HELENA — Landlords would be able to send their tenants to a collections agency for unpaid rent and other charges without a court ruling under a bill introduced to the Montana Legislature.
Sen. Roger Webb (R-Billings) is sponsoring Senate Bill 184, which amends the Residential Landlord Tenant Act. The changes would also allow landlords to charge their tenants fees if they break their lease agreement.
Webb is a landlord himself and said he owns about 100 properties and represents more than 500 landlords as president of the Billings Landlord Association.
Webb said the idea for the bill came out of a district court decision in Missoula, Galbraith v. Professional Property Management, INC., in which Judge Leslie Halligan ruled it was illegal for a landlord to send a tenant to collections, as well as charge them additional fees when they break their lease agreement.
“The Residential Landlord Tenant Act was intended to largely displace the ability of landlords to act as the arbiter of disputes involving money and possession,” Judge Halligan wrote in her decision.
But Webb said he doesn’t want the case to set a precedent for the whole state, and this bill is necessary to clarify what a landlord can and cannot do. “That’s just one person’s opinion,” Webb said.
A memo sent out by the Montana Association of Realtors in July of 2018 informed its members of the decision and advised them to not send any of their tenants to collections, as well as to limit fees they charge their tenants until the decision was overruled by the Montana Supreme Court or the act was amended through legislative action.
Chris Mockel with the Helena Association of Realtors was one of 10 supporters during the bill’s public hearing Thursday. He said when landlords can’t collect debts from previous tenants, they transfer the cost into increased rents or higher security deposits.
“It’s a cost of doing business. And, if you’re just swallowing those costs of doing business, there has to be a recapture,” he said. “When costs go up, then, it’s the consumer that’s impacted.”
Travis Dye is a private practice attorney in Missoula and represented Cindy Galbraith during the court case that sparked the proposed legislation. He was one of seven opponents during the hearing.
Dye said Galbraith had accrued more than $5,000 in unpaid fees and rent but never knew about the bills because she was in jail. He said Professional Property Management evicted her but then sent the bills to the same house, even though they knew she was in jail.
Dye also said Galbraith was charged for eviction fees, for a door that was broken while she was in jail and for keeping another tenant in the house.
“She had a defense to those claims,” Dye said. “She wasn’t allowed to present her defense because this was turned over to collections.”
Montana Associated Students lobbyist Sam Forstag also testified against the bill. He said when a landlord sends a tenant to collections without a court ruling, they skip the tenant’s right to due process and being sent to collections has long-lasting impacts.
“These egregious and sometimes predatory practices that this bill would make room for in law are not hypothetical,” Forstag said. “The problem here is not that landlords are bad. The problem here is that this bill legalizes practice with that tremendous potential for abuse.”
The Senate Judiciary Committee did not immediately vote on the bill when it was heard Thursday.
-Tim Pierce reporting for UM Legislative News Service, University of Montana School of Journalism
Tim Pierce is a reporter with the UM Legislative News Service, a partnership of the University of Montana School of Journalism, the Montana Broadcasters Association, the Greater Montana Foundation and the Montana Newspaper Association.