BEFORE THE
COMMISSION ON LANDLORD-TENANT
AFFAIRS
FOR
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In the Matter of Alan Freeman, Acting Chairman Complainants |
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v. |
Case No. 13286 |
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Plaza Apartments L.L.C. Rental Facility: Respondent |
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Order
The
above-captioned case having come before the Commission on Landlord-Tenant
Affairs for Montgomery County, Maryland (the "Commission"), pursuant
to Sections 29-10, 29-14, 29-41, and 29-44 of the Montgomery County Code, 2001,
as amended (“County Code”), and the Commission having considered the testimony
and evidence of record, it is therefore, this 15th day of January,
2004, found, determined, and ordered, as follows:
BACKGROUND
On
March 20, 2002, Alan Freeman, Acting Chairman, Colespring Plaza Tenants’
Association (hereinafter referred to as “Complainants” or “Tenants
Association”), filed a formal complaint with the Office of Landlord-Tenant
Affairs within the Department of Housing and Community Affairs, (the
“Department”), in which they alleged, among other issues, that Plaza Apartments
L.L.C. (the “Respondent”), owners of Colespring Plaza Apartments, a
multi-family apartment complex of 268 units in Montgomery County, Maryland (the
“Property”), and Realty Management Services, Inc. (“Agent”), management agent
for the Respondent, issued “exorbitant rent increases” to tenants at the
Property “forcing Tenants to make a decision between an increased annual lease
or month-to-month at an even higher percentage.”
By a
letter dated July 17, 2002, the Complainants amended their original complaint
to request that the Department review all rent increase notices issued by
Respondent’s Agent from October 2001 to determine if such notices complied with
Section 29-54, “Rent Adjustments; notice requirements,” Landlord-Tenant Relations, of the Montgomery County Code, 2001, as
amended (“County Code”).
Specifically, the Complainants assert that the Respondent
and Respondent’s Agent: (1) consistently issued improper notices of rent
increase to tenants at the Property beginning in October 2001; (2) continued to
issue improper rent increase notices after being put on notice that such
notices did not comply with County law; (3) failed to reissue proper notices of
rent increase to affected tenants; and (4) failed to credit or refund improper
rent increases to affected tenants.
The Respondent contends that: (1) the rent increase
notices were issued in good faith; (2) the corrections made to the notices
brought them into compliance with applicable County law as of
The Complainants are seeking an Order from the Commission
that: (1) the Respondent’s notices of rent increase issued prior to July 2002
did not comply with Section 29-54 of the County Code, and are therefore
unenforceable; and (2) all rent increases paid by tenants at the Property based
on the defective notices be refunded.
After
determining that the complaint was not susceptible to conciliation, the
Department duly referred this case to the Commission for its review, and on
The record reflects that the Complainants and the
Respondent were given proper notice of the hearing dates and time. At the hearing the Complainants were
represented by attorney Adrian V. Nelson, II, and the Respondent was
represented by attorney Ronald M. Miller. Without objection, the Commission
entered into the record of the hearing the case file compiled by the
Department, identified as Commission’s Exhibit No. 1. All witnesses called by the parties were
properly sworn and all exhibits entered into the record were properly
identified.
After the second and final night of the hearing, but
before the record closed and before the Commission panel met to deliberate this
matter, by a letter dated
Furthermore,
the Commission has extended the time period within which it would decide this
matter pursuant to Section 7.1 of Appendix L, “Regulations on Commission on
Landlord-Tenant Affairs,” of the
Based
on the testimony and evidence received at the hearing, the Commission makes the
following Findings of Fact:
1. In approximately July or August 2001, a
group of tenants who lived in the Property came together due to concerns
regarding a number of issues at the building including, but not limited to,
rent increases, maintenance, and safety.
The group met approximately ten times through the end of December
2001. These meetings in 2001 were not
publicly advertised and were attended by approximately two dozen tenants. During the course of these meetings, the
tenants at the meetings requested that Alan Freeman assume the position of
“leader” of the group.
2. The first meeting of the group of
tenants that was publicly advertised to the residents of Colespring Plaza
Apartments was held on
3. The
4. During the period from
5. After the
6. In March 2002, the tenant group
officially began referring to themselves as the “Colespring Plaza Tenants
Association.”
7. On
8. Also on
9. In April 2002 and May 2002, following
the filing of the complaint, meetings were held between members of the Tenants
Association, Rosie McCray-Moody, Investigator for the Department’s Office of
Landlord Tenant Affairs, and representatives from Realty Management Services,
Inc., to discuss concerns raised in the tenants association’s complaint. The Commission finds based on the credible
testimony of Alan Freeman and Investigator McCray-Moody that one of the issues
raised at these meetings was the fact that the Respondent’s notices of rent increase
did not comply with Chapter 29, Landlord-Tenant
Relations, of the
10. On
regarding whether the
Respondent gave adequate notice of rent increase to tenants at Colespring Plaza
Apartments, and if not, whether the Respondent was required to credit or refund
rent paid pursuant to invalid notices of rent increase.
