https://www.citybeat.com/news/blog/21102812/cincinnati-city-council-to-consider-legislation-requiring-landlords-to-offer-security-deposit-alternatives

 

 

Chalk this up to other bad ideas from a city councilman who does not understand much about the average renter in Cincinnati. In an effort to "put money in renters pockets" he is creating a mandate opening up a predatory product to renters.

33 minutes ago, Brutus_buckeye said:

https://www.citybeat.com/news/blog/21102812/cincinnati-city-council-to-consider-legislation-requiring-landlords-to-offer-security-deposit-alternatives

 

 

Chalk this up to other bad ideas from a city councilman who does not understand much about the average renter in Cincinnati. In an effort to "put money in renters pockets" he is creating a mandate opening up a predatory product to renters.

 

Most renters will be better off with security deposit insurance. Landlords are predatory too and most tenants never get their security deposits back. I'd rather pay a small monthly amount than the huge lump sum that I'm almost guaranteed to never get back.

2 minutes ago, DEPACincy said:

 

Most renters will be better off with security deposit insurance. Landlords are predatory too and most tenants never get their security deposits back. I'd rather pay a small monthly amount than the huge lump sum that I'm almost guaranteed to never get back.

I am sorry buy you are flat out Wrong on this -

The way the legislation is written, you have are essentially giving a monopoly to 1 company who can provide this insurance.

On the surface, the product is good, but to mandate it, is a huge mistake to low income renters. This product only makes sense for shorter term renters who are upwardly mobile. Otherwise, you will be financing the gains of class A tenants on the backs of the working class.

 

What happens is that the tenant will have a choice of paying a Sec Dep or tenant insurance. The tenant insurance is say $5-$15 per month. It will be higher depending on credit scoring and total amount insured. Lets assume it is $10/month on average. You will have to pay $120 per year to insure the security deposit. Now assume the security deposit is say $600-$700 for the unit. If you live there 1-2 years, it may be a good deal to pay the $240 and keep the rest of the cash. However, note if you move out, you do not get any of this back as it is a fee.

 

If you are working class and often live in the same apartment for 5-10-20 years, you will end up paying much more than the security deposit. If you live in the unit 10 years, you will pay $1020 toward security deposit insurance and if you leave and the landlord claims against that amount, the landlord will get $the $600-$700 but then if there is additional damage, they will have to pursue you individually for the difference. The $400 additional you have paid in could have gone to satisfy the additional damages, but you have now paid that in fees to an insurance company that is only giving you a payout benefit of $600. Not a good deal. However, in year 1 when you are confronted with the choice of a $600 payment up front held in escrow or $10/month, the $10 month option seems tempting and appealing if you are a working class individual.

 

The other challenge that this legislation will do, is that it will force landlords to stop offering month to month renewal options and you will essentially need to renew your lease annually. If an opportunity comes up to move, you will almost always look at a situation where you would break your lease and owe damages. This is because the company offering the insurance requires a year lease for administrative purposes and the paperwork must be renewed annually. Not always a great deal. If you just break the lease and the landlord claims against the security deposit, the insurance company will then seek to collect from you for your breach and seek repayment. This is because this is not really an insurance product, like PG's bill says but rather it is more of a surety bond. This will hit your credit rating in a negative manner if you needed to break the lease early.

 

I could go on and on about this, but I hope you can see the problems with this legislation. While the product itself is intriguing and offers a unique concept in the marketplace, a one sized fits all mandate in this case is just poor policy and will lead to significant problems. 

34 minutes ago, Brutus_buckeye said:

I am sorry buy you are flat out Wrong on this -

The way the legislation is written, you have are essentially giving a monopoly to 1 company who can provide this insurance.

Not true at all. Several companies offer this product. 

 

34 minutes ago, Brutus_buckeye said:

On the surface, the product is good, but to mandate it, is a huge mistake to low income renters.

 

No one is mandating it. It is only being required as an option. The tenant can choose to pay a security deposit. 

