Landlords would keep eviction fees they charge tenants who later settle up and stay in their apartments under legislation that surfaced Tuesday night in a House committee.
It would reverse a recent court decision involving a Raleigh tenant that stood to impact thousands of eviction cases across the state.
House members gutted an unrelated bill that had passed the Senate and replaced it with one that would "reaffirm" landlords' right to collect out-of-pocket costs when they begin eviction proceedings against tenants who later pay back rents and fees and remain in their apartments. Those costs would include court filing fees, eviction notices served by sheriffs and "reasonable fees" not to exceed 15 percent of the amount the tenant owes.
In March, a state Superior Court judge ruled that an apartment owner wasn't entitled to collect $191 in such eviction fees from a Raleigh tenant who paid the back rent and fees and wasn't evicted from the apartment. That ruling shocked apartment owners across the state, who had been applying the fees for several years.
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Lawyers who represented the tenant have filed several other cases seeking to overturn eviction fees paid by others, including a Durham woman who fell behind on her rent while recovering from two surgeries to stop fluid leaking from her brain.
No one tracks the total amount of disputed fees paid by tenants, but North Carolina communities and much of the southeastern United States are home to some of the nation's highest eviction rates, a recent study by a Princeton professor found. State court records show North Carolina had nearly 164,000 eviction proceedings in the 2016-17 fiscal year.
Reps. Jon Hardister of Whitsett and John R. Bradford III of Cornelius, both Republicans, introduced the bill in the House Rules Committee Tuesday evening after talks with representatives for Realtors and apartment owners. The legislation wasn't made public before the meeting.
Hardister told committee members the legislation would "align" state statutes with "the industry standard." He said the bill had been worked out among the stakeholders, but that wasn't the case.
Abby Hammond, a lobbyist for the N.C. Advocates for Justice representing trial lawyers, spoke up and said there was no agreement. Two other groups who advocate for tenants, the N.C. Justice Center and the N.C. Housing Coalition, said today they had not agreed to the legislation, either. They said they were negotiating with Realtors and apartment owners Wednesday morning to try to address their concerns before the legislation reached the House floor.
Hardister on Wednesday acknowledged that when he was speaking of stakeholders, he was referring only to the Realtors and apartment owners agreeing on the legislation.
Al Ripley, a director involved in consumer and housing matters with the justice center, and Samuel Gunter, the housing coalition's policy director, said they are concerned about lawmakers' rush to respond to the court decision.
"This essentially undercuts a case in the middle of litigation," Gunter said.
Hardister and Bradford said apartment owners are entitled to the fees so they can cover the costs they incur in eviction proceedings. The lawmakers also view the legislation as protection for tenants.
If apartment owners can't recover their eviction-related expenses, they could lose their properties, which could put tenants out on the street, the lawmakers said. They also said the eviction-processing costs could also be passed on to other tenants who pay their rent on time.
"This is not just looking after the landlord," Hardister said. "It's looking after the tenant."
Karl Gwaltney, one of the attorneys representing tenants in the eviction fee cases, said the legislation gives apartment owners an incentive to evict tenants as opposed to working with them when they fall behind on their rent. The eviction fees are on top of late fees the apartment owners can charge that equal 10 percent of the rent.
"This is just going to lead to more evictions filed," Gwaltney said.
The legislation includes one change clearly favorable to tenants. Landlords would be required to remove an eviction finding from tenants' records if they have settled the rent issue. But Hardister said that provision may be removed at the request of apartment owners before the bill is introduced in the House.
"They are thinking it might be better for apartment owners to know that past history," Hardister said.
Hardister and Bradford both own single-family homes that they rent. Hardister said he checked with Erika Churchill, a legislative attorney who handles ethics issues, to see whether that would be a conflict of interest. She told him in an emailed response that it wasn't.
"(E)ven though a legislative action may result in a reasonably foreseeable financial benefit to you, you can vote on it if you are a member of a general class that is being treated the same under that legislative action," she wrote. "In this instance, all landlords would be affected in the same way."
The legislation would also have to clear the Senate. It would take effect on Oct. 1 if it becomes law.