Legislative Update 6/14/2014 - HB1274 Becomes Law & Urge the Governor to pass HB590

This Legislative Update is provided by Nick Norman, Director, Legislative Affairs for the RPOA 

Howdee everyone,

Important Updates:
HB1274, Quarterly/Semi-annual Rent signed by Governor and becomes new law.
This is an important win for many of us especially for student housing because it allows landlords to legally require rent in payments 3 months or longer and many students pay a large amount of rent at one time with the financial aid package.  In more rare cases you can use this for a tenant that wants to handle an application defect by prepaying a large portion of rent.

Action items this week:
Write and/or call the Governors office asking the governor to pass HB590 which allows an LLC etc, to be represented by a member of an LLC in district court (for evictions and small claims). (You will no longer be required to hire an attorney).

Governor's office is 271-2121
You can e-mail the governor by going to the following website:
http://www4.egov.nh.gov/governor/goveforms/comments.asp

See more info in Summaries & Full Detail for each category further below. (includes property owner position, contact info, Talking points, and more).
(to jump right to bill detail, use Control-F, Find).

Hearings this week:
None

Hearings next week:
None scheduled so far

Further below is:
Bills Updated Status summary:
Full details on all bills above
(Which includes property owner position, contact info, talking points, and more)

Love & Light,
Nick Norman
RPOA Director of Legislative Affairs
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We only list the committee reports on the most important bills affecting the real estate business.  If you want to get the committee report on one of the other bills contact me & I will show you how to get them on line.  Its not terribly hard to get but not straight ahead either.
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Bills Updated Status summary:
We only list the committee reports on the most important bills affecting the real estate business.  If you want to get the committee report on one of the other bills contact me & I will show you how to get them on line.  It’s not terribly hard to get but not straight ahead either.
HB227, Casualty Insurance Carriers File Retention & amendments   
Title: relative to property and casualty insurance.
Property Owner Position: You Decide
House Status: PASSED / ADOPTED WITH AMENDMENT
Senate Status: PASSED / ADOPTED
General Status:  Signed by Governor

HB421, Real Estate Brokerage Regulation   
Title: relative to regulation of real estate brokerage and sales by the real estate commission.
Property Owner Position: LimitedImpact; You Decide
House Status: CONFERENCE REPORT ADOPTED
Senate Status: CONFERENCE REPORT ADOPTED
General Status:  Passed

HB590, Unauthorized Practice of Law   
Title: relative to the unauthorized practice of law.
Property Owner Position: For
House Status: CONFERENCE REPORT ADOPTED
Senate Status: CONFERENCE REPORT ADOPTED
General Status:  Passed

HB1274, Quarterly Semi-annual Rent   
Title: (New Title) relative to the payment of rent and security deposits.
Property Owner Position: For
House Status: PASSED / ADOPTED WITH AMENDMENT
Senate Status: PASSED / ADOPTED
General Status:  Signed by Governor

SB306, NH Study Commission on Foreclosure Law   
Title: establishing a commission to study New Hampshire mortgage foreclosure law, new federal regulations, and fair foreclosure practices.
Property Owner Position: LimitedImpact; You Decide
House Status: PASSED / ADOPTED WITH AMENDMENT
Senate Status: CONCURRED
General Status:  Passed
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Full details on all bills above:
HB227, Casualty Insurance Carriers File Retention & amendments
03/18/2014 at 01:00 PM    LOB 101
Title: Title: relative to property and casualty insurance.

Summary: This bill expands the list of things that an insurance company must retain for the year of the claim and  the five years thereafter to include debt and bank card information.

The second section deals with rebating commissions.

The third section adds a provision that if there is an audit regard premiums, that has to be completed within 120 days of the cancellation of the policy, and any refund due must be sent out within the 120 days. A fine of $1,000 per day can be imposed on any company that violates this provision, unless notice of a dispute is sent in 120 days.

The balance of the bill, which was proposed by the NH Dept of Insurance, is amendments to regulatory system for insurance and adjusters. The bill appears to be consumer friendly, which as buyers of insurance, landlords would want.

