Massachusetts News 
By: Lenore and Skip Schloming, Small Property Owners Association 

August 2--The Judges of the Massachusetts Supreme Court thought they were helping poor tenants when they held that a tenant could withhold the rent if the landlord was not providing basic services. 

But what has happened is that this is being used by many tenants as a device to cheat the land lord, and many small landlords have gone out of business as a result--which does not help the poor--and the abandoned houses in many cities have become a serious problem. 

The legislature could pass a law which would require a tenant to put money into escrow until the matter is settle. But after many years it still has not acted.  
 

"Last night the City Council ordered four more houses torn down," Louise Ferris started out the interview. 

For 12 years, Ferris has been Commissioner of Inspectional Services in the city of Lawrence, which has been plagued with abandoned housing since the early '90s. 

"Next week, five more buildings will come before the Council for demolition," Ferris went on. Cost to the city: $12,000 to demolish each house. 

Since 1992, Ferris has overseen 407 abandoned houses torn down by the city, mostly three-family houses, some larger, just a few "singles." Ferris keeps a list of abandoned houses. It still has over 200 buildings on it, almost all residential multi-family houses. 

Why such rampant abandonment? "It's a combination of things," both Ferris and her assistant commissioner in charge of code enforcement, Dick Galle, agreed. A major factor is the economy. Also poor management by owners. And unchecked rent withholding. For years, Ferris has wanted a state law requiring the escrowing of rent where a tenant has a complaint, rather than allowing them to withhold the rent unilaterally. 

A Spreading Disease 

Most of Lawrence's abandoned housing is in "the heart of the city," the old millworker housing that grew up around the city's once-thriving textile industry. 

A new wave of immigrants, mostly Hispanic, hit the city in the 1980s. When the nationwide recession of the early '90s caused businesses to leave and tenant incomes to fall, the city's lower-income neighborhoods went into a tailspin. Ferris calls 1992-93 the "Arson Year," when Lawrence's vulnerable vacant housing blazed into the national media. 

Lawrence realized it had to do something, and the only thing was to tear down the housing. "Demolition is not the final answer," Ferris says, "but if we didn't demolish those buildings, we'd look like a war zone." 

"The main problem is squatters," Galle points out. The squatters who invade the abandoned housing are typically drug addicts, drug dealers and prostitutes. Once they are present, problems spread throughout the neighborhood. 

Ferris and Galle describe abandoned housing as an infection, a spreading disease. Vacant buildings attract criminals. Criminals in the neighborhood reduce rents and housing values. Marginal tenants move in and can't pay their rent. Owners can't pay their mortgages, can't fix up their properties, and can't evict tenants. So owners "take a hike," in Ferris' words, abandon their properties, and the neighborhood just sinks deeper into trouble. 

Asked for Rent Escrowing  

Two years ago, Ferris and a group of city councilors finally went to then Senator John O'Brien from their district and asked for a rent escrowing law to help their situation and stop unchecked rent withholding. O'Brien supported a bill in the last legislative session and testified that "the state's landlord-tenant laws are killing the housing in my city." 

Isn't the problem, we asked, that a big landlord can absorb the cost of one non-paying tenant, but for an owner of just three or four apartments, that one non-paying tenant is devastating? 

"You got it right on the nose," said Galle. "That's exactly what's killing the small landlords here." 

Of course, Ferris and Galle know about non-paying tenants, because their housing inspectors are called in by tenants who report code violations and justify their non-payment as "rent withholding." 

"We see it every day. It happens constantly," Ferris says. "We have a full-time prosecutor who goes to court every day. If you look at the evictions, the landlords are evicting for non-payment the same tenants who are reporting code violations." 

"It's all about delay," Galle explains. "A lot of the time, it's not about getting the apartment fixed up, it's about delaying eviction. The tenants are great at making the complaint, but the owners can't get in to repair and we can't get back in the door to reinspect." 

Ferris pointed out about so-called "professional tenants" who use the law to get free rent: "We can follow some of these tenants from one building to another." 

Galle interjects: "We have some inspectors who plead, 'Please don't give me these tenants.'" 

"The sad part is," Ferris laments, "we know we are being used, and we can't do a darned thing about it." 

Escrowing is Fair 

Ferris also struck a loud note for fairness. 

"Rent escrowing is fair for both parties," Ferris asserts. "I can't imagine anyone against it. Put the rent in escrow [if the tenant claims code violations and wants to withhold rent]. Leave it up to the judge to decide. Maybe the judge will say the owner doesn't deserve it all. But at least rent escrowing is fair. Right now, the tenants take it all. The tenants know they can get away with it, and there's nothing to stop it." 

Galle insists: "Rent escrowing has got to be mandatory." 

Ferris resumes her point on fairness. "Even for the landlords who aren't that good, rent escrowing will teach them a lesson." 

"To be fair," she said, "a lot of apartments have code violations, but those apartments need paying tenants or they won't get fixed up. I want rent escrowing so I have an answer to the landlords who say 'I can't fix it up because I don't have the money because the tenants aren't paying rent." 

Controlling Tenant Behavior 

But the conversation with Ferris and Galle is not just about the rent money. It's about culture and attitudes and behavior among the tenants, which they think rent escrowing will change. 

"There is a lack of pride and respect among some of the tenants." Ferris clarifies what she means: "Lack of pride and respect for other people's property. If you have pride, you have an incentive to keep your apartment and your yard clean." 

"My parents always lived in tenements," she says. "When I was first married, I lived in a tenement. We sanded the floors and tiled the kitchen floor. I even tiled my bathroom. I didn't think anything about it. I remember 
some old-timers washing the [common area] stairs." 

Galle picks up the same point: "You see so little of people today keeping the place clean. Today some tenants expect the landlord to change their light bulbs and smoke alarm batteries. We had to pass an ordinance to stop people from hanging laundry on their front porches or on lines tied to bushes." 

How will rent escrowing help? "I think it will educate the tenants," Ferris says. "They will know, 'I can't complain for a foolish reason, I can't tear up the place, but if I have a good reason, the courts will back me up." 

Ferris makes it clear, "Officially, rent withholding does not affect us. We are in the middle. But I think rent escrowing will help both parties. I don't think it will hurt the tenant." 

Ferris is also clear that she thinks rent escrowing will be a useful weapon against Lawrence's problem. "We are on the up now. I believe rent escrowing would help get properties back into shape. It would have stopped some houses from being abandoned." 

If tenants were actually escrowing their rent and landlords were not repairing, would you go to court to get a judge to order those escrowed rent funds used for repairs and improvements? "Definitely yes." 

Bankruptcy Hits Lawrence Inspector 

Even a Lawrence housing inspector could not avoid bankruptcy in his own multi-family property. 

An immigrant from the Dominican Republic 23 years ago, this long-time inspector faced a number of tenants in a row who refused to pay their rent. Three of them reported code violations to delay their eviction. When he finally got them evicted, all his money went into fixing up the apartments to re-rent them. 

When several tenants left at once, the combined effect of no rent from several apartments plus needed repairs was just too much. "I finally just walked away," he says. He lost the entire seven-unit building. 

This article first appeared in the newsletter of the Small Property Owners Association, the Cambridge-based organization that spearheaded the successful 1994 statewide referendum ending rent control in Massachusetts. SPOA is a non-partisan, non-profit statewide organization that defends the rights of small-scale owners of rental housing and fights for better landlord-tenant laws. Small property owners provide over 75% of the rental housing in Massachusetts. Lenore Schloming is president of SPOA; Skip Schloming edits their monthly newsletter. SPOA's phone: 617-354-2358. 
 

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