Box 22, Folder 18, Document 24

Box 22, Folder 18, Document 24

Dictated but not read

DRAFT SUMMARY ON LANDLORD-TENANT



by Julian Levi

Archaic landlord-tenant law and principles, once appropriate to
an agricultural society, must be reformed and modernized to meet the
need of industrialized urban America.

Ancient legal doctrine construing a lease as a conveyance of an
interest in land rather than an agreement leads to the holding that
the obligation of the tenant to pay rent is independent of the duty
of the landlord to repair and maintain the premises. The sole remedy
thus available to the tenant to secure his rights is limited to his
vacating the premises and then granting termination of the lease or
himself repairing the premises, financing the cost and thereafter
creating a set-off against further rents.

Such limitations, while onerous to all tenants, are intolerable
in their application to poor people. Their choice of accommodation
within their means is minimal. They cannot finance repairs nor often
even gain access to parts of the premises requiring repair. While
state and local governments prescribe minimum standards for housing
accommodations, outdated legal practices thwart the poor in direct

assertion of their rights.
II,

Reformation of landlord-tenant law is a state and local
government responsibility burdened with consequence to the
national welfare.

While appropriate solutions may vary between jurisdictions
certain broad principles must be applied throughout:

A. State and local enforcement of building, health, and
safety codes must be streamlined and improved. Administrative
flexibility and fact-finding must be fostered and the power of
local courts strengthened. The obligation of code compliance
must be a prior charge on the property itself and all rights
within rather than merely a personal obligation of the owners.

’

Be Compliance with law must be a basic part of every
agreement and every right. Obligations of landlord and tenant
alike as provided in building, health and safety codes must be
construed as creating independent rights enforceable by direct
legal action. Determination of such issues in the court room
must be facilitated.

C. Public funds must not reward illegal conduct. Appropriate
rent withholding scoeadures must be developed for the welfare
tenant. Appropriate actions must be taken in all public acquisition
to the end that prices paid disregard values achieved from income
derived in property operation contrary to minimum building, health

and safety codes.

we “we cy


iy

While these responsibilities are local, the Federal government
can and has assisted: (1) the establishment of neighborhood legal
centers in slums by the directive of the Office of Economic Opportun-
ity who are making a major effort to help tenants secure their rights
to safe and sanitary housing: (2) ‘the convening of a conference by
the Attorney General to develop new procedures to insure that the
rights of tenants are fully and effectively enforced; (3) the
appointment of a commission to make a comprehensive review of codes, zoning,
taxation and development standards.
rit. Practices and activities of the Federal government while indirect,
inept, enforcement of fire prevention, housing, building, and sanitation
law as a responsibility of local government can be of decisive importance:
(1) Section 10la of Public Law 171 qualifies federal assistance
upon the appropriate local public body undertaking "positive programs” and
"workable programs" for community improvement through the “adoption,
modernization, administration and enforcement of housing, zoning, building
and other local laws, codes and regulations relating to land use and adequate
standards of health, sanitation and safety and building, including the use
of occupancy of dwellings." Administrative regulations heretofore issued
by the Secretary of Housing and Urban Development should be clarified to direct
specific enumeration and attention to the application and enforcement of
local codes and ordinances related to life, health and safety throughout
the locality and to demonstrate increased effort and progress in such enforcement.
Such enforcement of minimum codes shall be required as protection of life and
health of occupants irrespective of whether a basically sound and stable area

is to be created. The Secretary of Housing and Urban Development can further
implement the purposes of the legislation through the development of mejor
uniform statistical reporting whereby a yardstick of comperable municipal
performance may be established.

(2) The Secretary of Housing and Urban Development can teke exist-
ing regulations to the end that mortgage insurance availeble through the
Federal Housing Administration for property acquisition, rehabilitation
and improvement must be conditioned upon code compliance. At the same
time mortgage insurance and grants under section 312 can be promoted dnd -siicadbteid:
Special personnel can be designated in each insuring office of the Federal
Housing Administration with the specific assignment of coordinating the in-
suring activities of that agency with city building departments and com-
munity organizations to the end that division of property financing for complete
rehabilitation to meet code standards be greatly expedited. .

(3) The Secretary of Health, Education and Welfare can by admini-
strative regulation require that each local authority participate in
administration and disbursement of relief funds available in collaboration
with appropriate local authorities systems of housing inspection and certvifi-
eation to the end that appropriate withholding of rents where justified be
undertaken.

