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Archive for Sunday, October 2, 2011

City mulls policy that would crack down on landlords

October 2, 2011

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A crackdown may be coming against landlords who allow too many tenants to live in single-family houses across Lawrence.

City commissioners at their meeting Tuesday will review a proposal that would give city staff members much broader authority to revoke the licenses of landlords who allow more than three unrelated tenants to live in single-family homes.

“These are big changes from how we’re doing this right now,” said Brian Jimenez, code enforcement manager for the city.

Under the proposal, the city would start using the city rental licensing program as leverage to get problem landlords to comply with a city code that says no more than three unrelated people can live in a single-family home. The proposal has several provisions. They include:

• First time violators of the occupancy provision would be put on probation, which would consist of being told that they have 30 days to either evict a tenant or take other means to bring the property into compliance with the occupancy code. If they fail to comply, the property would lose its rental license and could not be occupied.

• Landlords who violate the ordinance two times in a 24-month period would automatically lose their license. Those landlords could appeal the revocation to the City Commission for a hearing.

• Monetary fines under the rental licensing ordinance can be from $250 to $1,000, and would be at the discretion of the City Commission. The fines currently attached to the occupancy code range from $10 to $500, and are at the discretion of the city’s Municipal Court judge.

• The proposal also would change the definition of a resident to make it clear that any person who stays at the house for 14 or more days during a 30-day period is counted as a resident under the city’s code.

The proposed process is expected to speed up the time it takes to resolve an over-occupancy case. Currently, city inspectors must build a case that is taken to Lawrence Municipal Court, unless the landlord voluntarily agrees to comply. That can take several months, Jimenez said. Under the proposal, city inspectors would be allowed to make an administrative finding that the property is violating occupancy standards. If property owners disagree, the appeal process would go to the City Commission — although a landlord always has the ability to sue the city in a court of law.

“We’re not going to be too quick to pull the trigger on any case,” said Jimenez. “We’re going to make sure that there is a violation. But we think this process could take a few weeks instead of three or four months.”

City commissioners asked staff members in June to come up with ideas for strengthening enforcement of the occupancy code, which has been a major concern of several residents who believe their neighborhoods are becoming dominated by illegal student housing.

City Commissioner Bob Schumm said he wants to review the proposal in more detail but likes some of what he’s seen so far.

“I’m interested in a stiff fine, I’m interested in clearing up the definition of what constitutes a resident, and I think the revocation of a license certainly would be meaningful and appropriate,” Schumm said.

One key question city commissioners will have to decide, if they move forward, is how long any revocation ought to last.

Schumm said he wants to have a policy that is strong enough to get the attention of the minority of landlords who are violating the law.

“What is going in a lot of neighborhoods right now is reason for worry,” Schumm said. “Sometimes people’s entire net worth is in their homes, and they don’t want to see that vaporized because their neighborhood has turned into something completely different than what it used to be.”

City commissioners meet at 6:35 p.m. Tuesday at City Hall.

Comments

Number_1_Grandma 2 years, 11 months ago

What can the city do if instead of "rental property" the landlord becomes a "lease to own property" taking the property out of "rental registration" guidelines? Who's to say how long a "lease to own" lasts. I don't think the city could touch them then.

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Ron Holzwarth 2 years, 11 months ago

The law would then apply to whoever was leasing to own because in that case, the purchaser is then the legal owner of the house.

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Ron Holzwarth 2 years, 11 months ago

Yes, that is an interesting point. Twice I have purchased houses on a "lease to own" basis, and in neither case did we even get a lawyer involved. The owner of the property was advised what to write on the document, and then I signed it. After that, we both had copies, and it was a very private arrangement.

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jafs 2 years, 11 months ago

My understanding, and I've also had an owner financed deal, is that until the full amount is paid, you're not really the legal owner.

Our deed was held by an escrow company until that point, not by us.

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Ron Holzwarth 2 years, 11 months ago

True: I did not hold the deed to either house while I was paying on it. The contract stipulated that the deed would be transferred after the payments were complete.

But, I can also talk about "The Enchanted Cottage" on Tennessee street that the city totally rebuilt some years ago. The owner wanted his name off the property so that he would not be subject to legal liability, and according to him, if he sold it to me on contract he would then have no liability.

He was going to sell me the property which consisted of one dilapidated house and two lots on Tennessee street for $40,000 or something like that, and he considered $300 a month to be a reasonable monthly payment. He just wanted his name off it, and he thought that with some legal help, that plan would have worked.

