November_ 2010 by yaoyufang


									                              AANC NEWS                                                      November, 2010
                                     NAAPAC Supports N.C. Congressional Candidates
                            Greenville Area Property Managers Association leaders
Apartment Association       Leigh Ann Raiford Odom, Business Manager for Meridian
of North Carolina           Park Apartments, and Amanda Lyall, Assistant Community
                            Manager for University Manor Apartments, met with U.S.
2101 Rexford Road,          Congressman Walter Jones (R-3rd District of North Carolina)
Suite 330-E                 in Greenville on Tuesday, October 26th to outline apartment
Charlotte, NC 28211         industry matters and to share NAA Political Action Committee
Phone: 704.334.9511         support (see photo at right). AANC’s Ken Szymanski also
Fax: 704.333.4221           participated in the meeting.
                            Leaders from the Triangle Apartment Association and the AANC met with U.S. Congressman
                            Brad Miller (D-13th District of North Carolina) in Raleigh on Wednesday, October 27th to outline
AANC Officers               multi-housing matters and to share NAA Political Action Committee support.

Susan Passmore

Vice President
Tim Hose
Kellie Falk-Tillett
Mindy McCorkle
Lobbyist:                   (above, L to R) Josie Eatmon, Triangle AA Executive       (above, L tor R) Congressman Miller, Kim
Colleen Kochanek            Director; Fred Dean, NRP Group & Triangle AA President;   Howard (Campaign Manager, Brad Miller
                            Congressman Brad Miller (D-13 th District); Susan         Congressional Campaign), and Fred Dean
Executive Director:         Passmore, Blue Ridge Property Management and AANC
Ken Szymanski               President; Ken Szymanski, AANC Executive Director

AANC Mission
Statement                                 Greenville Continues to Grow a Progressive
                                                       Local Association
The Apartment
Association of North        Led by a series of committed volunteers, the Greenville Area Property
Carolina is a statewide     Managers Association continues to respond to multifamily rental
organization comprised      housing industry needs in parts of Eastern North Carolina. The
of local apartment          GAPMA’s current President is Emily Carter (CAM, CAPS), the Area
associations to promote     Manager for American Campus Communities. Emily understands
safe, affordable housing    the issues involved with multi-housing management, and sees the
through participation       value that Association membership can make. For example, she and
in the legislative          the Association have made excellent strides with members, their
process, and through        local Police Department, and Greenville City Council in being pro-
communication to            active with crime deterrence. “We take responsibility for operating
and education of its        reasonably safe communities, and it’s important to sustain good
members, public officials   management practices and an open dialogue with public officials
and the general public.     in minimizing problems,” said Emily.                                      GAPMA’s Emily Carter
                                                                                                        and Mandy Lyall
   AANC NEWS                                                                                               Page 2
 AANC Engages With Local Elected Officials at N.C. League of Municipalities Show
On October 24th and 25th, the AANC actively demonstrated the many advantages of multifamily rental housing at the annual North
Carolina League of Municipalities conference, held in Winston-Salem. Hundreds of municipal officials from the League’s 542
members and towns attended. AANC’s message was one of affordable housing for many city citizens and employees, efficient city
service delivery, quality fire protection and accessible design, professional management, and resident flexibility.

AANC thanks the enthusiastic volunteers who energetically tended the AANC booth:

    Mindy McCorkle and Tammy Oglesby               AANC President Susan Passmore                   Rhonda Roth and Chris Parr
              (Blue Ridge)                          (Blue Ridge) and Jody Longwill                     (Parr Investments)
                                                        (Burkely Communities)

                                                 Jon Lowder (Triad Apartment                                  Mayor Jerry Walker,
                                                 Association), Mary Gwyn                                      of the Western North
                                                 (Apartment Dynamics),                                        Carolina Town of Clyde,
                                                 and Ken Szymanski (AANC                                      was the winner of the
                                                 Executive Director)                                          AANC Booth Door Prize!

AANC Participates in Civil Rights Luncheon in Greensboro
On October 27th, AANC President Susan Passmore, Board Member Jody Longwill, Triad Executive
Director Jon Lowder, and Ken Szymanski were part of a Civil Rights Luncheon in conjunction
with the 63rd Annual Meeting of the National Association of Human Rights Workers. The Keynote
Speaker was Bryan Greene, U.S. Department of HUD Assistant Secretary for Fair Housing at
the HUD National Office in Washington, DC. Mr. Greene specifically mentioned the AANC as
an actively engaged and laudable trade association in matters of fair housing and civil rights.
Mr. Greene also outlined the significance of the “Westchester case,” where federal officials
tied in local government’s affirmative duty to deliver affordable housing outside of traditional
low-income neighborhoods as a condition for receiving federal Community Development
(neighborhood improvement) funds.

