Every year there is proposed legislation that would affect the rights of landlords and tenants, and this year is no different.  While this most often amends or supplements the Arizona Residential Landlord and Tenant Act (“the Act”), this is not always the case.  Therefore, just reading updates about the Act won’t always tell owners what is changing.

There were four main bills that were proposed which would have, or will, affect the rental industry:

First, our firm has been actively involved in HB 2358 which clarifies that payments from housing providers, such as Section 8, or other third-party entities, are not partial payments. As we reported last year, an appellate judge made a ruling that a landlord couldn’t accept a Section 8 payment on the first, and later attempt to evict the resident if the resident failed to pay their portion of the rent. It was held that the Section 8 payment constituted a partial payment and thus the landlord waived the right to proceed.

To address this concern, WZP attorneys have worked with the Arizona Multihousing Association (“AMA”) and drafted a bill that would clarify that any payment from, or on behalf of, a government entity is not a partial payment. Acceptance of money from that third party doesn’t waive the landlord’s right to proceed with an eviction if the resident fails to pay their portion of the rent. While this is a very nuanced area of the law (and may even bore readers), we think this is an important change to the Act and ensures that landlords don’t leave the Section 8 program.  This bill was signed by the governor and will become law August 27, 2019.

Second, HB2445 is another bill that became law.  It requires cities to notify landlords at least 60 days prior to increasing the transaction privilege tax rate. When a city increases the tax, a landlord is allowed to pass the extra cost on to the tenant, provided they serve a 30-day notice. In the past, many cities have not sufficiently published the notice of increase and have not given landlords enough time to notify their tenants. This law merely requires cities to notify landlords in sufficient time to notify tenants.

Now, onto the bills that did not become law.

There was a bill (HB2115) that tried to specify that the Act controls all landlord-tenant matters throughout the state and that cities and towns are prohibited from enacting additional obligations upon landlords and tenants. This is known as a preemption bill, as it preempts cities and towns from writing their own local laws governing landlord tenant matters.  Many people may not have thought of this before, and may not realize why it’s necessary.  For example, the City of Chicago has its own laws governing landlord-tenant matters separate and apart from what the state of Illinois requires.  As a result, many landlords in Illinois have one lease that they use throughout the state and another that they only use in the city of Chicago. Can you image imagine the confusion if you could serve a 5 Day Notice for non-payment of rent in Peoria, but that Glendale requires a 10 Day Notice be used?   Unfortunately, this bill did not pass out of the legislature and therefore it is possible this type of city-by-city legislation could happen here in Arizona.

Finally, there were two bills that would have extended protected classes in employment and housing, to include “sexual orientation” and “gender identity.”  While these are protected classes in some cities, this would have applied across the state.  It did not pass out of the legislature and thus will not become law.  Regardless, we suggest never using sexual orientation or gender identity as a basis for making any real estate decision.  It should be irrelevant to the transaction.

By Mark B. Zinman,  Zona Law Group