I should have taken him up on it! It would have been very profitable, maybe. But there was a serious problem in that there was some movement by some historical society or somesuch that wanted the house to be preserved.

So, I might have ended up with one hell of a lemon of a property, a house that was too trashed to be rebuilt, and then be stuck with no legal way to demolish it because it would be blocked by the preservationists, which were already becoming a problem for the previous owner.

He ended up selling to the historical preservation group, they moved the house west, replaced just about everything, dug out and finished a new basement, and when they were done they only had a few fragments of the original house. And, then they built another house on the lot next to it.

Preservation? Of what? Everything there is new except for some of the gingerbread on the front of the house and a few fragments of the second story.

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jafs 2 years, 11 months ago

How about an immediate mandatory fine, not at the "discretion" of city commissioners?

And, how about 2x and the landlord loses their license, regardless of how long it is in between?

My only reservation is that evicting a tenant puts that person into a bit of a stressful spot, and it's not their fault the landlord is breaking the code, and they may not even know it.

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Godot 2 years, 11 months ago

Seems to me the tenants should have some responsibility for knowing the law, as well. Or are they considered innocent victims who were forced by the evil landlords to exceed the limit of three unrelated adults?

Will the city determine which unrelated tenant is thrown out on the street, or will be it up to the landlord, who could then be sued by the affected tenants?

Example: Four unrelated people share a house that rents for $1200 a month. The city orders the landlord to kick one of them out. Where will she find a place to live for $300 a month? How will the remaining three come up with an extra $100 a month each? If they signed a lease based on 4 tenants, will the action of the city break the lease and allow all the tenants to move out without notice, and leave the landlord with an empty, unproductive rental house?

In these times of foreclosures, job losses, reduced wages and food inflation, one would think the city fathers would encourage people to make the best they can of what they have to spend by sharing a house and the expenses.

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parrothead8 2 years, 11 months ago

Why would a landlord allow a lease based on 4 tenants? Isn't that against code?

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Godot 2 years, 11 months ago

I don't know, but it must be happening, or the city would not need to address this situation with more rules and regulations.

If the landlord signs a lease for 3, and the tenants invite a fourth or fifith person in, then, as Jafs says, the tenants, not the landlord, should be held responsible. But that is not what is being proposed.

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jafs 2 years, 11 months ago

Because they don't care about the code, and want to make more money.

Seems pretty clear to me.

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jafs 2 years, 11 months ago

I agree about the eviction difficulties, as I said.

But, no, I don't expect tenants, many of whom are young, students, etc. to know the ins and outs of Lawrence's rental ordinances that apply to landlords.

I expect landlords to know those.

And, the tenants aren't "breaking the law" - the landlords are. The code is that it's against the law to "rent to" more than 3 unrelated people.

If tenants have a responsibility, it would be to understand their legal obligations as a tenant.

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Cai 2 years, 11 months ago

it would depend entirely upon how the lease was set up.

Either the landlord broke the rules with the drawing of an illegal lease, or the tenants broke their lease - which they are held responsible for knowing. they signed it.

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jafs 2 years, 11 months ago

Yes.

But, it's not the tenants' responsibility to know all of the legal codes that the landlord is held to, is it?

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Cai 2 years, 11 months ago

it would depend entirely upon how the lease was set up.

Either the landlord broke the rules with the drawing of an illegal lease, or the tenants broke their lease - which they are held responsible for knowing. they signed it.

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Godot 2 years, 11 months ago

Young students incapable of understanding city ordinances are not adults and are therefore not subject to the ordinance. What is the definition of an adult?

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jafs 2 years, 11 months ago

It's not that they're incapable of it, it's that they have a lot of other things they're interested in.

And, why is it their responsibility to know all of a landlord's legal responsibilities?

They're not the landlord, they're the tenant.

Tenant's are responsible for knowing their responsibilities, and landlords are responsible for knowing theirs.

It may be useful for a tenant to know what landlords are required to do, but many don't care that much, and the Landlord-Tenant Act is long and torturously written.

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Charles McPheeters 2 years, 11 months ago

What determines a single family dwelling? One or two bedrooms? what about some of the big old mansions with five bedrooms and three or four baths? Is a 5000 sq ft house the same as a 1500 sq ft house? I don't have any rentals, just wondering how bureaucrats decide how the rest of the common folks should live.

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jafs 2 years, 11 months ago

Check with the city.

Some of it must be zoning related - some neighborhoods are zoned single family residential, so any houses in those neighborhoods are single family ones.