 

35 minutes ago, Brutus_buckeye said:

If you are working class and often live in the same apartment for 5-10-20 years, you will end up paying much more than the security deposit.

 

This rarely happens. In fact, working class folks tend to move around more than higher income folks because they end up stuck with bad units and bad landlords. My partner is a housing attorney so she lives this everyday. It is interesting that you can call someone "flat out wrong" and then get this basic fact completely backwards. 

https://www.jstor.org/stable/10.1086/673963?seq=1

 

43 minutes ago, Brutus_buckeye said:

However, in year 1 when you are confronted with the choice of a $600 payment up front held in escrow or $10/month, the $10 month option seems tempting and appealing if you are a working class individual.

 

For many, a $600 payment up front might as well be a million dollars. Their only actual choice is homelessness. And as I already pointed out, it is very unlikely that they'll live in this unit long enough for the monthly fee to cost them more than the security deposit they'd never get back anyway. 

 

47 minutes ago, Brutus_buckeye said:

While the product itself is intriguing and offers a unique concept in the marketplace, a one sized fits all mandate in this case is just poor policy and will lead to significant problems. 

 

This is not mandating that everyone use this product. It is only requiring that landlords provide the option. 

 

It seems like you think you are an expert on this but you didn't even know that low-income people move around a lot. That fact, in itself, undermines your entire argument. But I'm sure you'll disregard it and will not reconsider your opinion.

Sittenfeld already got a minor bit of national attention for this effort, which is his primary intention.  

15 minutes ago, DEPACincy said:

Not true at all. Several companies offer this product. 

 

16 minutes ago, DEPACincy said:

\

 

 

No one is mandating it. It is only being required as an option. The tenant can choose to pay a security deposit.

 

Again, you do not really understand this legislation. The way that it is drafted, only 1 company offers this product that would fit into the parameters of the law.

 

Secondly, it is not being mandated that the tenant must do this, but it is being mandated that property owners need to offer a predatory product to individuals who may not truly have the understanding of what they are signing up for.  It is like a payday loan if you get down to it. Do you really want to encourage those who can least afford it to sign up for a predatory product.

 

And, that article is not quite accurate. Yes, the poor move around a lot, not by choice. The working class, permanent renting class  does not move around as much and they will be renting 5-10 years or longer. If you ask the large housing providers of workforce housing and senior housing in the city, you will see a decent percentage of tenants who have been there 10 years or longer.

 

23 minutes ago, DEPACincy said:

 

For many, a $600 payment up front might as well be a million dollars. Their only actual choice is homelessness. And as I already pointed out, it is very unlikely that they'll live in this unit long enough for the monthly fee to cost them more than the security deposit they'd never get back anyway. 

 

 

You seem to think of the security deposit as not being returned, that is not accurate when the person pays and is responsible. As far as the $600 payment, the choice is not homelessness, and it actually protects the tenant from getting into a situation where they will actively fail. THat is not good for anyone. Most security deposits are only a few hundred dollars for working class units and many property owners allow flexibility on payment of the security deposit.

 

26 minutes ago, DEPACincy said:

. 

 

It seems like you think you are an expert on this but you didn't even know that low-income people move around a lot. That fact, in itself, undermines your entire argument. But I'm sure you'll disregard it and will not reconsider your opinion.

Not to toot my horn, but yes, I am an expert on this issue and have been actively working on it. So yes, I have significant inside knowledge on the matter which I know you do not at this point.

7 minutes ago, jmecklenborg said:

Sittenfeld already got a minor bit of national attention for this effort, which is his primary intention.  

He is looking for a feather in his cap as he runs for mayor.

4 minutes ago, Brutus_buckeye said:

You seem to think of the security deposit as not being returned, that is not accurate when the person pays and is responsible.

