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2007 Indiana General Assembly
LEGISLATIVE REPORT
Another Membership Service of the Indiana Apartment Association
The Indiana General Assembly adjourned the 2007 legislative session on Sunday April 29th at midnight. Roughly ten percent of the 1,300 bills became Indiana law.
All things considered, IAA had great success this legislative session - specifically, with three bills dealing with Landlord Tenant, Lease Changes for Domestic Violence, and Meth Lab Registry. However, property tax relief for the rental housing industry remains a major issue that we will continue working from various angles.
PROPERTY TAX RELIEF
The Indiana General Assembly had a great opportunity to provide meaningful property tax relief for all tax payers. However, the $550 million dollars that was spent is a property tax band-aid that is so ill conceived that government officials are still trying to figure out how to comply with the property tax rebate that was passed. Many are concerned how to refund the money to homeowners who have mortgages and pay their taxes through escrow. Secondly, the cost to state to administer this refund is in the millions of dollars and finally no one considered the income tax consequences this could have on those receiving the rebate when this was enacted.
During the last three days of the legislative session there were new versions of the tax bill and budget about every three hours. IAA worked hard to get some relief for the rental housing industry.
The issue that IAA lobbied against was an increase in the homestead deduction which again would have caused a shift to rental property. The legislation that passed has no increase to the homestead deduction for 2008 and actual reduced the deduction by $1000.00 each year beginning 2009 until the deduction reaches $40,000.
The circuit breaker is relief which limits tax payments to no more than two percent of the assessed value. All property was scheduled to receive the two percent circuit breaker in 2008, however, local governments argued that it was disastrous to local budgets and would create a shortfall that they were unable to makeup. The legislation that passed in the final hours of the session left the two percent cap for owner occupied housing but lifts the cap to three percent for all other properties beginning in 2010. Because of this change, rental housing will now receive a three percent circuit breaker beginning in 2010.
An additional change created by House enrolled act 1478 allows local units of government to enact a 1% local income tax to offset property taxes. This new tax money that will be collected must be used for property tax relief. Relief can be given for: 1) Local property tax replacement credits for all taxpayers in the county. 2) Uniformly increase the homestead credit in the county.3) Local property tax replacement credits for all qualified residential property in the county.
The rental housing industry must be diligent in lobbying local governments to ensure property tax relief is given for all residential property if a local option income tax is enacted. Since local governments have the option of choosing the class of property to receive the relief (option 1, 2, or 3 above) we must get renters involved. If a local option income tax is enacted renters will pay more in local taxes and property owners will see an increase in local taxes if the relief is not spread among all qualified residential housing.
IAA is monitoring the various locales throughout the state, however, if you become aware that your local area may be enacting the local option income tax, please contact IAA. We are prepared to make the case to local government for relief for the rental housing industry. Local governments have until July 30, 2007 to enact this for 2008.
Remonstrance Procedures
Senate enrolled act 487 allows registered voters and owners of real property to participate when a political subdivision conducts a petition and remonstrance process to approve a bond issue or a lease rental. Currently, the law allows only the owners of real property to sign a petition or a remonstrance. Registered voters in rental housing can now have a say on local government spending which directly affects property tax increases. ( See related article on voter registration day)
Lease protections for domestic violence victims
Legislation regarding victims of domestic violence and the rights of rental housing providers was introduced a second consecutive year. IAA worked with proponents of this legislation to strike a balance between the rights of property owners and the victims of domestic violence. This legislation, which has been signed by Governor Daniels, goes into effect in July 2007, but applies only to leases entered into, or renewed, on or after July 1, 2007.
This legislation was introduced by Representative Linda Lawson (D) (Lake County). It defines a “protected individual” as a tenant who is a victim or an alleged victim of a crime involving domestic or family violence, a sex offense, or stalking and who has taken action in court to obtain either an order from a civil court requiring the perpetrator to have no contact with the tenant or an order of no contact from a criminal court.
A protected individual may ask the landlord to change the lock on the rental premises and, if the landlord does so within twenty-four hours of a written request, the landlord may charge the protected person for the service (the time is forty-eight hours of the perpetrator does not reside in the rental unit). The protected person may also submit written notice to the landlord to terminate his/her rights and obligations under the rental agreement thirty days after such written notice is given to landlord and the protected individual has also provided the landlord a copy of (1) either (a) a civil order for protection issued or recognized by a court under IC 34-26-5 that restrains a perpetrator from contact with the protected individual; or (b) a criminal no contact order that restrains a perpetrator from contact with the protected individual; and (2) a copy of a safety plan, which must satisfy the following: (a) the plan must be dated not more than thirty (30) days before the date on which the protected individual provides the written notice to the landlord under this section; (b) the plan must be provided by an accredited domestic violence or sexual assault program; and, (c) the plan must recommend relocation of the protected individual. A perpetrator who is a tenant and who is excluded from a dwelling unit under a court order remains liable under the lease, as do all other tenants of the dwelling unit, for rent and for the cost of damages to the dwelling unit. The security deposit is not subject to return until the tenancies of all tenants have terminated. A landlord or the agent of a landlord is not liable for the actions of a perpetrator or a third party.