And, I don't believe it's the "bureaucrats" who have decided this - it's the homeowners who invest in their homes, and want their neighborhoods and property values to remain decent, and don't want the problems that come with lots of unrelated renters.

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Beth Ennis 2 years, 11 months ago

If there is a large house that big, I'm guessing the city would tell them to split it up into separate apartments. We have a large house in our neighborhood. It's owned by one of the landlords that continually abuses this law on the books. There are 6 to 7 cars parked outside this place every single night, with a driveway that fits 2. So in the past, they have parked in their yard, which the city finally put an end to. This house is never taken care of, the grass (weeds) are always 2 feet high and trees grow over the sidewalk so that you have to walk in the grass because the sidewalk is unavailable. They make a ton of money on this house every month, and yet, they aren't keeping it up. It just encourages the "slum lord" mentality, which this particular landlord is really good at. We don't mind living next to students, in fact, we have loaned out our lawnmower in the past and other yard tools so that they could keep their yards up. That only happened with 2 different houses once though. Most students could care less about that. I would like to see the city crack down on the slum look that most of these rentals have.

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appleaday 2 years, 11 months ago

Agreed! And crack down on all the trash and garbage that no one ever seems to pick up.

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Ron Holzwarth 2 years, 11 months ago

Maybe it's not trash. It could be an expression of individuality.

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Ron Holzwarth 2 years, 11 months ago

I have a problem with this:
"change the definition of a resident to make it clear that any person who stays at the house for 14 or more days during a 30-day period is counted as a resident under the city’s code."

It is not uncommon for a guest from far away to stay for over two weeks. Instead, it should be similar to the policy of one of the apartments complexes here in town, which states:

"A resident is defined as a person that occupies the apartment for more than three weeks in any given month, and receives mail at that address."

City Commissioner Bob Schumm has a very good point when he stated: ",,, I’m interested in clearing up the definition of what constitutes a resident,,,,"

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Jock Navels 2 years, 11 months ago

need an operational definition of 'related' as well. and then, the 'proof' of relationship? better get kolbach on that...

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Ron Holzwarth 2 years, 11 months ago

An attorney would have no problem defining "related", except in the perhaps vague case of aunts, uncles, second, and third cousins. The law would need to be clarified on that matter.

And if the ownership of the house was in question, all he would have to do would be to check with the register of deeds at the courthouse.

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Jock Navels 2 years, 11 months ago

my point....so, what if i live in coffeyville and buy a house in lawrence for my kids to live in while they go to school...not uncommon...and so, in the house lives my son, my other son, their two cousins from winfield and my first son's girlfriend. the house has 4 bedrooms and two baths. it was built by a doctor in 1897 who lived there with a wife, 4 children and a spinster sister. a housemaid/cook lived in the basement. just asking.

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Ron Holzwarth 2 years, 11 months ago

Sounds to me like you are talking about four related people living together if cousins count and one that is not related, which is well within the guidelines. If they maintain the property, live quietly, and don't cause the neighbors any problems, I doubt it would ever be an issue. That's only my opinion, I am certainly not qualified to give any legal advice.

But I am quite certain that if there are no complaints, the city will never investigate.

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Cai 2 years, 11 months ago

@jocknavals

Your proposed situation wouldn't apply. You bought the house, your family is staying there. It's not a rental property that you're looking to make profit from; so anything (including but not limited to the above proposed changes) that is a rule under "rental licensing ordinances" doesn't apply.

normal noise complaints / cop calls / etc etc could still be an issue, depending on how quiet they are.

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pz5g1 2 years, 11 months ago

This assumes the home is registered as a rental in the first place.

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Salvia 2 years, 11 months ago

First- I would like the commission to define what constitutes a rental. We have a problem house in our neighborhood that the city says is not a rental because the homeowner's daughter and grandchildren live there. The city said that even though the present residents are not the homeowners, they can live there because they are family and the house is not a rental. Others, many others, live there as well, but the city can't "verify" that they do. The house is in disrepair, many, many police calls, etc. Can't be declared a nusiance house because it is not a rental! Like the fireworks ordinance, I think the rental ordinace is unenforceable. Frustrating!

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jafs 2 years, 11 months ago

Aren't there existing laws/ordinances that can be used, even if it's not a rental?

I understand your frustration.

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Carol Bowen 2 years, 11 months ago

That's odd. We had a similar situation a couple of years ago. We were told by the city that relatives do not count as homeowners. In our case, parents had purchased the house for their college age child. Friends moved in, etc., etc., etc., The parent had to register the house as a rental. I would press onward and upward.

