More transparency needed from Tennessee’s property owners
Since the COVID-19 pandemic began more than a year ago, tens of millions of Americans have been at risk of eviction for nonpayment of rent.
In Tennessee, nearly 300,000 tenants reported in February that they were not up to date on their rent – this accounts for more than 20% of residential renters across the state.
The state, along with city and county governments, have received hundreds of millions of dollars in federal aid that is designed to keep tenants housed and landlords afloat financially. Many landlords are engaging in good faith efforts to work with individual tenants and advocacy groups to avoid displacing people in the midst of the worst public health crisis in a century, but other landlords, and their allies in Nashville, are using the pandemic as an opportunity to further erode legal protections for tenants.
As they claim to care about low-income tenants, racial equity and community, these landlords and legislators demonstrate they are in fact motivated by profit margins and the interests of big businesses.
As tenants’ attorneys working closely with the Emergency Rental Assistance program, previously known as the Eviction Settlement Program, ESP, we are very concerned with this trend.
Memphis and Shelby County have one of the lowest percentages of homeownership in the country and a poverty rate that exceeds 30%, so the problem of pandemic-related evictions is particularly acute here.
Memphis was an epicenter of the mortgage foreclosure crisis of the late 2000s, with astounding numbers of owner-occupied homes being sold at foreclosure. Memphis became a magnet for non-local and out-of-state real estate investors, who turned formerly owner-occupied homes into rentals. There was a corresponding increase in demand for rental units as families who had lost their homes could not qualify for another mortgage.
As a result, it has become nearly impossible to determine from standard research of registered deeds that actually owns many of the properties in question. The properties often were purchased by amorphous sounding, limited liability companies. Sometimes there was a purchase by a local company with an immediate transfer or, series of transfers, to mysterious and unidentifiable entities.
The situation has come to mirror the ownership of home mortgages where homeowners make a mortgage loan with a lender of their choosing and it immediately becomes part of a securitized trust and the only entity the consumer has contact with is a loan “servicer”.
In the rental market, the tenants’ only point of contact is a management company, which they often mistake for the owner.
According to the Census Bureau, in 1991, 92% of rental properties were owned by named individuals. By 2018, that number dropped to 60%, with approximately 48 million rental units owned by anonymous shell companies according to a recent Los Angeles Times opinion piece.
Against this backdrop, HB177 was recently passed in the Tennessee House of Representatives. This bill would allow property managers to bring eviction lawsuits and testify in those lawsuits in the same manner as the actual owner – a practice that is already routinely permitted in the Shelby County courts.
Our objection to the bill was not so much that an agent of the landlord be allowed to stand in the landlord’s shoes during court proceedings, but that it perpetuates the already difficult task of identifying the actual owner of the property so that tenants can make legitimate complaints about housing conditions, or fair housing violations.
With that in mind, we asked that language be added to the bill that would require the plaintiff to provide the court with the name and address of the actual owner of the property.
Although the sponsors originally adopted this request, the committee to which it was assigned ultimately removed the suggested language. The result is that it will be easier for owners to evict tenants at will, while the culture of opacity and evasion that characterizes tenants’ attempts to bring their own claims will continue unchanged.
Since the pandemic began, the Tennessee legislature has done nothing to directly assist tenants who have been disproportionately affected by COVID-19, but continues to make it easier for them to be evicted. Secrecy is the antithesis of accountability. Community members, public officials, and, most of all, tenants should be able to know the identity of their rental property owners, who make decisions that affect the lives of all of us.
It is too easy to propagate draconian and insensitive policies or neglect maintenance obligations behind a shield of anonymity.
During this period of great hardship, it is time for politicians to listen to and work for tenants as much as they do for landlords, big businesses, and their lobbyists.
Katy Ramsey Mason is Assistant Professor of Law and Director, Medical-legal Partnership Clinic at the University of Memphis Law School.
Webb Brewer, PLC, serves as general counsel to the Memphis & Shelby County Emergency Rental and Utility Assistance Program.