Legislature(2005 - 2006)BELTZ 211

03/09/2006 01:30 PM LABOR & COMMERCE

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01:32:55 PM Start
01:38:29 PM HB274
01:50:33 PM SB307
02:05:07 PM HB393
02:27:02 PM Confirmation Hearings:
02:28:45 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Confirmation Hearing: TELECONFERENCED
Alcohol Beverage Control Board -
Billy G. Andrews and Gail M. Niemi
State Board of Registration for
Architects, Engineers & Land Surveyors -
Charles A. Leet
Board of Veterinary Examiners -
Steve Torrence
+ Bills Previously Heard/Scheduled TELECONFERENCED
Including But Not Limited to:
Moved CSSSHB 274(FIN) Out of Committee
               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                                                                   
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                                                              
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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