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kernal 2 years, 11 months ago

cheeseburger, you're shaking the wrong tree. We wouldn't even have to address this if it weren't for the few landlords trying to skirt the existing law. This is just another example of the actions of the self-serving few causing the need for fine tuning existing laws or enacting new ones.

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woodscolt 2 years, 11 months ago

Aah, look who's apparently got their shorts in a knot.

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sunny 2 years, 11 months ago

The Oread neighborhood. Maybe Candice and the like should have never bought homes in that area.

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workinghard 2 years, 11 months ago

So tell me if I am correct. Three unrelated people means two married couples can live together, right?

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Ron Holzwarth 2 years, 11 months ago

I can't seem to verify that on the web. But, that does not mean that it's not true.

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rwwilly 2 years, 11 months ago

Wrong. Its four people and not legit.

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Ron Holzwarth 2 years, 11 months ago

I didn't know that married couples are not related to each other.

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Ron Holzwarth 2 years, 11 months ago

Not if you do it in a "city authorized facility".

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itsalwayssunnyinlarry 2 years, 11 months ago

I would much rather see them take action against the landlords that allow students to live in essentially uninhabitable houses, proper maintenance of the exterior and grounds as well. What's going to happen to all these kids living in houses that have 6-10 bedrooms or apartments? The student ghetto is very affordable on a student budget, not all of them can afford to live in these "luxury apartments" that charge 700-800 dollars a month for a 300sqft apartment (hawks point for example).

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greywolf85203 2 years, 11 months ago

That's fine that they want to stop over crowding of homes. But what about the landlords "slumlords" that do not make needed repairs? There are several in town that think its okay to not fix things such as water heaters, air conditioners, major appliances that are supplied for the rentees and so on. Also I wonder about the rent to own landlords and how the city is allowing them to do this with reporting to credit bureaus as most other landlords do? The city really needs to look at all landlord issues and correct a good many things since this town is largely made up of rentals!

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jafs 2 years, 11 months ago

I agree with the above points - the city should do a much better job of making sure landlords are providing a decent place to rent.

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sunny 2 years, 11 months ago

Yes...lets make it harder and harder for people to live and pay their rent. Lets keep raising taxes and raising utility bills. Candice and the like need to move out of the Oread..you know...the area around the University where students live!

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usesomesense 2 years, 11 months ago

How about just requiring a clause in the lease of single family residencies that puts the responsibility where it should be? On the tenants. In my college days we squeezed as many people as we could into the house we rented to save money. None of them were on the lease and I was the one on the hook to pay the rent if they didn't. Eviction is a very costly and time consuming process. This proposal merely puts more favor on big box apartment complexes and puts small property owners out of business. If the tenant isn't complying it should fall squarely on the tenant.

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jafs 2 years, 11 months ago

The law is that it's illegal to rent to more than x number of people.

That means the landlord is the one breaking the law, not the tenants, who may not even be aware of the law.

If legal tenants are in fact allowing others to live there who aren't on the lease, that's on them.

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Godot 2 years, 11 months ago

That is not what is being proposed. It is all on the landlord.

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jafs 2 years, 11 months ago

Well, how would you go about enforcing the law, if you don't make it the landlord's responsibility?

Would you like for the city to go around and do the work of seeing how many people live there? And, then what, if there are more people than allowed? The city can't evict them, right?

If illegal activity of other sorts is taking place in/on their property, what's the story with that?

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workinghard 2 years, 11 months ago

The law should be 4 people with no more than 2 per bedroom and no more than 2 in a studio apartment.

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Ron Holzwarth 2 years, 11 months ago

Beaucoup de personnes aiment vivre avec trois par chambre à coucher.

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Alceste 2 years, 11 months ago

"Destruction of the Center of Lawrence

"Landlords profit from turning the center of Lawrence into a student ghetto, while taxpayers and the city provide them with massive subsidies."

The above was written by:

Arly Allen Bob Blank Joan Stevenson for the Centennial Neighborhood Assocation

The city documents the statement here:

http://www.lawrenceks.org/web_based_agendas/2011/10-04-11/pl_occupancy_limits_communications.pdf

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Scott Tichenor 2 years, 11 months ago

Anyone that thinks this city can get slumlord Bonita Yoder to adhere to some reasonable guidelines is fooling themselves. She'll continue to own her little overpriced slum dwellings and laugh all the way to the bank while waiting until the very last minute and then do legal end-runs around everyone. Been doing it for ages.