A landlord may not refuse to rent to a person, nor subject a person’s tenancy to different terms and conditions, solely because the person is or has been a protected individual.
LEGISLATIVE CHANGES EFFECTIVE JULY 1:
- Owner must change locks for a “protected individual” within 24 hours if the alleged perpetrator lives in the apartment, 48 hours if not. Cost is passed to resident unless lock change is late; in that case, resident may change locks at Owner’s expense.
- Owner must allow protected individual, who has been advised in writing to move, to leave without further obligation under the lease except for rent and normal charges during the required 30-day written notice period. Notice must include the court order requiring the perpetrator to stay away from the resident and the safety plan recommending that the resident move away. Others on the lease remain liable. Return of security deposit is not due until the lease expires.
- Owner must not allow perpetrator access to the apartment after locks are changed. Owner is not made liable, under the act, for the damage or injury perpetrator may cause. Owner has no liability to perpetrator for denial of access or loss of use of property.
- Owner may not discriminate in rental decisions or in other conditions of tenancy against a person on the sole basis that the person is a “protected individual.” Owner may not refuse to rent to a person solely because the person has exercised the right under the act to terminate a lease. This does not mean that behavior contrary to the lease or the rules must be tolerated.
Landlord-Tenant: Right of Entry: Disposal of Abandoned Property
A Landlord-Tenant bill was introduced by Representative Matt Pierce (D) (Bloomington) to establish the circumstances in which a landlord may enter a tenant's dwelling unit without prior notice to the tenant, and to require the tenant to allow the landlord reasonable access to the dwelling unit. Under the bill a tenant may not unreasonably withhold consent to the landlord’s entry for the following purposes: to inspect the dwelling unit; to make necessary or agreed to: repairs; to provide decorations; alterations; or improvements; to supply necessary or agreed to services; or to exhibit the dwelling unit to prospective or actual purchasers; mortgagees; tenants; workers; or contractors.
A landlord may enter the dwelling unit: without notice to the tenant in the case of an emergency that threatens the safety of the occupants or the landlord's property; and without the consent of the tenant: either (a) under a court order; or (b) if the tenant has abandoned or surrendered the dwelling unit. A landlord shall not abuse the right of entry or use a right of entry to harass a tenant. In the absence of emergency, the landlord shall give a tenant reasonable written or oral notice of the landlord's intent to enter the dwelling unit; and may enter a tenant's dwelling unit only at reasonable times. No specific form of notice, or amount of advance notice, is required.
IAA worked with Representative Pierce to insert language in this bill to alleviate the longstanding problem this industry has faced with abandoned property. The following language was included in the bill:
A landlord has no liability for loss or damage to a tenant's personal property if the tenant's personal property has been abandoned by the tenant. For purposes of this section, a tenant's personal property is considered abandoned if a reasonable person would conclude that the tenant has vacated the premises and has surrendered possession of the personal property. An oral or a written rental agreement may not define abandonment differently than is provided above.
The bill also was amended at our request to give a judge leeway, if property cannot be determined to have been abandoned, to allow an owner to store the property in any storage location acceptable to the judge, regardless of the warehouseman’s statute.
LEGISLATIVE CHANGES EFFECTIVE JULY 1:
- Owner may not enter resident’s apartment without advance notice except in case of emergency, under a court order, or if the resident has abandoned or surrendered the apartment.
- Advance notice requirement does not specify a written notice, nor set an amount of time before entry by which notice must be given.
- Resident may not act unreasonably to deny Owner access to the apartment, and Owner must not abuse the right of entry.
- If a reasonable person would conclude, from all of the circumstances (and not merely non-payment of rent) that the resident has abandoned the apartment and surrendered possession of the personal property left behind, the Owner may dispose of the property as the Owner sees fit, and has no liability for damage or loss of the property.
Methamphetamine lab registry and disclosure
SB 520, authored by Senator Michael Young ( R) (Indianapolis), and as it was introduced, required a property owner to disclose to a purchaser if the property is listed on the new Criminal Justice Institute web site, which will contain a list of properties where meth labs have been discovered and dismantled. As introduced, the bill affected residential real estate that is for sale, exchange, lease with an option to buy, or sale under an installment contract. However, in committee, SB 520 was amended to require a landlord who has actual knowledge that property was, within the two previous years, used as a meth lab, to disclose that fact to potential tenants prior to execution of a lease. Failure to make such a disclosure would allow the tenant the option to void the lease.
