Landlords Sue Seattle Over Right To Choose Their Tenants

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The Editors's picture
Landlords sue Seattle over ordinance requiring them to rent to first qualified tenant

Several landlords have sued the City of Seattle over a new ordinance which took effect this year, called the first in time rule, requiring them to rent to the first qualified tenants who apply and seeking an injunction to halt the city from enforcing it.

The Pacific Legal Foundation said in a release it has sued in King County Superior Court saying the rule violates the Washington constitutional protections for property rights.

“PLF’s challenge rests on Article 1, section 16 of the Washington State Constitution, which says, “no private property shall be taken … for public or private use without just compensation.”  The Washington Supreme Court has held that this protection includes the right to sell or lease property, on a nondiscriminatory basis, to a person of your choosing, according to the release.

“By telling landlords, including mom-and-pop property owners, that they basically have no say in who can live in their rental units, Seattle is stripping them of a fundamental right,” PLF attorney Ethan Blevins said in the release.

“Owners should have the freedom to use their judgment and discretion to decide, on a nondiscriminatory basis, who would be the best and the most responsible tenant.  The city is robbing them of an important element of property ownership:  control over who lives in your property.  This amounts to a taking of private property rights, and government can’t do that without reimbursing the property owner,” Blevins said in the release.

Enacted by the Seattle City Council on August 9, 2016, the “first in time” rule took effect on January 1.  It amends Seattle’s Open Housing Ordinance to force landlords to rent to “the first prospective occupant meeting all the screening criteria necessary for the approval of the application.”  (Council Bill 118755).  The rule brands it an “unfair practice” for a landlord to choose among qualified tenants.  Violators are subject to civil suit from would-be renters, as well as government financial penalties of as high as $55,000 for multiple alleged violations.

According to the city, the ordinance is aimed at making the housing application process more objective as a tool to mitigate unconscious bias and ensure the city investments in addressing the affordable housing crisis and homeless crisis are effective.

The source of income discrimination proposal was developed following recommendations from the Mayor’s Housing Affordability and Livability Agenda task force.  Council further amended the proposal to provide further protections. It prevents housing providers from giving applicants with alternative sources of income a lower priority. It requires landlords to review applications one at a time, on a first-come, first-served basis.

Council Member Lisa Herbold said the rule is the first of its kind to be imposed by a U.S. city. “We will do an assessment of the impact of these polices,” Herbold told Q13 Fox. But as of now Herbold is defending the policy.

“We still find a lot of discrimination in housing,” she said. Herbold is pointing to the fair housing test, done every year by the Office for Civil Rights. People pose as prospective renters and test landlords for biases.

In 2015, the test found that 34% of landlords showed bias when it came to familial status. And 63% of landlords showed bias towards disabilities. “The fact is its occurring and this law is intended to make sure it’s not occurring,” Herbold told the television station.

How landlords see it

By renting or leasing out a residential unit, a small landlord is entering into a close business relationship with the tenant that can last for a number of years, according to the PLF release.  Seattle is now denying landlords the ability to make reasonable choices as to whom they want to enter into those contractual relationships with.  The plaintiffs in this lawsuit are small-scale landlords directly harmed by being denied discretion over the individuals who may rent their property.

Moreover, as they point out, the oppressive rule will harm tenants by driving up rents, increasing evictions, and even deterring people from becoming landlords and offering rental units, the release states.

The story of 3 small landlords who say law hurts them

One the plaintiffs, Marilyn Yim and her husband own a duplex and a triplex in Seattle.  With their three children, they live in one of the triplex units and rent out the other two.  They could not afford to live in Seattle without this rental income.  They have never denied tenancy to anyone based on membership in a protected class.  They merely value the ability to carefully select tenants, according to the PLF release.

They say they cannot afford losses from a bad tenant. For a family with children, selecting a tenant who will be their close neighbor requires careful discretion.  The Yims want the ability to ensure compatibility and safety by choosing among eligible applicants.

“We are, literally, mom-and-pop property owners renting our home to make Seattle affordable for our family and our tenants, and the council’s actions hurt not only us but the very people they keep saying they want to help,” Yim said in the release.  “We aren’t corporate landlords sitting on large capital reserves or with hundreds of rentals to spread our risk.  One bad tenant could take us years to recover from financially. 

