Legislature(2005 - 2006)BUTROVICH 205
04/19/2006 08:30 AM JUDICIARY
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* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 307-LANDLORD REMEDIES; LATE FEE 8:40:28 AM CHAIR RALPH SEEKINS announced SB 307 to be up for consideration. SENATOR CON BUNDE, Sponsor, introduced the bill. SB 307 addresses a problem in the landlord/tenant relationship that surfaced due to a 2002 Superior Court decision, which changed the status quo on collection of late rent and late fees. The bill would return the notification process back to its original process. Prior to 2002, inclusion of a late fee on the same 7-day notice to quit for nonpayment of rent was an accepted practice. The court ruled that this was illegal and required that the landlords use an additional 10-day notice for the late fee. Simple, clear language between landlord and tenant is essential. Replacing one notice with two notices, both with different due dates and amounts owed causes problems, and a dispute invariably ends up in court. The bill would allow landlords to return to the same 7-day notice requirement for non-payment of the rent plus the additional late fee. 8:42:49 AM Senator Hollis French joined the meeting. 8:43:38 AM BOB MAIER, Alaska Manufactured Housing Association, testified in support of the bill. He said historically the late was included in the 7-day notice to quit of non-payment of rent. This practice has been going on since before the Landlord-Tenant Act was enacted. He asked the committee to support the bill and gave a comparative example of an electric bill that includes a late fee on the same notice with the same due date. 8:46:02 AM Senator Gene Therriault joined the meeting. SENATOR GRETCHEN GUESS asked Mr. Maier whether a person could be evicted for not paying a late fee even after paying the rent. MR. MAIER said yes but it has never happened. A landlord would not pursue an action based on a late fee due to all of the additional costs involved, including court costs and the costs involved in re-renting the property. SENATOR GUESS countered that as the bill is written it would allow for an eviction based on the late fee. MR. MAIER agreed and said that it has never been the practice of a landlord to evict a person based on non-payment of a late fee. He said he has sat through over 400 eviction hearings and has never seen a judge evict on the basis of a late fee alone and has never seen an action brought forward on the basis of a late fee alone. 8:48:38 AM LEO REGNER, Landlord, testified in support of the bill. He said the contract agreement should be enforceable with one notification to quit. The law as currently written allows the tenant to extend the problem due to all of the additional paperwork and waiting that both parties have to go through. 8:53:48 AM WILLIAM WHIPPLE, Landlord, testified in support of the bill. He voiced support of the previous testimony and informed the committee of the difficulty in evicting tenants who have failed to pay their rent. 8:57:39 AM STEVE CLEARY, Executive Director, Alaska Public Interest Research Group (AkPIRG), testified in opposition to SB 307. He asserted that late fees should not be treated as rent and the bill would cause that to happen. 8:58:55 AM PAT LUBY, Executive Director, AARP Alaska, testified in opposition to the bill. He cautioned the committee that the bill would allow for landlords to impose unreasonable late fees and that the bill would force the courts to include that late fee in the rent. AkPIRG agrees with the attorney general's office and with the court on the issue. ED SNIFFEN, Assistant Attorney General, Department of Law (DOL), testified that the DOL has already provided comments to the bill sponsor in the previous committee hearing. Senator Guess has highlighted some issues with the bill. Currently if a late fee is assessed the landlord has the right to give a 10-day notice and the recipient has the opportunity to schedule a hearing and challenge the reasonableness of that late fee. If a person does not pay the late fee, the judge must decide whether failure to pay constitutes a material non-compliance with the lease agreement. Hence, the court is forced to apply a different standard of review to the failure to pay rent and the failure to pay the late fee. Combining these two issues into one hearing would allow the court to evict a tenant for failing to pay a late fee and it wouldn't necessarily need to consider the reasonableness of the late fee. The DOL does not take a position on the bill but the committee should understand the impact of the legislation, he stated. 9:03:47 AM SENATOR FRENCH said for the record he has done two evictions for non-payment of rent and they were over 10 years ago. He asked Mr. Sniffen if there was anything in the law that outlines a maximum late fee proportional to the rent. MR. SNIFFEN said no but courts are unlikely to allow a late fee that is greater than the rent. SENATOR FRENCH referred to Mr. Sniffen's letter in the bill packet regarding the possibility of moving everything to a ten- day notice. He asked him to review the letter dated March 22, 2006 from Mr. Maier, which claims that going to the 10-day notice would be a disaster for the tenant. MR. SNIFFEN responded that he spoke to Mr. Maier about the issue of landlords being able to evict tenants and stated that there are a number of ways for landlords to evict tenants. He said he would read the letter and get back to the committee. SENATOR FRENCH said his experience is that 25 percent of the people he rents to are young people renting for the first time. He said when they sign the lease they generally don't know to what obligation they are signing. He expressed agreement with the one time notice and said he is looking for a procedure that is more efficient yet protects both sides. 9:09:08 AM WAYNE STEVENS, President and CEO, Alaska State Chamber of Commerce, testified in support of the bill. He said the court decision created unnecessary confusion and disruption to the rental and leasing services in Alaska. CHAIR SEEKINS saw no further testimony and held the bill in committee.