11. On
12. Although the original complaint filed by
the Tenants Association in March 2002 complained generally about the rent
increases without specifically stating that the rent increase notices were out
of compliance with the requirements in Section 29-54 of the County Code, the
Commission finds that from the meetings held in April and May 2002 between
members of the Tenants Association, Investigator McCray-Moody, and
representatives of Realty Management Services, Inc., and from the
correspondence between the Department, the Tenants Association and the
Respondent, between May 2002 and May 2003, it is clear that the Respondent had
actual notice over the period of more than one full year preceding the hearing
that the Tenants Association was complaining that the notices of rent increase
issued by the Respondent in 2001 and 2002 did not comply with County law. The correspondence that supports this finding
includes the May 27, 2002 letter from the Department to the Tenants Association
with a copy sent to Property Manager Tara Guttridge (Commission Exhibit No. 1
at pgs. 25-27), the July 17, 2002 letter to Elizabeth Davison, Director of the
Department, from the Tenants Association with a copy sent to Tara Guttridge,
John Costick and Dametrice Jones (Commission Exhibit No. 1 at pgs. 30-32), the
August 14, 2002 letter to Colespring Plaza Apartments from the Department’s Joe
Giloley (Commission Exhibit No. 1 at p. 40), the July 22, 2002 facsimile
transmission from Dametrice Jones to Investigator McCray-Moody attaching a
revised notice of rent increase (Commission Exhibit No. 1 at p. 61 and pgs.
63-64), the Department’s Case Summary dated February 4, 2003 (Commission
Exhibit No. 1 at pgs. 68-69), the Summons and Statement of Charges and Notice
of Hearing sent to the Respondent dated March 25, 2003 (Commission Exhibit No.
1 at pgs. 70-71), and the Summons and Statement of Charges and Notice of
Hearing sent to the Respondent dated May 2, 2003 (Commission Exhibit No. 1 at
pgs. 84-85). Furthermore, the Commission finds that the letter that the Tenants
Association sent to the Director of the Department, and copied to the
Respondent, on July 17, 2002, that responded to correspondence from the
Department indicating that the Tenants Association’s case was going to be
closed, and that complained about the rent increase notices, and requested that
the Department review all rent increase notices issued by the Respondent back
to October 2001, operated as an amendment of the Tenants Association’s original
complaint.
13. Between February and April 2003,
approximately 59 individuals signed forms addressed to the Commission
authorizing the Colespring Plaza Tenants Association, through its acting chair,
Alan Freeman, to represent their interests at a hearing before the Commission
and to ask the Commission to order a refund or rent credit for rent paid
pursuant to invalid notices of rent increase issued to them by the Respondent.
14. The Commission finds that prior to the
quasi-judicial hearing which began on June 12, 2003, the Respondent had
received copies of all 59 signed authorization forms (Respondent’s Post Hearing Memorandum at p.
12), and the Respondent never requested a continuance of the hearing in order
to have more time to prepare based on the fact that 59 individuals had
authorized the Tenants Association to represent their interests at the hearing.
15. The Commission finds that from approximately
August 2001 through approximately June 2002, the Respondent sent out notices of
rent increase to tenants who lived at the Property that omitted at least one or
two of the terms that Section 29-54 of the
Accordingly,
based upon a fair consideration of the testimony and evidence contained in the
record, the Commission on Landlord-Tenant Affairs concludes:
1. The Colespring Plaza Tenants
Association, the Complainant in this case, has standing to bring this
complaint, and therefore, Respondent’s Motion to Dismiss is denied. Chapter 29 of the
The
Commission further concludes that, under Chapter 29, a tenants association can
bring a complaint not only on matters affecting common areas of the building as
a whole, but also on behalf of individual tenants on matters affecting
individual tenants. Section 29-33
specifically states: “Tenant organizations may file complaints under any
provision of this Chapter in a representative capacity on behalf of those tenants
who have authorized representation.
Nothing in this chapter permits any tenants’ organization to represent
exclusively any tenant or class of tenants unless specifically authorized to do
so.” The standing of a tenant
organization is not limited to only filing complaints regarding common area
concerns because the law allows a tenant organization to represent the
interests of fewer than all of the tenants.
This conclusion is supported by the Maryland Court of Appeals decision
in The Milton Co. v. Council of Unit
Owners, 354 Md. 264, 729 A.2d 981 (1999).
