Real Estate

On May 23, 2020, Howard County Executive Calvin Ball approved emergency legislation (Bill No. 33-2020) (the “Bill”) passed by the Howard County Council, which prohibits certain rent increases, changes in lease terms and certain other actions by residential and commercial landlords and mobile home park owners.

This discussion will focus on the Bill’s provisions regarding commercial landlords and tenants.

Prohibitions on Landlords

During the Catastrophic Health Emergency declared by Governor Hogan on March 5, 2020 (the “Emergency”), and thereafter for the duration of the emergency but not longer than three months, a landlord may not:  

1. increase the rent;
2. unreasonably or arbitrarily decrease the utilities or other services to which a tenant has been entitled;
3. terminate a tenancy, lease or rental agreement for monetary defaults; or
4. charge or otherwise assess a tenant for nonpayment or late payment of rent; or 
5. otherwise materially alter the terms of a lease to the financial detriment of the tenant.

Further, for the foregoing period, a landlord may not notify a tenant of any change in a lease or take any other action that violates the foregoing, and must inform a tenant to disregard any such notice of a material change in the lease if the material change would be in violation of the foregoing.

The Bill does, however, specifically state that it shall not apply to a commercial tenant that was in default at the time the Emergency was declared.

In addition, a landlord may not attempt to harass, intimidate, threaten or coerce any tenant subject to the protections in the Bill.

It should be noted that the Bill does not specifically address step increases in rents that appear in existing leases. At least one industry group has suggested that the legislative intent is that the bill not apply to such step increases, but that does not appear in the Bill. In addition, the Bill is not clear whether its references to “rent” are only to base rent, or to additional rent as well.

Payment Plans

During the Emergency and for one year thereafter or, if longer, for the remaining term of the lease, a landlord may allow a rent payment plan. Tenants are eligible to participate in a rent payment plan if they notify the landlord of an inability to pay all or part of the rent due as a result of the Emergency.

The following conditions apply to any such payment plan:  

1. A rent payment plan shall allow for monthly installments in lieu of rent, fees or other payments due.
2. Payments under the plan shall begin on the date to which the parties agree. 
3. The term of the plan shall be one year or, at the request of the tenant, a shorter term. 
4. A charge, fee or penalty may not be imposed for entering into a rent payment plan. 
5. A tenant may pay an amount greater than the monthly amount provided for in the plan.
6. A landlord shall not require or request a tenant to provide a lump sum payment in excess of the amount required under the plan. 
7.  A landlord shall not report to a credit bureau a delinquency or other derogatory information that occurs because of entering into a rent payment plan. 
8. A landlord shall agree in writing to the terms of the rent payment plan.

With tenant’s consent, a landlord may use any security deposit, last month's rent or other amount that the landlord holds on behalf of the tenant to satisfy amounts owed under a rent payment plan.

Applications for Payment Plans

Landlords shall establish application procedures for tenants to use to apply for a rent payment plan and shall allow an application to be made online or by telephone. The procedures shall require a tenant to submit supporting documentation.

A landlord may approve an application in which the applicant: (i)(1) demonstrates evidence of a financial hardship resulting directly or indirectly from the cause of the Emergency, and (2) establishes that the applicant would not otherwise qualify for renting the unit under the original criteria related to the applicant's income; and (ii) agrees in writing to make payments in accordance with the payment plan.

A landlord that receives an application for a payment plan shall retain the application, whether approved or denied, for at least three years. On request of the Howard County Office of Consumer Protection (notwithstanding the fact that these are commercial leases), a landlord shall make an application for a rent payment plan available to the Office and a person whose application for a payment plan is denied may file a written complaint with the Office.  The Office of Consumer Protection is required to post on its website information about the requirements of the Bill, including posting the dates when the Emergency begins and terminates, and the date that is three months after the Emergency terminates.

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