Property Owner Position: You Decide

Link to Committee Info: 

Email to Committee: 
To: 
Subject: HB227 

Link to Bill Text: http://www.gencourt.state.nh.us/legislation/2014/HB0227.html
Analysis Stated in Bill: This bill makes certain changes in the laws relative to property and casualty insurance.
This bill was requested by the insurance department.

Notes: 
This is a complicated bill that would need lots of study to respond intelligently.  We feel our time is better spent on bills directly affecting our business.  You decide if this affects you enough to pursue it further.

Talking Points:
none developed so far.
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HB421, Real Estate Brokerage Regulation
05/23/2014 at 02:30 PM    LOB 204
Title: Title: relative to regulation of real estate brokerage and sales by the real estate commission.

Summary: Changed a lot of the wording around to be more clear – addressed disciplinary actions by Board, increased credit requirements from 9 to 12 hours.

Property Owner Position: LimitedImpact; You Decide

Link to Committee Info: 

Email to Committee: 
To: 
Subject: HB421 

Link to Bill Text: http://www.gencourt.state.nh.us/legislation/2014/HB0421.html
Analysis Stated in Bill: This bill makes various changes to the real estate practice act and regulation by the New Hampshire real estate commission, including the investigation and prosecution of unlicensed practice.

Talking Points:
The first part of the bill attempts to modify who is exempt from needing a license to sell or lease real estate. We are not sure if they intended to amend the statute to the extent that we are reading it.  It seems that the owner of real estate has to be licensed but not his employees. This is problematic for those of us who rent our own property.

The rest of the bill is wording changes that appear to be just for clarification, and one provision dealing with Continuing education of the brokers and salespeople increasing credit requirements from 9 to 12 hours.
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HB590, Unauthorized Practice of Law
05/22/2014 at 03:00 PM    LOB 208
Title: Title: relative to the unauthorized practice of law.

Summary: Allows a person who is not authorized to practice law but who is a member, or employee of a limited liability company, corporation, or partnership, which has 5 or fewer members, to represent the entity on civil matters (like evictions & small claims) in the circuit court of  New Hampshire.

Property Owner Position: For

Link to Committee Info: 

Email to Committee: 
To: 
Subject: HB590 

Link to Bill Text: http://www.gencourt.state.nh.us/legislation/2014/HB0590.html
Analysis Stated in Bill: 

Talking Points:
HB 590 would amend RSA 311, the statute that enables the Supreme Court of the State of New Hampshire to regulate the practice of law within the state.  Under current law, any person may represent him or herself, or be represented by a person of good character.  All citizens are presumed to be of good character unless demonstrated otherwise.  However, no person shall be commonly permitted to practice as an attorney in court unless he or she has been permitted to do so by the court. (Current requirements are graduating from an accredited law school, which generally is a three year program on a full time basis and passing the New Hampshire Bar Exam, unless allowed to practice based upon reciprocity).

Basically, someone of good character can represent another person in court, but may not hold him or herself out as an attorney unless that person has been admitted to practice law in this state.

HB 590 changes the above to clarify that person of good character who is a member or employee of a limited liability company (an LLC), corporation, or partnership which has 5 or fewer members, shall, with the proper written authorization from the organization be authorized to represent the organization in Circuit Court.  However, there needs to be a new authorization for each appearance in court.

The bill, as amended, does not address properties held in a trust or an estate.  Also, a corporation has officers and shareholders and not members as does an LLC. I would think that the Courts would allow a corporation with 5 or fewer shareholders to make use of this bill, but not trusts or estates.

This bill is useful to the all businesses, including landlords, who are organized in LLC's, partnerships or corporations. It avoids the necessity to hire an attorney for evictions, collection suits both in small claims and circuit court level, other cases brought for and against the business person in circuit court.

Most likely the authorization will have be given by the majority of the members of the LLC or shareholders of the corporation.  The acting or managing partners/members will likely have to give it for the partnership/LLC.

This allows any person of good character to represent the business in court with the proper authorization.  Note however, it does not, however, change any of the evidence required to prove a case. (The employee may not have personal knowledge that a tenant is behind in rent, but may have only been told that by the employer, which is hearsay and not admissible.)

