Balance Was Goal of Rental Reform

Balance Was Goal of Rental Reform
Sen. Jonathan Dismang, R-Beebe (left) and Rep. Spencer Hawks, R-Conway, successfully sponsored changes to the Arkansas Residential Landlord-Tenant Act of 2007.

Arkansas bears the distinction of having the least equitable laws governing the landlord-tenant relationship in the nation. The General Assembly this year made a move to reduce the tip of the landlord-tilted scales with Senate Bill 594, sponsored by Sen. Jonathan Dismang, R-Beebe, and Rep. Spencer Hawks, R-Conway.

Hawks has been interested in making long-overdue changes to the Arkansas Residential Landlord-Tenant Act of 2007 since joining the Legislature two years ago.

“My background is in real estate,” he said. “I grew up around it. I own rental property, so I understand it well. I’ve worked with nonprofits and helped people with unfortunate circumstances. I see the plight.

“I know that this bill is a historic document for the state of Arkansas even though some have said it is very narrow.”

Among the advocates of change is the group Arkansans for Stronger Communities, which offered this assessment: The new law “requires landlords to provide a sound structure, running and drinkable water, ‘available’ electricity, whatever heating and air conditioning is available at the beginning of the lease term and plumbing. But the requirement is largely toothless because if the landlord fails to provide or repair any of these, the tenant’s only remedy is to move out.”

Unless specified in a lease agreement, landlords aren’t legally required to make repairs. Tenants aren’t allowed to withhold rent as leverage to prompt landlords to follow through with repairs either.

“There was kind of an all-or-nothing mentality when we started discussion with tenant advocates,” Dismang said. “That’s where I had most of my conversations. It didn’t go as far as they wanted.

“We tried to draft what would be a fair bill to both sides. There’s more to be done, and I’m ready to be engaged in that conversation, too.”

Neil Sealy, an organizer with Arkansas Renters United, said more changes will be sought to advance landlord-tenant reform.

“It’s going to take a lot of good organizing and a good push,” he said. “The danger will be that legislators will say ‘we already addressed this.’ But that’s not the case.

“A decent bill made it into law, but it’s a fake warranty of habitability because it leaves significant items out.”

According to Arkansans for Stronger Communities, the amended law “does contain one clear and significant benefit for tenants: In unlawful detainer eviction cases, tenants will no longer have to pay a deposit to the court in order to be heard by a judge.”

Unsuccessful efforts to decriminalize the eviction process were made during the legislative session through a bill introduced in the House and a joint resolution advocating a proposed constitutional amendment.

Arkansas is the only state that criminalizes the eviction process, and more than 200 of these cases were filed last year, according to Arkansans for Stronger Communities.

The nonprofit group notes: “If the property is located in a court district that allows these cases, the landlord can then file an affidavit with the prosecutor, who will charge the tenant with the criminal offense of failure to vacate. The tenant may be arrested prior to the criminal hearing. Because this is a criminal process, if the tenant fails to appear she will then be charged with failure to appear, a more serious offense, and a warrant will be issued for her arrest.”

“I’ve seen their frustration in trying to get a bill passed,” Hawks said of tenant advocates. “I didn’t want to see this session end without some form of a warrant of habitability for the state of Arkansas.

“It’s a great first step forward and will help people who need the assistance in dealing with the really bad actors and will allow us to make assessments going forward and not price people out of housing.

“I think everyone wants what’s best for Arkansas. There’s two sides to the coin. On one side is safe and habitable. On the other side is affordable. If we place overly burdensome items on the property owners, they’re just going to pass it on to the tenants through higher rents.”

The amended version of the Residential Landlord-Tenant Act, which becomes law on Nov. 1, affects but isn’t directed at mainstream landlords and property managers.

“The Arkansas apartment communities that Lindsey Management provides management services to had no issues with either the habitability section or changes made to the unlawful detainer statute,” said Scott Rogerson, chief financial officer at the Fayetteville-based firm.

“The business practices of the on-site management of the apartment communities were already in compliance with the new requirements, so the passage did not really impact or require any changes to our business practices.”

Keith Richardson, owner of Richardson Properties in North Little Rock, said the changes shouldn’t pose any issues for most landlords. He does wonder how far the pendulum will swing for additional reform.

“The new law has little effect on us,” said Richardson, whose firm owns more than 2,000 units of market-rate apartments in central and northwest Arkansas. “We only manage Class A apartments. The new law deals with bad landlords who don’t take care of their tenants.

“But I wonder where it will go from here. Our biggest fear is: Will it have a future impact on us?”

David Wilson, owner of Tower Management in Hot Springs, whose firm manages 3,100 units of apartments that range from market-rate to tax-credit and rent-subsidized projects, has mixed emotions about the amended landlord-tenant law.

“I don’t want heavy-handed government in my business, but at the same time, I can see the logic behind it because of a landlord who ignores deferred maintenance, quality of life and preservation of assets.”

Neither Brittany Jews, president of the Arkansas Apartment Association, nor Margaret Maher, legislative and political action committee chair of the association, could be reached for comment.

Pandemic Variables

Hal Crafton, partner in Conway’s Rush-Hal Properties, said the economic impact of the pandemic on individuals didn’t manifest in any fallout for his company’s rental market of apartments and houses.

“I would’ve never believed we would’ve held up as well as we have,” said Crafton, whose firm is one of the largest residential property management firms in central Arkansas. “The market is as good as it’s been. We have had some instances, because of COVID, that some tenants got laid off. But most people got enough help that they could pay their rent.

“I haven’t seen a lot of problems in Conway. Our vacancy rate and our past dues are about nil. I would’ve never expected that given what we’ve been through.”

Dealing with a pandemic-mandated moratorium on evictions has created a financial burden on some of the projects managed by Tower Management.

“It’s property specific, low- to moderate-income properties,” Wilson said. “You can be 100% full but only 50% current. That produces challenges.

“We’ve seen a mixed bag of residents including people making no effort to pay the rent. That’s what’s frustrating to me. Some people are just giving us the finger. But the day of reckoning is coming.

“When a guy is evicted, what are we going to do when he applies for another lease, and we run a credit report on him and find out he left a $1,000 balance at his previous apartment? Some of these folks may not be able to find a place to stay.”