In that case, the defendants, in an action brought against them by a
condominium association, challenged the standing of the Council of Unit Owners
to bring a suit for damages based on defects in individually owned units, where
individual unit owners were not named as a party and only a few of the
individual unit owners provided testimony at the trial. (354
The
Tenants Association’s standing to bring this case is not destroyed by the fact
that the 59 authorizations were mostly signed in February 2003 and March 2003,
while the complaint itself was filed by the Tenants Association in March
2002. Chapter 29 allows a tenant
organization to bring a complaint in a representative capacity. At the time that the Tenants Association
filed the complaint it did so on behalf of the tenants who were then members of
the Tenants Association. The fact that
new or additional authorizations were acquired after the complaint had been
filed but before a hearing was held, or that additional individuals joined the
Tenants Association after the complaint had been filed but before a hearing was
held, did not prejudice the Respondent and did not violate the Respondent’s due
process rights, because the Respondent had notice of all 59 authorizations
prior to the commencement of the quasi-judicial hearing, and the issue in the
case – whether the rent increase notices were defective and the effect of such
a defect – did not change based on which or how many tenants authorized the
tenants association to represent their interests. There is nothing in the law that provides
that the membership in a tenants association is frozen as of the date of the
filing of the complaint. Furthermore, in
the name of judicial economy, where a complaint is brought by a tenant
organization, and the issue to be decided remains the same, it would be
inefficient and needlessly duplicative to require other tenants with the same
legal issue to file their own individual complaints regarding the same precise
issue that is before the Commission, rather than allow them to authorize the
Tenants Association to act in a representational capacity on their behalf, so
long as such authorization comes before the hearing, and the Respondent has
notice of such authorization before the hearing.
2. Section 29-54 of the
Sec. 29-54. Rent adjustments; notice
requirements.
(a) A
landlord must not increase the rent until 2 months after the landlord gives
notice of the increase. A landlord must
not impose more than one rent increase on a tenant in any 12-month period. Each written rent increase notice must
contain the following information:
(1) The amount of monthly rent immediately
preceding the effective date of the proposed increase (old rent), the amount of
monthly rent proposed immediately after the rent increase takes effect (new
rent), and the percentage increase of monthly rent.
(2) The effective date of the proposed
increase.
(3) The applicable rent increase guideline
issued under Section 29-53.
(4) A
notice that the tenant may ask the Department to review any rent increase that
the tenant considers excessive.
(5) Other information that the landlord
deems useful in explaining the rent increase.
An
otherwise valid notice of rent increase is not invalid because the notice
contained an incorrect rent increase guideline number if the landlord
reasonably believed that the number was correct.
The Commission concludes from the plain language of
Section 29-54 of the County Code that in order to be valid, a rent increase
notice must contain all of the required terms, including notice that the tenant
has the right to ask the Department to review any rent increase that the tenant
considers excessive, and the percentage increase of the new monthly rent. Furthermore, the plain language of the law
makes clear that the only exception is if the landlord makes a reasonable
mistake as to the rent increase guideline number. The Commission concludes that any violation
of the requirements in Section 29-54, other than an incorrect rent increase
guideline number, makes a rent increase notice invalid. Therefore, the rent increase notices issued
to tenants in the Property by the Respondent in 2001 and 2002 that did not
contain a statement that the tenant could ask the Department to review the
increase, and/or that did not contain the percentage of the monthly increase,
are invalid. Any other reading of
Section 29-54 disregards the plain language of the law, and, in effect,
operates to read those requirements out of the law.
3. Section 29-1 of Chapter 29 defines a
defective tenancy as “[a]ny condition in rental housing that violates a term of
the lease, this Chapter or any other law or regulation.” This Commission has consistently, in cases
that have come before it, interpreted the word “condition” in the definition of
“defective tenancy” very broadly to include not only conditions relating to the
habitability of rental housing, but also notices and procedures that must be
followed pursuant to County and State law.
For example, the Commission has consistently found that where a landlord
fails to comply with the notice requirements in State law regarding the
disposition of security deposits, the landlord has created a defective
tenancy. As such, the Commission
concludes that issuing a defective notice of rent increase that does not comply
with the requirements of Section 29-54 of this Chapter creates a defective
tenancy.
4. Section 29-47(a) of Chapter 29 sets out
the actions this Commission may take when a defective tenancy exists. Pursuant to this section, the Commission may,
“require the respondent to stop any unlawful conduct and take appropriate
action to comply with this Chapter.” In addition, Section 29-47(b) goes on to
establish:
(b) If the Commission or panel finds that a
landlord had caused a defective tenancy, it may award each party to the
complaint one or more of the following remedies:
* * *
(5) An
award of damages sustained by the tenant as a result of the defective tenancy,
limited to the actual damage or loss incurred by the tenant. The award must not exceed $2,500 per affected
dwelling unit.