We plan to propose a clarifying amendment to address corporations(not having members), trusts and also family LLC partnerships with more than 5 family members.

Being that different circuit courts presently interpret this situation differently from court to court, the bill would add  clarity for circuit court judges.
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HB1274, Quarterly Semi-annual Rent
04/01/2014 at 10:00 AM    SH 100
Title: Title: (New Title) relative to the payment of rent and security deposits.

Summary: This bill allows a landlord to collect 3 month's or more rent at move in. This greatly affects college communities and tenants overcoming an application default by prepaying rent.  In Durham, Dover, Keene, etc., you have landlords routinely taking a full semester's rent up front.  The bill was intended to legally allow this kind of option.

There is also the situation where someone with bad credit has a tax refund, personal injury settlement or other lump sum and the landlord might be willing to take a chance on the tenant if the landlord were permitted to due so under the law.  There is an amendment which would allow landlords to require 3 months or more rent to be paid up front.  With the amendment (passed by House Judiciary committee) landlords would be allowed to legally handle these situations.

Property Owner Position: For

Link to Committee Info: 

Email to Committee: 
To: 
Subject: HB1274 

Link to Bill Text: http://www.gencourt.state.nh.us/legislation/2014/HB1274.html
Analysis Stated in Bill: 

Talking Points:
As amended by the house, this bill allows a landlord to enter into a residential lease requiring a tenant to pay rent either quarterly or longer without violating the security deposit statute where a landlord can not ask for more than one month's rent.

We think the bill is excellent because it accommodates many tenant situations listed below where either a tenant has come into a considerable sum of money or need to overcome a bad credit, bad landlord reference or lack of employment or other application default by prepaying the rent.  It rarely happens, but some people when they receive their tax refund or other lump settlement etc. want to prepay ahead when they are moving into a new apartment.  Prepayment of rent should be just that and not considered a security deposit.

The bill merely clears up an ambiguity for landlords who want quarterly or longer payments. This is very important in student housing.

There is an amendment proposed by NHLA that would limit this to prepayment of 4, 5, or 6 months rent.
NHLA’s objections to the present language are “that allowing rent to be collected in three-month installments could be enforced selectively against "undesirable" tenants, and that tenants paying a year's rent could stand to lose big time if the property owner went bankrupt or were foreclosed upon.”

Below is a letter we will send to the Senate Judiciary Committee.  You can pick from it for your talking points.
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To: Senate Judiciary Committee
Re: Proposed Amendment to HB 1274
From: The Rental Property Owners Association
Date: April 13, 2014

We are sending you this memo to give you our thoughts and position in regard to the proposed amendment to HB 1274 that was recently submitted by NHLA.

HB 1274 was originally sponsored in the House because RSA 540-A:6, one of the statutes governing security deposits for residential housing, specifically states: “ A landlord shall not demand or receive any security deposit in an amount or value in excess of one month’s rent or $100, whichever is greater.”

Security Deposit is defined in RSA 540-A 5(II) as “All funds in excess of the monthly rent which are transferred from the tenant to the landlord for any purpose.”  These two sections together prohibit any landlord who owns a building other than one five units or less and lives in one of the units, from taking any funds from any tenant in excess of one month’s rent and a security deposit greater than one month’s rent.

The above was enacted so that people with limited financial means would not be forced out of the apartment rental market if they did not have three month’s rent. (Massachusetts allows landlords to charge three month’s rent, first and last month’s rent and one month as security deposit).

There are a number of circumstances where it is in the interest of both the landlord and the tenant that the tenant  pays more than one month’s rent. These situations, as testified to during the hearing before your committee on the bill, include:
1. Students living in fraternity or sorority houses where they receive financial aid or other funding by the semester or year.  It also protects the landlord from having to evict someone in the middle of a semester due to non-payment.
2. Students living in private housing who receive financial aid by the semester or year.
3. People who have or are facing foreclosure, with terrible credit, but have saved a lump sum to find other housing.
4. People who have bad credit but have a lump sum for any reason, such as a large tax return, a workers compensation settlement for a permanent injury, or from a car accident, which resulted in lost income causing the bad credit.
5. People who are retired and plan to travel but want to make sure that the rent is paid while they are away.
6. Affluent people who want to pay rent quarterly or less often.
7. Businesses renting apartments for employees.
8. People who have just moved into the area and have not yet secured employment.
9. People who have lost their jobs & have a good amount of savings but for some reason have to move.
If a landlord accepts more than one month’s rent and one month as security deposit, under current law, the landlord can be subject to a fine of $1,000 plus $1,000 per day for each day the landlord does not return the funds to the tenant after the tenant obtains a court order under RSA 540-A.

