Bill That Establishes Warranty of Habitability for Residential Rented Properties Put on Hold

Mar 6, 2019

Rep. Jimmy Gazaway presents his bill to the House Insurance and Commerce Committee.
Credit Sarah Kellogg / KUAR

An Arkansas House committee postponed voting on a bill that would establish a Warranty of Habitability for rented residential properties in favor of making some changes to the legislation.

The House Committee on Insurance and Commerce dedicated the majority of its meeting Wednesday on HB1410, which establishes minimum standards that landlords must maintain for their rented properties. Arkansas is currently the only state in the country without a law placing the burden of repairs and maintenance on landlords as opposed to tenants.

Rep. Jimmy Gazaway, R-Paragould, the bill’s sponsor, told the committee he worked with many organizations such as the Arkansas Realtors Association and state Attorney General’s office to draft and amend the bill. Gazaway said while there are protections for landlords, there needs to be a balance between the rights of tenants and the rights of landlords. According to Gazaway, over one million Arkansans rent their property.

"Those one million people are both Democrats and Republicans. They live in urban and rural areas. They’re of every race and gender. They’re young, they're old. They're voters. They live in your district and this is an important bill to them," Gazaway said.

The first part of the bill maintains the current law where landlords would not be subject to tort liability, unless the landlord agrees to take on a duty and then fails to do so. Multiple representatives had questions over this particular section of the bill. Rep. Joe Cloud, R-Russellville, wanted to make sure tort liability did not expand under the proposed legislation. Gazaway reiterated that it does not. 

"Landlords are generally not liable in tort. The only instance where a landlord is liable to a tenant in tort under 18-16-110, is where they make an agreement to do something, and then they breach their own agreement," Gazaway said.

The bill drafts a list of requirements that landlords must maintain for all of their rental properties. This includes a reasonably safe structure, access to electricity with wiring and equipment that was up to date at the time of installation, working fire and carbon monoxide detectors when necessary, among other requirements. Gazaway did not think these requirements were extraneous on landlords.

"Those are the minimum standards. That’s it. And, again I would just say I don’t think in this day and age that those minimum standards are too much to ask," Gazaway said.

In addition to the minimum habitability standards, the bill also sets up the requirements for when a tenant must request a repair from their landlord. According to the legislation, a landlord is not responsible for repairs to a property if the damages are caused by the tenant themselves. They are responsible for repairs when it affects the health or safety of the tenant. However, according to Lynn Foster, a law professor at the University of Arkansas at Little Rock, the floor on that requirement is "fairly high."

"The landlord has to materially fail to comply. The tenants' health and safety or the use of the premises have to be materially affected. So we're not talking about a hot tub that’s not hot enough. We're talking about something that is seriously affecting health and safety," Foster said.

If a landlord is required to make such a repair, but fails to do so, the tenant is responsible for contacting the landlord in writing to notify them of the failure to address the issue. The landlord then has two weeks to fix the problem, although extensions could be given. If the problem is still not addressed, the tenant may either end their rental agreement and move out, or stay at their property and pursue injunctive relief. However, in cases of some repairs, a landlord can use one defense, which Foster says was added by request of the landlords. 

"Say a case arose where you’ve got a mom and pop landlord, and the house is out in the country and a tenant is getting water from a well, and the well runs dry. It’s going to cost $20,000 to $30,000 to drill a new well," Foster said. "That might cause the landlord undue hardship to make that repair. So we have an undue hardship exception that we added to the bill." 

This undue hardship exception would have to be proven in court. Rep. Deborah Ferguson, D-West Memphis, had concerns about that aspect of the bill.

"The landlord’s going to have to go to court and hire an attorney to prove hardship? And how much is that going to cost them, how much time?" Ferguson asked. Foster said that in most cases, the tenant is going to want to move out as opposed to pursuing litigation in the first place.

With multiple people signed up to speak for and against the legislation, the committee limited testimony to 15 minutes per side.

Wade Marshall with the Arkansas Professional Fire Fighters Association spoke in favor of the bill, saying safer conditions of buildings helps not just tenants.

"The places that I’m thinking about, that you are addressing here are in pretty deplorable conditions. In 23 years, I’ve fallen through floors, porches, things like that, things that are not necessarily hygiene issues, just structural issues. Smoke detectors save lives. Carbon monoxide detectors save lives. A safe living condition for a tenant is a safe working condition for my members," Marshall said.

Cliff McKinney, an attorney representing the Arkansas Realtors Association, spoke against the bill, saying he would like to see a bill that is more equitable for both sides.

"If you don’t have an appropriate balance, costs for landlords will go up. If costs for landlords go up, then costs for tenants go up. Rents will increase. The availability and supply of affordable housing will go down in the state. And that is not something that the realtors association wants to see," McKinney said.

After his testimony, Rep. Laurie Rushing, R-Hot Springs, spoke about her own experience of trying to pass a similar bill a few years ago in the legislature. Her bill was brought to her by the Arkansas Realtors Association, but when one change was made, they rebuked it.

"My question to you is, ‘Is there ever going to be a bill that’s even halfway close that realtors can agree on?’ Because if they can’t agree on a bill they wrote themselves, then I’m not sure they can agree on anything," Rushing said.

When testimony was finished, Gazaway decided to withdraw his bill and work with other lawmakers and organizations to make changes. After the meeting, Gazaway said he was encouraged by some of the discussion he heard.

"I think there’s a general consensus that we don’t want to be the only state in the country that doesn’t recognize some form of an implied warranty of habitability. So, that’s encouraging to me. It’s the details, working out the details on how we get there is what’s going to be important," Gazaway said.