IAA worked with proponents of this legislation and made several changes to this bill. This legislation as passed will not affect apartments that are following current Indiana Department of Environmental Management (IDEM) regulations for meth lab clean up procedures. The required notification to residents was also deleted from the bill.
Current IDEM regulations require that if a meth lab is discovered on a rental property, the affected unit or building (depending on contamination levels) is to be vacated and to remain vacant until the property has been tested by an IDEM certified inspector. An analysis of the testing is done to determine the extent of the contamination and then the property must be thoroughly cleaned. Then, a second inspection is required for clearance before the property can be occupied again. In the event an owner allows occupancy of the property before the property has been certified “decontaminated” the owner will be fined and the new lease is void.
The bill as signed by the governor does not require properties to be placed on the Meth Registry website if properties are in the process of remediation. An owner of property that was the site of a meth lab has 30 days to begin the decontamination process, or the property will appear on the website. Once the clean up process begins, the owner has 180 days to remediate and have the property certified as decontaminated, or it will be listed. In the event property appears on the list, it is to be removed promptly upon proof of decontamination.
LEGISLATIVE CHANGES EFFECTIVE JULY 1, 2007:
Owner of property on which meth lab has been discovered must, within thirty days of discovery (by police agency) employ a certified inspector (available in IDEM website), have inspector conduct proper inspection of the property, and notify the Indiana Criminal Justice Institute (“ICJI”) that the inspection process has been completed and that remediation is underway.
NOTE: Current IDEM regulations govern the inspection and remediation process. Law enforcement agencies are authorized to initially assess the extent of contamination of property from operation of a meth lab and may order all or part of the property evacuated and left unoccupied. Reentry or re-occupancy of such property before the property has been certified by a certified inspector as “decontaminated” will subject the Owner to severe penalties. In order to minimize loss of income and damage to reputation, the Owner is advised to seek legal counsel, identify and employ a certified inspector, and to communicate with IDEM and ICJI as promptly as possible.
- Owner of property must complete remediation within one hundred-eighty days and notify ICJI of the completion of remediation. This prevents the property from being identified on the ICJI website as a location where a meth lab has been located.
- If property is listed on the ICJI website, Owner should notify ICJI as soon as the property is certified as “decontaminated” so that the property can be removed from the ICJI website.
The following legislation was either modified or defeated by IAA legislative efforts:
Automated external defibrillators
IAA was instrumental in getting language removed from Senate bill 134 which would have required apartment communities with work out facilities to employ at least one individual who is trained to use the an automatic external defibrillator machine. This person would have had to be on site at all times when the health facility was open. Senator Miller ( R) ( Indianapolis) worked with IAA and added language to the bill which says that this is only necessary if you have 30 pieces of motorized physical fitness equipment
Smoke detectors
Senator Robert Jackman ( R) (Milroy) introduced legislation that imposes a Class B infraction upon a landlord who either fails to have a functional smoke detector in place at the time a tenant moves in, or fails to repair an inoperative smoke detector within seven days of receiving notice by certified mail that the smoke detector requires repair. At the time a landlord delivers the rental unit to a tenant, the landlord must require the tenant to acknowledge in writing that the rental unit is equipped with a functional smoke detector, although no penalty is imposed for failure to do so. The bill increases the penalty for failure to install or timely repair or replace a smoke detector upon such notice, to a Class A infraction, for a repeat violator, and enhances the offense to a Class D felony if a fire occurs on the rental premises causing bodily injury or loss of life and the fire, injury, or loss of life could have been avoided by an operable smoke detector. Under the bill, a tenant who knowingly or intentionally fail to replace the smoke detector batteries or to report a defective or inoperable smoke detector to the landlord commits a Class D felony if a fire occurs on the rental premises causing bodily injury or loss of life and the fire, injury, or loss of life could have been avoided by an operable smoke detector. The tenant’s obligations under current landlord-tenant law are expanded to include the duty to ensure that the smoke detector is functional and is not disabled. This legislation also permits a fire department to inspect for smoke detector compliance in a private dwelling upon the request of the owner or primary lessee who resides in the dwelling.
IAA testified against this bill in committee. Initially this bill had no protection for the landlord and basically made it a Class D felony for failing to repair a smoke detector if death or bodily injury resulted from a fire. The original bill has changed drastically with proponents addressing many of our concerns. The requirement that notice of a non-functioning smoke detector be by certified mail is an improvement over existing law, and the imposition of the duties to ensure that the smoke detector is functional and to not disable the smoke detector clarify either as a basis for eviction. THIS BILL FAILED IN THE SENATE. |