Later in the four-day conference, the NAHRW held an Awards Ceremony. Those recognized
included N.C. Representative Alma Adams who received the Legislative Award, legendary                Ken Szymanski with his 2010
school desegregation lawyer Julius Chambers who received the Judicial Award, and AANC                  NAHRW Advocacy Award
Executive Director Ken Szymanski, who received the Advocacy Award for his many years of
fair housing work.
   AANC NEWS                                                                                                 Page 3
                        AANC PAC Board of Trustees Off to an Excellent Start

                                                                    The AANC Political Action Committee supported the following
                                                                    candidates for the North Carolina General Assembly prior to
                                                                    the November 2nd election:

                    The Voice of Multifamily
                                                                    Rep. Van Braxton
                                                                    Rep. Jim Crawford
                                                                                              COUNTY(IES) REPRESENTED
                                                                                              Greene, Lenoir, Wayne
                                                                    Rep. Pryor Gibson         Anson and Union
CHAIRPERSON OF THE AANC PAC BOARD OF TRUSTEES:                      Rep. Julia Howard         Davie, Iredell
Meg Pisczek                                                         Rep. Carolyn Justice      New Hanover, Pender
                                                                    Rep. Ric Killian          Mecklenburg
TRUSTEES                                                            Rep. Danny McComas        New Hanover
Apartment Association of Western NC: Sandra Austin Carlton          Rep. Bill Owens           Camden, Currituck, Pasquotank, Tyrrell
Cumberland County Apartment Association: Jonathan Elliott           Rep. Thom Tillis          Mecklenburg
Greater Charlotte Apt. Assoc: Skip Huddleston, Jay Tillman          Sen. Dan Clodfelter       Mecklenburg
Greenville Area Property Managers Association: Amanda Lyall         Sen. Phil Berger          Guilford, Rockingham
Triad Apartment Association: Chris Dunbar, Frank Forde              Sen. Margaret Dixon       Cumberland, Bladen
Triangle Apartment Association: Cliff Webster, Will Brownlee        Sen. Fletcher Hartsell    Cabarrus, Iredell
Wilmington Apartment Association: Jennifer Byrd                     Sen. Neal Hunt            Wake

               Photo Highlights from October’s AANC Board Meeting in Troy, NC

                                                          Photos by Mary Gwyn

         AANC to Participate in Reception for 2011 General Assembly Members
Mark your calendars for this event on January 26th, 2011 from 6:30 until 8:30 PM at the NC Natural Science Museum in Raleigh.
AANC will have 10 tickets for the event which coincides with the kick-off of the General Assembly’s “Long Session.” With a dramatically
different elected-official landscape for 2011, the apartment industry will have a number of challenges and opportunities to make
a difference for multifamily rental housing in the year ahead.
   AANC NEWS                                                                                          Page 4
   A Landmark Precedent: Reviewing the Effects of Woodridge Homes v. Gregory
                                       By Will Brownlee, BROWNLEE LAW FIRM, PLLC

The appellate courts of North Carolina (the N.C. Court          offensive acts or sounds that would disturb the rights of
of Appeals and the N.C. Supreme Court) are the courts           other person; to not destroy or deface the apartment or
of highest authority in our State. Their opinions serve         common areas; and to remove abandoned or inoperable
as powerful precedents that bind and guide the future           vehicles within forty-eight hours’ notice.
decisions of lower courts, including the small claims courts
and district courts, which generally hear eviction lawsuits     The lease also contained provisions regarding the
and their appeals, respectively. Of the opinions issued by      landlord’s right to terminate the lease or non-renew it at the
the appellate courts, some decisions are “unpublished”,         end of the term. Because the community was a subsidized
which is to say the Court chose not to publish them formally    community, the lease required that the landlord have
and thus did not intend for the decision to be a binding        “good cause” – i.e., specific examples of prior violations of
precedent for future cases. Others are officially “published”   the lease and related conduct issues – to non-renew the
and are thus a precedent for future courts.                     lease at the end of the term. Finally, the lease contained a
                                                                specific provision that stated that “the failure or omission of
Published cases dealing with residential landlord-tenant        landlord to terminate this lease for any cause given above
law are rather rare. The rarity is largely due to the fact      shall not destroy the right of the landlord to do so later for
that appellate cases in the landlord-tenant world are           similar or other causes.”
already uncommon, as most cases settle long before then.
However, every once in a while, a landlord will choose to       Between January 2008 and December 2008, Ms. Gregory
fight a case to the appellate level – and when they do, it is   received five separate notices that she had committed
wise for landlords everywhere to pay particular attention       violations of the rules and regulations provided in the lease,
to such cases, as they may result in important precedents       including issues such as trash, an abandoned vehicle, a
that will change the way parts of the rental industry does      confrontation with another resident, and her refusal to
business.                                                       allow maintenance staff into her apartment to perform a
                                                                required inspection. On December 26, 2008, the landlord
Woodridge Homes v. Gregory, 697 S.E.2d 370 (decided July        sent Ms. Gregory a notice of its intention to non-renew the
20, 2010), is such a case, and it is a good idea for us all     lease effective January 31, 2009; as evidence of its good
to read it, understand it, and remember it. For a copy of       cause in doing so, the landlord cited the “repeated minor
the case, go to:         violations of the lease” and “one or more major violations of
coa/opinions/coa2010.htm.                                       the lease,” and in doing so, the property manager provided
                                                                specific examples relating back to the five notices Ms.
THE FACTS AND BACKGROUND OF GREGORY                             Gregory received earlier in the year.