 

The problem is that the security deposit is not returned instantly. If you're moving into a new place, the old place still has your original security deposit. Now you have to pay the first month rent AND the security deposit before you get your last one back. For someone living paycheck to paycheck who is forced to leave their apartment, $1200 in one month is not possible if you're renting a 3 bedroom apartment or home for your family.

 

Many landlords try to keep the security deposit, too (or at least a significant portion of it). I had a landlord in CUF who charged me for every little thing he could think of. What was I going to do when he lied and said I had $300 in damages to the property? I wrote him a letter saying I would bring him to court because of it. He gave me $100 more back and I left it alone because the last thing I wanted to do was go to court over a couple hundred dollars.

 

Theoretically you get the money back. But it's not guaranteed. And when you need the money tomorrow, getting it back in 2 months is not soon enough. You know what people do in these instances? They actually go to predatory payday loan companies because they have no other option.

4 minutes ago, Brutus_buckeye said:

Again, you do not really understand this legislation. The way that it is drafted, only 1 company offers this product that would fit into the parameters of the law.

 

This is false. Three companies in Ohio provide this product and meet the standards. And it is very likely that more companies will start offering it once this legislation is in place. 

5 minutes ago, Brutus_buckeye said:

And, that article is not quite accurate.

 

Yes it is. I have a master's degree in public policy and housing was once of my areas of concentration for my graduate research. My partner is a housing attorney. The article is accurate, I assure you. 

 

6 minutes ago, Brutus_buckeye said:

The working class, permanent renting class  does not move around as much and they will be renting 5-10 years or longer.

 

That's just not true. I'm sorry. Repeating a claim doesn't make it accurate. Please stop sharing misinformation. 

7 minutes ago, Brutus_buckeye said:

You seem to think of the security deposit as not being returned, that is not accurate when the person pays and is responsible.

 

This would be laughable if it wasn't such bullsh*t. To believe this, one must assume that all landlords are wonderful people who are looking out for their tenants and never try to take advantage of them. Many landlords know that the law favors them over a poor renter who has no resources for a legal fight and they will definitely take advantage of this. Again, my partner goes after these landlords on a daily basis in court. If all responsible tenants got their security deposits back then housing attorneys wouldn't be overwhelmed with these cases. 

 

11 minutes ago, Brutus_buckeye said:

. As far as the $600 payment, the choice is not homelessness

 

It quite literally is. This is easy to understand. If you can't afford a lump sum security deposit, it is very hard to find housing. Many people have become homeless because of this. 

 

12 minutes ago, Brutus_buckeye said:

many property owners allow flexibility on payment of the security deposit.

 

Some do. Unfortunately they are not as common as you seem to think. And we shouldn't have to rely on the selflessness of landlords. 

 

13 minutes ago, Brutus_buckeye said:

Not to toot my horn, but yes, I am an expert on this issue

 

No you're not. You've gotten several key facts wrong in your posts. It seems you actually have very little understanding of this issue. 

 

Look, I don't think this proposal is a silver bullet. And it might not be effective in the end. But it is worth a shot. It is directed at a very real problem and could potentially help lots of people in our city. Because there are a lot of predatory landlords out there and there are a lot of people who cannot afford a security deposit. 

Have you read the legislation. Based on what you are stating, which you are incorrect on a number of points, you are very misinformed.

 

I have read the legislation, read it any get back to me and we can debate the actual language.

 

Your statement about the 3 companies in Ohio that do this is wrong. Yes, there are other companies that do this, but unfortunately, the legislation is drafted in a way to cut them out. So while you may be correct about the other companies, this legislation does not allow them to play.

 

That is cute your partner is a housing attorney. I also have significant experience in the industry and would qualify as an expert too.

 

The $600 deposit is a barrier, yes, but there are options in the marketplace already.

 

It is comical that you question my accuracy on this subject when you have just read an article and have not read the actual legislation, but carry on, you're cute.