HB 1274 as amended by the House, if it became law, would allow the tenant to pay and the landlord to require payment either quarterly or less often (longer time spans) in circumstances such as those enumerated above.  The bill was amended in the house to address concerns that if landlords were allowed to collect two month’s rent,  they would be able to circumvent the current restrictions of RSA 540-A.

Under the provisions of HB 1274 as amended by the House, a landlord would be able to accommodate a tenant in categories enumerated above by legally being able to accept an amount equal to four month’s rent, one month as security deposit and three months as rent or more.  The number of people who can actually do this and are willing to do this is very limited. Therefore, landlords could not demand quarterly payment of rent, or less frequent payments, for most of the apartments in the state. Otherwise, the landlord would have large numbers of empty apartments, and no funds to pay mortgages, taxes, insurance, utilities and all the other costs of property ownership.

The proposed amendment to HB 1274 would only allow tenants to pay and landlords to accept payment of rent every four, five or six months. Although the amendment does not seem to change the bill that radically, it actually would seriously reduce the effectiveness of the bill.  Examples of this are:
A. Semesters are not always four months, particularly during the summer.  At best, the summer programs run June, July and August.  Any student who rents for just the summer may have more difficulty finding housing if the proposed amendment is adopted.
B. People who have financial issues would have to pay five month’s rent under the proposed amendment, four months as rent and one month as security deposit. With the median rent for a two bedroom apartment in four of our counties running over $1,000 per month, as reported by the New Hampshire Housing Finance Authority, this means people who already are struggling would have to find $5,000 or more rather than $4,000, a 25% increase. Many of those people may need that extra money for other necessities, such as a deposit for utilities.
C. The most common way this bill could assist tenants is in the case where a tenant has bad credit or landlord reference or unstable seasonal income or someone moving into the area that has not secured employment yet or  any other default on their rental application that is preventing them from being approved for an apartment.  To defeat these valid objections for getting approved sometimes tenants will prepay their initial rent.  The most common amount they can afford is 3 months plus security deposit.  In most cases they don’t have more than that much saved.  The proposed NHLA amendment would require no less than four months plus security which would prohibit a landlord from giving these tenants “a chance.”

We also want to reiterate the point made by Sarah Mattson in her testimony before you at the committee hearing on the bill in regard to discrimination.  If a landlord has a different rental policy for different people, that clearly would be discrimination.  The landlord would be clearly subject to a complaint to the Human Rights Commission and a discrimination suit.  The only way the higher “move in” cost provision of this bill could be used is if the landlord’s policy affected everyone who applied for an apartment (which is not feasible), or if someone had bad credit or bad rental history, which is a valid reason for not accepting a tenant. 

Based on the above, we request that you do not adopt the amendment, or at least allow rent to be collected every three, four, five or six months.
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SB306, NH Study Commission on Foreclosure Law
04/01/2014 at 11:30 AM    LOB 302
Title: Title: establishing a commission to study New Hampshire mortgage foreclosure law, new federal regulations, and fair foreclosure practices.

Summary: This bill would establish a commission to study New Hampshire foreclosure law, Federal Regulations, and Fair Foreclosure Practices. The commission is as with all commissions, would then report back to the legislature its findings and recommendations, including aligning NH law with the federal regs.

Property Owner Position: LimitedImpact; You Decide

Link to Committee Info: 

Email to Committee: 
To: 
Subject: SB306 

Link to Bill Text: http://www.gencourt.state.nh.us/legislation/2014/SB0306.html
Analysis Stated in Bill: 

Talking Points:
This bill does not change any existing laws. Until we see what the commission recommends, and how it would effect us, we recommend no action.
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