“The primary way we have to manage our risk is by carefully selecting tenants and collecting adequate deposits up front.  The new city rule deprives us of that flexibility.  With this added, undue risk, we can no longer afford to charge below-market rents or give a break to good people who are just starting out or rebuilding from their own setbacks,” Yim said in the release.
 

“The council’s actions are bad for tenants and bad for the mom-and-pop landlords who make Seattle their home and fill an important niche in our rental market.  Many prospective tenants will find they don’t have a chance to get an already scarce apartment in Seattle unless they are the first to see it and they meet steep criteria.  This legislation will also increase evictions, with landlords no longer able to select the strongest applicant, and it will reduce the number of rentals as small landlords decide it isn’t worth the risk and sell their properties,” she said.

According to the release, donor-supported PLF is the leading watchdog organization that litigates nationwide for limited government, property rights, and individual rights.  PLF represents, free of charge, a number of small landlords whose ownership rights — and, potentially, rights of personal security — are undercut by the city’s denial of their freedom to make reasonable choices about tenants.

Landlords sue over law that can put women landlords at risk

Landlords sue over Seattle ordinance including Kelly Lyles who fears it may put women landlords at risk

Landlord and artist Kelly Lyles

Plaintiff Kelly Lyles is a single woman who rents out a home she owns in West Seattle.  She is an artist who relies primarily on rental income to afford living and working in Seattle.

She has never discriminated against any member of a protected class.  Rather, nondiscriminatory discretion in selecting her tenants is vital to her ability to gain income as a small landlord.  She cannot afford to miss a month’s worth of rent, and she does not have the resources to pursue an unlawful detainer action.  As a single woman who interacts frequently with her tenants, she also considers personal safety when choosing her tenants.  Such considerations cannot be adequately addressed through general rental criteria alone.

“No business would be told they have to hire the first person to show up with a decent resume,”  Lyles said in the release.  “This law would be ridiculous if it wasn’t so frightening. I inherited a small amount of money — and used the food bank for several years — in order to purchase my rental. Now, as a female landlord, I’m very concerned about the ‘first in time’ mandate.  Women are taught from childhood to ‘trust our gut’; I’m now denied that option.  I am terrified of no longer having a choice over whom I entrust with the majority of my yearly income (and life savings), not to mention my personal safety.  There are preexisting laws on the books protecting tenants from discrimination; this new one comes at too high a price-  robbing landlords of protection from potentially dangerous situations,” Lyles said in the release.

Law only rewards fastest applicant and not the best applicant

Scott Davis and his wife own and manage a seven-unit complex in the Greenlake area of Seattle. He also owns and runs a small business, the Davis Sign Company.  The rental property serves as an important supplement to the Davis family’s income.

“The city’s ‘first in time’ mandate puts an undue burden on small landlords who manage their property after-hours and on weekends, and do not have the capital to hire a management company or absorb the cost of an expensive eviction,” Davis said in the release.  “We will be forced to make strict screening requirements to protect our investment, exposure and liability, since we are no longer able to use our best judgment and reasonable discretion in selecting a tenant.  The result will be to exclude good tenants who are able to make a good impression.

“This legislation only rewards the fastest applicant and does nothing to protect the people it seeks to help,” he continued.  “As a result of this new rule, we have substantially raised our rents across the board with the anticipation of being forced to hire a property management company and avoid the future ‘sting’ operations of the city and the convoluted rules that are being implemented.”

The case is Yim v. City of Seattle.  More information, including the complaint and a blog post, is available at: www.pacificlegal.org.
About Pacific Legal Foundation
Pacific Legal Foundation, America’s most powerful ally for justice, litigates in courts nationwide for limited government, property rights, and individual liberty.  PLF represents the plaintiffs in this case free of charge, as in all its litigation.

Landlords Sue Resources:

CHONG and MARILYN YIM, KELLY LYLES, BETH BYLUND, CNA APARTMENTS, LLC, and EILEEN, LLC, Plaintiffs, v. THE CITY OF SEATTLE

Council Adopts Tenant Protection Legislation, Bans Discrimination Based on Income Source

Landlords suing over Seattle’s ‘first come, first served’ rental ordinance say it’s unconstitutional

PLF sues Seattle for robbing landlords of the right to choose their tenants

Pacific Legal Foundation

Liberty Blog: Can government regulate your subconscious?

 

 

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