And don't underestimate the group of rental owners in town that have banded together and form a powerful lobby in this burg. They'll have no part of this. Shame this city has such a craphole collections of slum lords that devalue neighborhoods.

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woodscolt 2 years, 11 months ago

Would seem to me the only way to regulate how many people live in a house would be through fire code regulation. While I understand the many reasons why the " no more than 3 non related members" appeals to some, the arguments crumble pretty fast.

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Ron Holzwarth 2 years, 11 months ago

The fire code regulations are the very most important. Not only have far to many people died from being burned alive right here in Lawrence, there are many who have physical and emotional scars that they will carry for the rest of their lives.

Case in point: The Boardwalk Apartment fire. The residents that lived there had no idea how little protection that they had from a disastrous fire.

It is a credit to the city that the owners of the remaining Boardwalk Apartment were required to demolish it.

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jhawkinsf 2 years, 11 months ago

So if three guys, college students, decide to rent a house and all three get very lucky throughout the course of the semester and each moves in his girlfriend, we're going to fine the landlord. No amount of legislation is going to stop that behavior, especially in a college town. The tenants get lucky but the landlord, through the behavior of the tenants, gets unlucky.

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madameX 2 years, 11 months ago

Actually, the tenant gets evicted is what happens. For being out of compliance with the lease. And I think it's also legal for the lease to contain a clause that says if the landlord incurs any fines as a result of the tenant's behavior those costs can be recouped. The landlord will be okay.

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madameX 2 years, 11 months ago

Actually, the tenant gets evicted is what happens. For being out of compliance with the lease. And I think it's also legal for the lease to contain a clause that says if the landlord incurs any fines as a result of the tenant's behavior those costs can be recouped. The landlord will be okay.

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jhawkinsf 2 years, 11 months ago

So it's on the landlord then to determine the difference between a guy getting lucky and having a girl spend the night, or a couple of nights, or she's moved in? What if she has her own place to live, but not wanting to tell her parents she's moved in with her boyfriend, she maintains her place of residence, say a dorm, but in actuality, she's spending 7 nights per week at the boyfriend's house? It'll be on the landlord to determine how many nights she spending at her place and how many nights she's spending at his place. Isn't that right?

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madameX 2 years, 11 months ago

If you're talking in terms of being fined by the city, the no, it would be on the city to determine if there are too many people living in the house. If the landlord wants to avoid that by keeping tabs on the tenants then yeah, it is on the landlord, just like with any other lease compliance. That's kind of how being a landlord works: you can ignore your tenants, collect the rent, and run the risk that they're not following your rules or you can pay attention, catch them not following the rules, and then have to deal with it somehow. Of course, maybe they're good tenants who do follow the rules who don't require babysitting, there's always that possibility.

I was mainly responding to your assertion that the landlord stands to be the only one who suffers consequences for tenant's actions further upthread by pointing out that the landlord does have a remedy. Does that make it okay if the tenants put and otherwise good landlord in a position where he or she has to exercise that remedy? Of course not, but the reality is that you run the risk that that will happen when you rent out a house to strangers.

BTW, I don't agree with the ordinance.

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jhawkinsf 2 years, 11 months ago

But now you're sounding like all those people who complain about people wanting to enter into the bedrooms of other people. If it's unreasonable for a landlord to enter a house every day to see if the tenants are destroying the house, they would need some specific reason to enter daily, then it's equally unreasonable for the landlord to enter daily and count how many shoes are under the bed. The tenants expect privacy when the enter into a lease and the landlord is expected to respect that privacy.
This ordinance looks to me the city's attempt to pass off to landlords what is essentially an unenforceable requirement.

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madameX 2 years, 11 months ago

I don't really understand what your point is. Yes, entering the property every day would be unreasonable. However, I don't really think it's necessary for a landlord to enter the property every day to have an idea of how many people are living there. Say a neighbor reports to the landlord (or the city for that matter) that there are always five cars parked in front of the house. At that point the landlord has reason to believe that there are too many people living there and can go have words with the tenant about how many people actually are living there. And if the landlord knows what they're is doing the they've only got three people on the lease and a clause that says no one but the people on the lease is allowed to live there, so if they tell the tenants that they have to kick the extra people out that actually carries some weight. Number of people living in a house is no more or less enforceable than any other lease provision, and how tough they are going to be about enforcement is up to each landlord.

Also, I would imagine that the city has to have some kind of proof that there are too many people living there before the can actually impose a fine. If the city proves it effectively enough to impose a fine, then I would imagine not much more would be needed to successfully seek an eviction order.

