Debt Collection

Court Cases Threaten Landlord-TenantLaws

4/10/99 The Fair Debt Collections Practices Act (FDCPA) was enacted to fight against abusive and deceptive collection practices. It requires that debt collectors treat consumers fairly by prohibiting certain methods of debt collection. TheNational Association of REALTORS®, and its affiliate, the Institute of Real Estate Management, fully support these goals. However, recent court cases have expanded the FDCPA to an extent that it threatens carefully balanced state and local landlord-tennant laws. This expansion represents a substantive change in state law benefiting only a small number of residents seeking to delay payment of rent owed. This will burden the courts, threaten the viability of small business apartment owners, and obligae rent-paying residents to cary the costs of the late-payers through higher rents. In Romea v. Heiberger, the court ignored the 20-day rent dispute resolution procedure which was outlined in New York‘s Real Property Actions and Proceedings Law, and instead resolved that the FDCPA superseded this state law and imposed a 30-day waiting period for a resident‘s response to the initial notice. By extending the FDCPA notice and debt verification procedures to cover rents collected in the ordinary course of businessunder state and local landlord-tenant laws, this ruling includes "rent" under the defninition of "debt". If followed, this decision could invalidate state and local "notice-to-quit" statutes that carefully balance residents‘ need for flexibility with theneed of apartment property owners to receive rent when due in order to meet their loan obligations. Over 40 states and the District of Colombia have viable landlord-tenant laws that require rental property owners to provide residents with a notice to quitin the event that a resident does not pay rent. These state and local laws provide residents with substantial due process protections. Expanding the definition of the FDCPA threatens the delicate balance of these valuable laws. The FDCPA clearly needs clarification so that it cannot be interpreted to invalidate state landlord-tenant laws that expedite resolution of rent disputes. The National Association of REALTORS®, and its affiliate the Insitute of Real Estate Management, support efforts to reform theFair Debt Collection Practices Act (FDCPA).