically included as a lease term. We are encouraging landlords to keep records of the exact amount of damages they incur as a result of the breach of lease by their tenant. Typical damages are: unpaid rent until the unit is re-rented or the lease expires (whichever is sooner), utilities/yard/pool/pest control (if normally paid by the tenant) for that same period of time, advertising costs, duplicate commissions paid to a locator or real estate agent, and any other costs to relet the unit. If you are going to charge these out of a tenant’s deposits, seek legal advice first so that you are clear about what you can and should charge a tenant that is breaking their lease.

  7. Credit Freeze: Effective September 21, 2108, credit reporting agencies will be required to provide consumers with free credit/security freezes which restrict access to their credit history. This means that screening a prospects history will likely result in the denial of the application. We are encouraging all of our clients to add some language to their application that reminds a tenant that they need to temporarily lift the credit freeze/fraud alert so that their application can be processed. See our sample application on our website for suggested language.