Idaho landlords may collect fees from many applicants for one unit. Can this law stop it?
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Affording Boise: Rental housing
Soaring rents. Skyrocketing home prices. The double-digit rates of increase in the costs of Boise-area housing create increasingly urgent problems for low-income, working-class and even moderate-income Idahoans who need places to live. Affording Boise is a series of Idaho Statesman special reports on housing. This collection focuses on rental homes, including apartments. A separate collection focuses on homeownership.
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A bipartisan bill would create new rules around rental application fees, meant to protect Idaho renters from landlords who charge fees for profit. But critics said it lacks a sufficient enforcement mechanism.
The legislation is one of multiple bills — sponsored by lawmakers from areas with burgeoning housing costs — that seek to enact new rules limiting how many application fees can be collected, but it’s the only one to have a committee hearing, so far.
House Bill 617 would prohibit landlords from collecting fees from multiple applicants for a single unit, unless an applicant agrees to be placed on a waiting list. It would also require that landlords disclose the criteria for an acceptable application, such as criminal history, credit score, income, employment or employment history or rental history. And landlords couldn’t compare one applicant to another but only evaluate an application against the criteria.
Rep. James Ruchti, a Pocatello Democrat and co-sponsor of the bill, told a committee on Monday that House Bill 617 protects renters from “unscrupulous practices.”
“Application fees are being abused by landlords and by property management companies in some situations,” he said.
The committee advanced House Bill 617 to the full House and recommended that it pass. It’s the second bill this session that’s been sponsored by Ruchti and Rep. Joe Palmer, a Meridian Republican, and deals with residential rentals.
The first, which the House overwhelmingly passed this month amid bipartisan opposition, would bar local governments from regulating fees, deposits and other bills imposed by landlords. Currently, only the city of Boise regulates rental application fees.
There’s a “significant difference” between the two bills, Ruchti told the Idaho Statesman. Regulating the amount of fees would interfere in “an entire business sector,” he said. House Bill 617 simply codifies best practices, he said.
“It just says, if you charge something, you have to have a real product,” Ruchti said.
Bill spurs debate over enforcement
The new bill garnered support from property managers and trade organizations. The Idaho Apartment Association and the southwest Idaho chapter of the Association of Residential Property Managers back the legislation. Treasure Valley property managers testified in favor of the bill Monday.
Renter advocates said the bill should include a provision to enforce the proposed rules, whether a criminal penalty or a private cause of action.
Ali Rabe, executive director of Jesse Tree, a nonprofit focused on homelessness prevention, said she supports the bill “on balance,” but it’s not the “end all, be all solution” to protect renters.
“An enforcement mechanism would certainly make this bill better,” said Rabe, an attorney and former Idaho senator, who is again running for Senate.
Ruchti told the Statesman the bill would strengthen existing consumer protection law. The proposed statute could be used in court to show a landlord engaged in deceptive practices, already prohibited by the Idaho Consumer Protection Act.
An individual, a private lawyer or state attorney can file a lawsuit against a landlord for deceptive practices, such as collecting dozens of application fees for a single unit. Then they could use the statute proposed in House Bill 617 as a jury instruction “to guide the court or the jury” in declaring that a deception occurred, said an opinion from Deputy Attorney General Stephanie Guyon.
Additionally, the attorney general could seek penalties or injunctive relief against a landlord or property management company that’s attracting complaints.
“For example, the Idaho Attorney General has investigated or sued landlords for failing to return security deposits and for using such deposits to cover expenses that are unrelated to property damage,” Guyon wrote in her opinion.
The attorney general has received complaints that would violate the proposed rules, Guyon wrote.
“Assuming the office received a significant number of complaints against a landlord, the attorney general likely would consider initiating an enforcement action,” she wrote.
‘Tough cases’ for ‘little’ reward
Rep. John Gannon, a Boise Democrat and attorney, said the enforcement method proposed by Ruchti and Palmer’s bill is “weak and confusing.”
Gannon told the Statesman by email that he introduced a similar bill with a “minimal enforcement mechanism.” House Bill 626 would add application fee violations to an existing Idaho statute that gives tenants the right to sue landlords for failing to repair their property.
Gannon’s bill has yet to receive a hearing in the House Judiciary, Rules and Administration Committee, which is chaired by Rep. Greg Chaney, a Caldwell Republican and attorney.
Chaney said Monday that he thinks Ruchti and Palmer’s bill is more likely to get passed. Last year, a bill proposed by Rabe — and supported by the same property managers and trade organizations — would have required landlords to disclose rental late fees on a lease and provide 30 days’ notice on fee changes. It was shot down by House Republicans.
Ruchti, who is also an attorney, said the consumer protection enforcement has sharper teeth and would allow for multiple claimants to bring action against a “bad actor.”
“These are tough cases, because the amount of money you can recover is little,” Ruchti said. “And you have to access the judicial system to get it, which is why it’s a perfect case for the attorney general to pursue, or for a public sector lawyer like Legal Aid.”
This story was originally published February 23, 2022 at 3:26 PM.