Like I said before, I don't agree with the ordinance, but it's not like a landlord has no recourse if they get fined. That's the only point I was trying to make.

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Ron Holzwarth 2 years, 11 months ago

"Anyone who makes their home their major investment is a dolt."

Very, very few have the several hundred thousand dollars in their portfolio that would make their home anything other than their major investment.

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hipper_than_hip 2 years, 11 months ago

I think the landlord licensing needs to be extended to the commercial apartment complexes.

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Boston_Corbett 2 years, 11 months ago

Ordinances similar to the Lawrence one are common in cities where unscrupulous landlords encroach upon neighborhoods. Is it any surprise that many of these are in college towns?

Lawrence is just catching up, by actually thinking about cracking down on some well known offenders.

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Godot 2 years, 11 months ago

What bothers me most about this is the City's stated objective of circumventing the municipal court by having an unelected, unaccountable bureaucrat serve as judge and jury, with appeal limited to the city commission. Apparently this city administration views due process to be nothing more than an inconvenience and a nuisance. Lawrence, Kansas, home of the Kangaroo Court!

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jafs 2 years, 11 months ago

So you'd rather all of these cases go to court?

Are you willing to pay higher taxes so that all of the cases go to court, and are decided that way?

If the city fines you for allowing your yard to grow up 5 feet, is that ok? Or should that go to court as well?

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Godot 2 years, 11 months ago

the potential here is for a city employee to unilaterally determine that a business person has to pay a fine up to $1,000 and to lose the ability to operate said business with the potential of losing thousands of dollars in income. that hardly compares to the fine for not mowing a lawn.

What is planned is the kind of "justice" you find in a third world country. It is a breeding ground for corruption.

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jafs 2 years, 11 months ago

Would you be glad to pay higher taxes so we can enforce this the way you suggest?

Landlords can appeal to the city commission, and they always have the option of taking the city to court as well.

Everything that involves money is a breeding ground for corruption, unfortunately.

What are you concerned about exactly? Shakedowns of landlords by city employees?

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Godot 2 years, 11 months ago

Funding due process to protect civil liberties and property rights is one of the few legitimate expenditures of tax dollars

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jafs 2 years, 11 months ago

Ok.

So will you be lobbying for this process to be done in the way you suggest, and raising taxes to pay for it?

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jafs 2 years, 11 months ago

Also, I think your use of the term "due process" may not be the best.

I assume you're using it to mean our constitutionally protected right to not be deprived of life, liberty or property without due process.

But, this example doesn't do that - the city isn't killing anybody, putting them in jail, or seizing their property.

They're setting the rules for licensing and operating a business within the city, as they do for many businesses.

I'm not sure that everybody has a constitutional right to operate the business of their choice without complying with the local regulations on those.

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Ron Holzwarth 2 years, 11 months ago

I personally know someone that should have paid off his home as his major investment after he received an inheritance, and I told him that. He told me that I was very, very stupid, instead he was going to make a very wise investment that someone had told him about. It was kind of a "secret".

And so, instead of paying off his home, he invested $80,000 in a Ponzi scheme.

Actually, it didn't work out that badly for him. He received a 24% return on his investment for a whole two years.

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Ron Holzwarth 2 years, 11 months ago

People have become wealthy in many different ways. The real challenge is to stay wealthy.

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Ron Holzwarth 2 years, 11 months ago

Here's an interesting hobby for anyone that has a few thousand dollars they can afford to lose:

Buy and sell stock in DNDN (NYSE).

On Mar 2, 2009 it was selling for $4.20 .

On Apr 1, 2010 it was selling for $54.06.

Today, it is selling for $9.00.

So, if you were to always purchase stock in DNDN whenever it was less than $10 a share, and always sold out whenever it broke $45.00, I really don't think you are likely to lose money.

But don't forget what Warren Buffett calls frictional losses, that is, the capital gains tax of 15% on your profits (computed with constant dollars, consistent with GAAP), and the brokerage fees.

And do NOT ever forget this basic fact:

This little game is only for gamblers, because DNDN could go bankrupt. However, that appears unlikely.

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Ron Holzwarth 2 years, 11 months ago

I believe it's like BRK, no dividend. A growth or price collapse stock, nothing more. What triggers the price volatility is when a new cancer drug is announced, when it does or not receive FDA approval, and when it does or does not receive approval for Medicaid payment. Their latest, Provenge, did receive FDA approval, then the stock spiked. Then it spiked again when Medicaid approved payment for it. Then it dropped when sales did not meet expectations!