Ms. Gregory was a tenant who resided in an apartment            After sending the non-renewal notice on December 26,
community originally subsidized by the Farmer’s Home            2008, the landlord took Ms. Gregory’s portion of all future
Administration, later renamed the Rural Housing Services.       subsidy payments (including the next payment received for
As was the case for all the rental units in the same            January 2009) and placed the funds in a separate, non-
community, Ms. Gregory’s rent was subsidized through            interest bearing account labeled as an “escrow account.”
payments from the Department of Agriculture. Woodbridge
Homes did not receive a separate subsidy check for Ms.          When Ms. Gregory failed to vacate her apartment by
Gregory’s unit; rather, it received a single rent subsidy       January 31, 2009, the landlord filed a summary ejectment
check covering all of the units in the Woodbridge Homes         lawsuit in small claims court. The landlord won the small
community.                                                      claims case, but the tenant appealed the case to district
                                                                court. At district court, Ms. Gregory was represented
The lease contained language common to many apartment           by attorneys from Legal Aid, who moved to dismiss the
lease contracts, including agreements for Ms. Gregory to        eviction case under two theories: (1) that by accepting
keep her apartment clean and free of rubbish; to conduct        rental subsidies after each of the five violation notices,
herself and her occupants in a civil manner and not to allow    landlord had waived its right to claim any of those violation
   AANC NEWS                                                                                           Page 5
notices as “good cause” to non-renew the tenancy; and (2)         that the landlord still maintained the right to non-renew
that by accepting rental subsidies from the Department of         the lease even if the landlord had waived the right to evict
Agriculture after sending the non-renewal notice, landlord        immediately for any one of the prior warnings.
had accepted rent and thus waived the non-renewal as
well as its right to evict. The District Court judge agreed,      Perhaps the most encouraging aspect to the Court’s
granted the motion, and the eviction case was dismissed.          opinion is its implicit endorsement of non-waiver provisions,
From there, the landlord appealed the decision to the N.C.        where lease language can trump the common law waiver
Court of Appeals.                                                 rule. This arguably sets the stage for more aggressive
                                                                  non-waiver provisions, where the parties could agree to
Thankfully, the N.C. Court of Appeals disagreed and               accept rent and still maintain all rights to declare a breach
reversed the District Court’s decision. However, the              and evict – such as the ones found in many standardized
decision is more complex than merely winning or losing.           leases, including the AANC Lease and NAA Lease. However,
Each side – both the pro-landlord side and the pro-tenant         the question of whether such strong anti-waiver provisions
side – won important battles in the decision, and each            are unquestionably enforceable in a residential lease may
battle has significant implications for landlords throughout      ultimately be another case for a future court to decide.
North Carolina, particularly subsidized housing providers.
The decision has pros and cons for landlords in North             PART 2 OF THE N.C. COURT OF APPEALS DECISION:
Carolina, as we will discuss, below.                              THE BAD NEWS – SUBSIDY PAYMENTS CAN BE CONSIDERED
                                                                  “RENT”…BUT THERE IS A SILVER LINING
THE GOOD NEWS – THE LEASE’S “NON-WAIVER” CLAUSE                   In several other states, courts have ruled that rental subsidy
                                                                  payments are not to be considered rent for the purposes
The concept of waiver has a long history in North Carolina.       of waiving the right to evict. It was generally assumed the
The precedent case of Winder v. Martin, 183 N.C. 410, 111         same rule would apply in North Carolina. Unfortunately, the
S.E. 708 (1922), states that a landlord who has knowledge         Gregory court found otherwise – or as the Court stated:
of a breach of a lease for which there is a right to re-enter     “We conclude that rent assistance payments . . . do, in fact,
and re-take possession of the premises, waives the breach         constitute rent for the purposes of the common law waiver
and the right to evict by later accepting a rental payment.       rule.” Though the Court declined to rule whether Section
In the Gregory case, Legal Aid argued for the expansion           8 payments specifically constituted rent for purposes of
of the Winder v. Martin rule (let’s call it the “common law       the common law waiver rule (“We express no opinion as
waiver rule”), where acceptance of rent would waive each          to whether rent assistance payments made in connection
and every warning of a breach and remove them as a                with the Section 8 program constitute rent for purposes
“good cause” basis to non-renew the lease. Essentially,           of the common law waiver rule”), the Court’s logic and
the prior violations of the lease would be somehow erased         analysis as to how subsidy payments constitute rent sets
from existence through the acceptance of subsequent rent          the stage for a future case to decide that issue as well.
payments and subsidies, and those violations could never          Thus, it may be prudent for landlords who accept subsidies