(4) All departments of government concerned with property acquisi-
tion wherever federal investment is involved can require that the acquisition
public authority demonstrate and certify thet no part of the award granted

or payment made represents values achieved by operation contrary to local

codes of building, health, and safety.

(5) All departments of government dealing with the eudit end verifica-

tion of real estate and mortgage assets can require certification as to the

' property concerned no complaints are presently pending by any local authority

charging violation of local minimum codes, building health and safety.
xe
At this time property owners in deteriorated or declining
city areas assume that the municipality either cannot or will
not enforce the building, housing, health and sanitation laws -
an assumption based on experience and occasions supported by
federal statement;

"Characteristic of a typical slum area is the overcrowding
of housing units well beyond the levels permitted by local
codes. Any effort to enforce the occupancy standards of
the code would have as its immediate consequence a massive
displacement of the families occupying the overcrowded ‘
units. This might be acceptable if it were coupled with

a concurrent program to make available to such families
decent housing at prices they can afford. Unfortunately,
the latter tends to be far slower and more costly than

the carrying out of code enforcement. In many cases local
courts have recognized this consequence and, as a matter

of public policy, have refused to permit enforcement action.

"By its very nature, a program of code enforcement requires
propoerty owners to make substantial investments in repairs
and improvements in order to avoid prosecution. Unless that
investment is coupled to an increase in rental returns or
property values, the owner is likely never to be able to
recover the cost. But since we are still dealing with a
seriously blighted area, neither the increase in renavls or
property values is likely to occur. The present tenants
usually cannot afford higher rentals, particularly if
occupancy is reduced and there are fewer wage earners to
pay the rent. Tenants with higher incomes usually cannot
be persuaded to move into a still blighted area. The value
of the property in a private sale cannot be expected to
increase unless the rentals increase nor would the repairs
or improvements add significantly to the property value in
the event of a future public comdemnation.
C.

"It has been argued that rigid code enforcement in
deteriorated areas will so depress property values
that new purchasers will be able to afford to make
the necessary repairs without increasing rents.

In fact, this does not happen on any broad scale.
While our understanding of the factors which motivate
owners of slum property is very limited, a recent
study does cast some light on this. The large
Tsophisticated' owners of slum property usually have
so little of their own money invested that any feasible
reduction in cost of purchasing could not equal the
cost of needed repairs. On the other hand, the small
"unsophisticated' investor is usually incapable of
taking advantage of any such economic effects.

"In sum, it is our belief that concentrated code
enforcement by itself in badly blighted areas would
result in more turmoil than improvement of housing
conditions. But to say that this one approach will

not work is not a satisfactory answer to a very real
and pressing problem. Although we have not yet arrived
at anything we regard as an adequate solution, it would
be extremely valuable to present some of the problems
and possible approaches in order to bet broader
consideration."

"Staff Report Housing and Urban Development
forwarded by the Secretary to Senator John
Sparkman, Chairman Subcommittee on Housing,
Senate Committee on Banking and Currency,
July 26, 1966."
The assumption becomes an unfulfilled prophecy:
Property owners reduce expenditures for property maintenance
and repair wherever possible.

Tenant and community morale collapse.

Constructive community leadership is denied creditability.
4

If it be assumed that power of state and local government to
regulate housing condition in order to preserve life, health and
safety is a prior charge on all interest in property, then the equation
as to the feasibility of property repair to minimum standards is simply
whether the gross rent roll will cover current operating expense,
current taxes, and principle and interest payments to cover the cost
of repair.

Antecedent mortgage commitments as well as the equity investment
are irrelevant to the issue. Where mortgagees and property owners,
contrary to existing assumptions, are convinced of this contingency,
their conduct concerning property repair and maintenance would be
altered significantly. In this circumstance it would not be necessary
that public action be asserted against each property in a given neighborhood
in order to reverse the prior assumptions.

A formidable case exists therefore for selection of a few
neighborhoods in which after complete inventory of structure condition,
ownership, mortgage debt, and prior Bieter of code enforcement, an
experimental program be undertaken by the appropriate local public
authority, working in collaboration with the local community, in which
a'number of the possible sanctions were enumerated were employed.

The effort is attractive in: (1) presenting a new attack upon the
syndrome of community decline and collapse; (2) offering promise of
reduced public expenditures by imposing costs upon non-conforming
properties; (3) generating increased volume compliance with minimum

codes and standards.