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Ron Holzwarth 2 years, 11 months ago

If you really don't know what you're doing, and you don't have someone that you really trust to help you, a home is certainly not the worst investment that you can make.

If you have a portfolio of any size, you should read all of Warren Buffett's letters to the shareholders of Berkshire Hathaway before you make any investment decisions. Start with the very first year.

They are all free and available here: http://www.berkshirehathaway.com/letters/letters.html

For a short summation, here are the two very important rules for investing:

1) Put no more than 5% of your portfolio in any single investment. 2) Do not make any investment that you do not thoroughly understand.

If you follow those two rules, it is very unlikely that you will lose everything.

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Ron Holzwarth 2 years, 11 months ago

This is the math on the two houses I have purchased: I bought one for $4,000 or $5,000, I forget which, in a small town, and moved into it. It was sufficient for my purposes and for that period of my life. I did only very minimal repairs for the eight years I lived there.

Then I decided that I would like to also own the house next door, partly for storage and because it came with a very nice garage. So, I bought it on contract for nothing down and $100 a month.

After a few years, I decided to move. So, I sold the first house for $5,000 and left. I simply walked on the contract for the house next door, and the seller didn't mind me doing that at all. He couldn't have received $100 for it any other way. Actually? He had been renting it for $50 a month before I bought it on contract.

So, I paid $4,000 or $5,000 upfront and got that back and I paid $100 a month for perhaps three years on the house next door, and I had to pay the taxes on both. So, I had one house for about five years, and for about three more years I had a second house next door plus the garage.

I didn't think that was a bad deal at all, considering what I actually paid.

Years discussed: 1990 - 1998.

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jafs 2 years, 11 months ago

That's a heck of a deal - what town was that in?

Of course, I'm not sure about "walking" on your contract - would you have done that if the seller objected?

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Ron Holzwarth 2 years, 11 months ago

"with a million dollar portfolio your house should be no more than $50,000,"

You have demonstrated wonderful mathematical skills. But, you also have to consider the fact that you will have to invest in a place to live anyway. And, a house is going to be an ongoing expense that will never end, due to the taxes and maintenance that will be required. It is necessary to balance all of those facts in your investment decision on whether or not to purchase a house. For many people, it is a very good investment, as long as they do not purchase a home that they cannot afford to pay for and maintain.

It is an unfortunate fact that many people buy houses that they cannot afford. The proof of that is the large number of foreclosures that are occurring today.

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Ron Holzwarth 2 years, 11 months ago

Possibly yes, because short sales are not counted.

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workinghard 2 years, 11 months ago

The college town my child lives in has "all" rentals licensed.

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Richard Heckler 2 years, 11 months ago

How will some feel when 64 bedroom boarding houses start popping in your backyards and/or next door?

Only one half parking space per bedroom is being forced through which means the other 32 cars will park where? 32 extra cars plus all of the vehicles that "lovers" bring along.

These will do wonders for property values. No older neighborhood is sacred territory. "Animal House" rides again.

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DVLPER 2 years, 11 months ago

Hopefully the city carefully examine the potential impacts this will have. Standard occupancy numbers like, three unrelated people is not the answer. Parking requirements, sq ft per person, and condition of the property are much more important. They will find out quickly that anything will be hard to enforce, Manhattan went down this same road in late 2008. They just removed their inspections and requirements. Not enforceable and a strain on city government. http://www.ci.manhattan.ks.us/index.aspx?nid=1474

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Godot 2 years, 11 months ago

The city could enforce existing ordinances to keep neighborhoods quiet and orderly.

I suggest the commissioners impress upon the police department that it should enforce existing parking, noise and disturbance ordinances by giving tickets to the perpetrators who will then be required to appear in court or pay a fine if they choose not to dispute the ticket. If they neither appear nor pay the fine, they will land in jail. Problem solved for the neighborhood.

The issue should not be how many adults inhabit a residence. It should be how the adults behave. If they misbehave, there are laws and courts (not Neighborhood Resources employees) to deal with them.

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jafs 2 years, 11 months ago

Those are good points, and I mostly agree.

Also, the city should be doing a better job of making sure that landlords are maintaining their rentals well enough.

I'm just not sure that limiting numbers should be thrown out - what do other cities do?

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workinghard 2 years, 11 months ago

None2 says: "We need more of that so that the city government doesn't keep expanding its tenticles into personal matters. You gave the example of girlfriends. I have another example. What if two committed gay couples wanted to room in one large house together?"