Having
found that the Respondent created a defective tenancy, the Commission concludes
that the residential tenants who signed authorizations for the Tenant Association
to proceed on their behalf prior to the commencement of the hearing, and who
paid rent increases to the Respondent pursuant to an invalid rent increase
notice issued in 2001 or 2002, sustained damages as a result of paying a rent
increase pursuant to an invalid rent increase notice, and are entitled to a
refund of the difference between the rent paid under the defective notice, and
the rent the tenant would have paid had the invalid rent increase notice not
been issued.
The
Respondent argues that the only relief available to the tenants in the Tenants
Association is that relief authorized by Section 29-47(b)(4), which
states: “Return of all or part of any
rent already paid to the landlord after the landlord was notified of the
condition.” The Respondent argues that
relief is limited to those tenants who were issued defective rent increase
notices after May 2002, the date the Respondent alleges it was first informed
that its notices were defective. The
Commission disagrees with that argument.
It is the Commission’s conclusion that landlords are required to comply
with State and County law regardless of whether they are specifically educated
as to the law. Ignorance of the law does
not relieve a landlord of the duty to comply with the law. Therefore, the Commission interprets the
relief available under 29-47(b)(4), which allows a refund of rent paid to the landlord after the landlord is notified of the problem, to be reserved for
defective tenancies chiefly stemming from allegations regarding the physical
condition of rental housing, because in those cases a landlord is not under an
obligation to repair such conditions if the landlord has no knowledge, actual
or constructive, of the condition.
To
award relief under Section 29-47(b)(4) of the County Code and to conclude that,
in effect, a landlord should not be held responsible for issuing invalid rent
increase notices prior to the time when the landlord was notified that its rent
increase notices were defective, allows a landlord to avoid liability for a
violation of the law by choosing to be ignorant of the law.
Based
on the foregoing, the Commission concludes that each residential household
occupied by one or more of the 59 individuals who signed authorizations for the
Colespring Plaza Tenants Association, through its acting chair, Alan Freeman,
to represent their interests at a hearing before the Commission, is entitled to
receive a rent refund if the residential household: (1) was a residential
tenant at Colespring Plaza Apartments at least up through the time the
authorization was signed, (2) is a member of a residential household at
Colespring Plaza Apartments that received a rent increase notice in 2001 or
2002 that was missing at least one of the terms required by section 29-54(a) of
the County Code, and (3) is a member of a household that paid an increased rent
pursuant to that rent increase notice that was missing a required term. Each residential household that meets all of
the above criteria is entitled to receive a rent refund in an amount equivalent
to the difference between the increased rent the individual’s household paid
pursuant to the invalid rent increase notice received by the household in 2001
or 2002, and the amount of rent the household would have paid for that period without
that rent increase notice.
In
order for the Commission to make a specific award of damages in this case, the
Commission orders the Complainants to submit to the Commission, with a copy to
the Respondent, within 30 days of the date of this order, affidavits from
members of the Colespring Plaza Tenants Association who meet the above
criteria. Each affidavit must state all
of the following in order for the Commission to make an award of damages:
1. The
individual’s address, including apartment number, at Colespring Plaza
Apartments;
2. The
fact that the individual is a residential tenant at Colespring Plaza
Apartments, and was a tenant at the time he or she signed the authorization;
3. The fact
that the individual received a notice of rent increase in 2001 or 2002 that was
missing at least one of terms required by section 29-54(a) of the County Code;
4. The
amount of the household’s rent prior to the defective rent increase notice, and
the amount of rent after the defective rent increase notice; and
5. The
fact that the household paid the increased rent pursuant to the defective rent
increase notice, including the month and year that the household first paid the
increased rent amount, and the length of time (number of months) the household
paid that increased rent amount.
If
the Respondent disagrees with any of the facts set out in any of the affidavits
submitted by the Complainants, the Respondent has 15 days from the date the
Respondent receives copies of the affidavits to file a rebuttal to those facts,
attaching proof, including but not limited to, rent records. The Commission will issue a final order
regarding damages in this case based on the affidavits submitted by the
Complainant, and any rebuttal filed by the Respondent, within 30 days after
receiving Respondent’s rebuttal. The
Commission reserves the right to schedule another hearing regarding damages
should that be necessary based on the affidavits and/or rebuttals submitted.
The
foregoing Decision and Order – Part I was concurred in unanimously by
Commissioner Mattie Ligon and Commissioner Travis Nelson. Commissioner Roger D. Luchs did not
participate in deliberations or vote on this case.
The
parties are hereby notified that this Decision and Order – Part I is not a
final decision that disposes of this case because it does not make an award of
damages. The final decision in this case
will be issued by the Commission following the time periods and submittals set
out above. Any party aggrieved by that
final action of the Commission can file an administrative appeal to the Circuit
Court for
_________________________________ _________________________________
Mattie Ligon, Commissioner Travis
Nelson, Commissioner
Commission on Landlord-Tenant
Affairs Commission
on Landlord-Tenant Affairs