Legislature(2005 - 2006)BELTZ 211
03/09/2006 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB274 | |
| SB307 | |
| HB393 | |
| Confirmation Hearings: | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 307 | TELECONFERENCED | |
| + | HB 393 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 274 | TELECONFERENCED | |
SB 307-LANDLORD REMEDIES; LATE FEE
CHAIR CON BUNDE announced SB 307 to be up for consideration.
JANE ALBERTS, staff to Senator Bunde, said that SB 307 addresses
a problem from the 2002 Superior Court ruling on how landlords
collect late fees. The court ruled two separate notices were
required. This has caused problems. SB 307 returns the
notification process back to what it was prior to the 2002
Superior Court Ruling. It allows landlords to include the late
fee on the same seven-day Notice to Quit for nonpayment of rent.
She explained that the 2002 ruling required a seven-day Notice
to Quit for nonpayment of rent and a 10-day Notice to Quit for
nonpayment of the late fee. This meant that two separate notices
had to be sent to the tenant. Having two different notices with
different due dates and different amounts has caused problems
and many have ended up being settled in court.
BOB MAIER, Alaska Manufactured Housing Association, supported
this legislation. He explained that they are asking for the
notice and late fee to be included on the Notice to Quit to cut
down on misunderstandings. Rent is usually due on the first of
the month and generally there is a 5 to 10 day grace period
before a late fee is assessed. After that time a Notice to Quit
is hung. He supported having the dollar amount of the rent and
the dollar amount of the late fee to be included on the seven-
day Notice to Quit to make communication clearer between
landlord and tenant. The Building Owners and Managers
Association supports SB 307. It has over 12,000 members
worldwide with 108 members in Alaska.
CHAIR BUNDE asked if this would make it easier to evict renters.
MR. MAIER replied no; it is just a simplification for the
landlords, the tenants and the courts.
CHAIR BUNDE asked if an eviction notice is served and protested,
does it have to be settled in court.
MR. MAIER replied that any Forced Entry and Detainer (FED) is
filed with the District Court where judges have a wide purview
to make decisions.
1:50:33 PM
GEORGE CAMP, Manager, Diamond State Properties, said Diamond
Properties is a 522 mobile home park in Anchorage. He sends out
an average of 20 Notices to Quit per month on the rent issue
alone. He supported SB 307 because it would cut down on
administrative costs by only requiring one notice. It would also
clarify the law for everyone concerned.
1:51:22 PM
ED SNIFFEN, Assistant Attorney General, Division of Consumer
Protection, said the department doesn't take a position on this
bill but he wanted to point out some of the consequences SB 307
would have. Before the Nakamoto case in 2002, there was an
accepted practice that was illegal and has always been illegal.
The Nakamoto case recognized it as illegal under the current
law. Mr. Sniffen explained:
It was illegal because we have two statutes, one that
requires a 10-day Notice to Quit for failure to pay
late fees and other surcharges and another statue that
requires a seven-day notice for failure to pay rent.
Rent is treated completely differently from late fees
and surcharges and for a reason. Under the statute, if
you fail to pay rent, there are specific review
requirements the court has to go through to decide if
you didn't pay because you didn't get your notice -
maybe there were offsets, maybe you had to perform
repairs, maybe you had to pay utilities - a variety of
reasons. And the court has directed, by statute, to
look at those issues when deciding whether or not to
allow an eviction for failure to pay rent.
If you fail to pay a late fee, however, there is
another notice required. And the failure to pay a late
fee has to rise to the level of being a material
breach of the contract before you can evict a tenant
and that's the current state of the law. So, by
combining these two concepts into one notice, you are
essentially allowing landlords to evict tenants for
failing to pay late fees. When under the current
system, you can only do that for failing to pay rent
and then you could proceed to evict for failure to pay
late fees, but only if you show that the late fee
failure was a material violation of the lease
agreement.
MR. SNIFFEN said some subtle consequences would have impacts on
tenants. One of the ways landlords could currently get around
this is by just issuing a 10-day Notice to Quit. Then the late
fees can be included with the late rent. It would be a 10-day
notice, not a seven-day notice.
1:54:39 PM
CLAYTON WALKER, Alaska Law Offices, Anchorage, said he has
represented a lot of landlords. He explained that the statute
doesn't say anything about the 10-day notice being for late
fees; it's simply for any other material violation of a lease.
Also, the tenant is only allowed one opportunity in a six-month
period to remedy a 10-day violation. So, if he misses making a
second late payment, he has no right to remedy that
circumstance. He elaborated:
So, having a landlord use a 10-day notice rather than
a seven-day notice is harmful for consumers. The
seven-day notice, in contrast, that tenant could be
late every month, get the seven-day notice; pay within
the seven days and they've remedied. They have a right
to stay in the premises. Allowing late fees to be
included with the rent on that kind of a notice would
allow them to remedy that indefinitely, no matter how
many times they were late. In contrast, a 10-day
notice, they would be out the second time they failed
to within six months.
MR. WALKER informed them that the Nakamoto Superior Court case
has not been consistently applied by the courts. Some of the
courts feel that the decision was wrongly decided and there is a
split within district court on how to handle the issue. Passing
this statute would create uniformity among the district courts
in how they handle the issue, which would simplify things for
both the tenants and the landlords, both of whom have problems
understanding the amount that needs to be paid.
1:57:01 PM
CHAIR BUNDE asked if this bill would encourage people to be
chronically late. He asked if under the old system, a person was
late twice, he could be evicted.
MR. WALKER replied that was his understanding.
CHAIR BUNDE asked if under existing law with the 10-day notice
for a late fee, could a person get the chance to cure that once
every six months. So being late twice would be cause for
eviction.
MR. WALKER replied that was correct as long as the court thought
the late fee non-payment was a material breach of the lease. If
the late fee was $50 and the rent was $1,000, he might decide to
let them stay and the landlord would have to wait until the late
fees accumulate to a much larger number that a judge would find
as material.
1:58:52 PM
WAYNE STEVENS, President and CEO, Alaska State Chamber of
Commerce, supported SB 307 because it clarifies and simplifies
the process and is in the spirit of regulatory reform, which was
passed last year.
1:59:33 PM
CHAIR BUNDE announced the bill would be held for further work
with Mr. Sniffen.
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