be considered again.                                              of any kind to consider them as rent moving forward and
                                                                  to adjust their policies accordingly.
The Court disagreed, noting the differences between the
common law waiver rule and the landlord’s lease in the            As such, this decision has broad implications for all
Gregory case. The Court stated that the landlord had not          landlords in North Carolina who own or manage subsidized
waived its right to non-renew the lease until (1) it became       communities – whether they participate in Section 8,
entitled to evict the tenant or non-renew the lease and (2)       public housing, or some sort of subsidized public-private
it then afterwards accepted a rental payment. Also, even if       partnership or development grant program. The bottom line
the landlord was entitled to evict, the “non-waiver” provision    is that landlords who accept a subsidy payment arguably
of the lease trumped the common law waiver rule, since the        waive all breaches of lease that the landlord knew about
lease clearly stated that “the failure or omission of landlord    prior to cashing the check. This could be a particularly
to terminate this lease for any cause given above shall not       painful principle for subsidized landlords, since the rental
destroy the right of the landlord to do so later for similar or   assistance payments are usually in the form of one single
other causes.” Based on this language, the Court believed         check for the entire community, not unit by unit. In the
   AANC NEWS                                                                                            Page 6
Gregory case, Legal Aid essentially stood for the position         THE BOTTOM LINE
that a landlord would need to reject the entire single check
in order to preserve its right to evict a single tenant. Had       The one constant to the law is, ironically, change. Though
Legal Aid’s argument been upheld, it would have rendered           many of us often look to the legislature or executive
evictions of subsidized tenants all but impossible – or at         branch for such change to occur, it can also happen via
the very least, financially impractical.                           the courts as well. Keeping up with important decisions
                                                                   such as Woodridge Homes v. Gregory is but one example.
Fortunately, the Court disagreed with this interpretation          Admittedly, this article is very heavy with the legal analysis
based on the good faith action of the landlord to place            and principles, but the landlord and manager who takes
the evicted tenant’s portion of the subsidy payment into           the time to learn them, to master them, and to adopt new
an escrow account pending the outcome of the eviction              policies based on them, will find themselves ahead of
lawsuit. The Court found that there did not exist a particular     their peers and better prepared for the eviction cases yet
way to return the monies to the issuing government                 to come.
authority, and as such, the landlord did the best thing it
could by placing the funds in an escrow account. Given             About the Author
this set of facts, the Court could not find that the landlord                      AANC Board member William K. Brownlee is the
waived its rights by cashing the single subsidy check.                             owner of Brownlee Law Firm, PLLC, a six-attor-
                                                                                   ney law firm with offices in Raleigh and Char-
This, in essence, is the silver lining – as the Court created a                    lotte, N.C. He graduated from The Citadel with
legal roadmap for North Carolina subsidized landlords who                          honors in 1993 and from North Carolina Cen-
need to evict a tenant. It works simply like this: the moment                      tral School of Law in 1999. Mr. Brownlee and
you send a notice to a tenant of an eviction-worthy breach         his firm have broad experience in the area of landlord-tenant
or non-renewal, you must find a way to either (1) return the       law, representing clients throughout the state in various mat-
evicted tenant’s portion of the subsidy to the governmental        ters ranging from lease interpretation and guidance to appear-
authority issuing it or (2) if that is not possible (it probably   ances in thousands of summary ejectment cases per year. Mr.
will not be), then open an escrow account with your bank           Brownlee has authored the most recent editions of both the
with instructions that the portion of the subsidy monies
                                                                   AANC Lease Agreement and the AANC Legal Handbook.
are not to be disbursed to you until:
        (i)      the tenant has vacated the unit; or
        (ii)     the eviction lawsuit is completely finished
                 (including all appeals); or
        (iii)    you have lost the eviction (if you lose, you
                 are still owed the money since the tenant
                 was likely in possession the entire time –
                 and waiver is a moot point).

Arguably, there is no need to open up a separate escrow
account per eviction; instead, you could open up a third
bank account (in addition to your operating and trust
accounts) and simply call it “Eviction Escrow Account” or
a similar name, and then deposit in the Escrow Account
all future payments of the tenant’s portion of the subsidy
checks received after you notify the tenant of a breach. By
using this method, it may be possible – per the Gregory
case – to keep the subsidy funds and still evict the tenant
without creating a waiver defense issue.

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