Hasn't the city passed all sorts of laws to stop discrimination against gay people? Yet this ordinance clearly discriminates against gay people. So does this mean nobody else can do it but it is ok for the city to thumb their noses and do as they please? Gay people cannot legally marry, it should be four unrelated people.

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Godot 2 years, 11 months ago

How does the City define the word "adult?"

Our district court has labelled 18 year old men who commit rape as "children."

Kansas law says anyone under the age 21 is a child, unable to make the decision to consume alcohol.

Students who are supported by their parents are labelled as children by the University.

Obamacare ordains that all people under the age of 27 are children under their parents' insurance policies.

In the eyes of the Lawrence City Fathers, when does one become an adult as it applies to this ordinance?

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jafs 2 years, 11 months ago

That's odd.

You can't find a grouping of those that results in 3 unrelated people.

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ghostofrealityspeaks 2 years, 11 months ago

Oneeye, it's mental illness awareness week. Maybe you can go to the city commission meeting and be the real life example of what happens to old tired men who have nothing better to do than than show their sanity is depleting ever so quickly. You are the true meaning of an idiot.

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imastinker 2 years, 11 months ago

Yet another reason Lawrence is unfriendly towards business.

Landlords seldom rent to more than three people because they know the law. How are they supposed to control tenant behavior?

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jafs 2 years, 11 months ago

Landlords in Lawrence routinely do not follow the ordinances regarding their responsibilities in a variety of ways, in my experience.

In fact, we only had one landlord who actually did what they were supposed to do, and refrained from doing things they weren't supposed to do, in many years of renting in Lawrence.

There was a story in the paper about a landlord that knowingly violated the rules about renting to more than three unrelated people, hid that fact from city inspectors by asking the tenants to leave, and hide evidence of it.

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imastinker 2 years, 11 months ago

What kind of houses do you rent from that you are willing to do business with people that you think are breaking the law? It seems you're implicit in this too.

I read that article you are referring to. I agree with your conclusion. The tenants were at fault as much as the landlord though. They all conspired together to break the law.

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jafs 2 years, 11 months ago

I have rented from a variety of landlords - all single family houses in a variety of neighborhoods.

Finding one who is actually responsible and lives up to their responsibilities is extremely difficult in Lawrence.

Your argument seems quite flawed to me - it's not my responsibility to ensure landlords are doing what they're supposed to do, and it's not my fault if they're not doing that.

As a tenant, my responsibility is to live up to my responsibilities, which I always did - I'm neither the city, nor the landlord's parents, etc.

In fact, a tenant who reports the landlord to the city for violating city codes risks not getting a good reference, etc. so that puts them in a difficult position. The city should have a way of ensuring landlord compliance without depending on tenant complaints.

In the case we're discussing, I disagree again - a tenant is not the one responsible here - the ordinance is that a landlord is not allowed to rent to more than 3 unrelated people - the tenant is not breaking the law at all.

And, that's another problem with enforcement of this issue - the one who suffers is the tenant, who is not breaking the law, and may not even be aware of it. There should be a way that the discomfort falls on the landlord instead.

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imastinker 2 years, 11 months ago

So what if a landlord rents to three people who have live in girlfriends? That's all on the tenant but the landlord gets the penalty.

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jafs 2 years, 11 months ago

That's a bit of a different situation - that would be a tenant's responsibility, and it might be unfair for the landlord to be penalized for it.

But, it's not just the landlord that suffers - the folks living there get evicted, right?

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jafs 2 years, 11 months ago

I might concede that tenants who knowingly helped the landlord conceal the landlord's violation of the ordinance bear some fault.

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sickofgoodoldboysthatrunlaw 2 years, 11 months ago

Most of the slum landloard don't have their rental places check buy the good old boys, because they(the city) look at their places as apartments. They don't even have to get a licence.Have anyone ever really look at the dumps (apartments) the rent around KU, and don't let the city say they don't know about them, those slum lords are very good friends with the City Gods. they wash each other backs all the time.Think about who is building all the apartment around lawrence just really look.

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uncleandyt 2 years, 11 months ago

I propose that no more than 3 unrelated people can sit at a table to eat bar-b-q in local restaraunts. Don't ask why.

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Richard Heckler 2 years, 11 months ago

All the landlords know this cannot be enforced. For the same reason it has never been effectively enforced. City Hall has never authorized enough staff to enforce the regulation.

As yet nothing much has changed...

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