20 minutes ago, ryanlammi said:

 

The problem is that the security deposit is not returned instantly. If you're moving into a new place, the old place still has your original security deposit. Now you have to pay the first month rent AND the security deposit before you get your last one back. For someone living paycheck to paycheck who is forced to leave their apartment, $1200 in one month is not possible if you're renting a 3 bedroom apartment or home for your family.

 

On the east coast many landlords charge last month's rent up front.  In NYC you often have to pay a broker in addition to all that.  

 

As I have commented elsewhere, rents are definitely accelerating citywide as compared to how things were just 2-3 years ago, but we are still far below not only the monthly rent levels but also the up-front costs of renting in bigger cities.  

 

My brief career as a landlord has already been filled with colorful stories.  For example, I had a guy move in two years ago and he promptly went on a 2-week road trip to Oregon with a high (literally high, btw) school buddy and didn't have his second month's rent since he blew it on an unnecessary trip.  He's still in the house 2 years later and has never, ever paid rent on time.  He's usually a full 3-4 weeks late, and I charge the lowest rent anyone has heard of - literally half of the prevailing $600/room rent in Clifton.  

 

I was kicked off the NUMTOT facebook group because I defended the crap that small-time landlords often tolerate.  No professionally managed place would tolerate chronically late rent payments.  

 

 

 

 

 

 

1 hour ago, ryanlammi said:

 

The problem is that the security deposit is not returned instantly. If you're moving into a new place, the old place still has your original security deposit. Now you have to pay the first month rent AND the security deposit before you get your last one back. For someone living paycheck to paycheck who is forced to leave their apartment, $1200 in one month is not possible if you're renting a 3 bedroom apartment or home for your family.

 

Many landlords try to keep the security deposit, too (or at least a significant portion of it). I had a landlord in CUF who charged me for every little thing he could think of. What was I going to do when he lied and said I had $300 in damages to the property? I wrote him a letter saying I would bring him to court because of it. He gave me $100 more back and I left it alone because the last thing I wanted to do was go to court over a couple hundred dollars.

 

Theoretically you get the money back. But it's not guaranteed. And when you need the money tomorrow, getting it back in 2 months is not soon enough. You know what people do in these instances? They actually go to predatory payday loan companies because they have no other option.

The issue about having money to move because of the upfront cost really does not go away. Most rental properties in the region charge only 1/2 month or less security deposit to be competitive. Many will require 1st and last month though. Placing restrictions on security deposit such as this does nothing to stop landlords from requiring first and last month rent. So again what seems like it could be a promising idea does not really accomplish its goal.

 

I will admit that Security deposit refunds can be subject to some abuse and there is also a wide degree of perception as to reasonable wear and tear on the property. One person's oasis is another person's dump. This lack of objectivity is what causes a ton of issues with the security deposit. The proposed legislation really does not address this.

 

As I mentioned earlier, this is an intriguing product that could offer benefits to a class A renter who rents at the Banks or 1010 Walnut. However, to the working class, it exposes them to a potential predatory product that over time would cost much more than the traditional security deposit will. It is like taking out a payday loan of $100 and being stuck paying $200 back over the next 6 weeks. It is seductive and tempting, but when you actually examine the numbers, the payments are actually usury.

 

 

2 hours ago, Brutus_buckeye said:

However, in year 1 when you are confronted with the choice of a $600 payment up front held in escrow or $10/month, the $10 month option seems tempting and appealing if you are a working class individual.

 

I have never, ever had a landlord who kept my security deposit in escrow. I've always made out a check directly to the landlord who got to deposit it in their savings account and earn interest on my principal.

2 minutes ago, taestell said:

 

I have never, ever had a landlord who kept my security deposit in escrow. I've always made out a check directly to the landlord who got to deposit it in their savings account and earn interest on my principal.

If your security deposit is more than a month rent, it legally has to be in a separate escrow with interest going to the tenant. If it is under a month, it does not need to be in a separate escrow and interest is not required to be paid. This is mainly to help the small landlords from burdensome paperwork on this. But regardless, even if it is not a separate escrow account, the security deposit is ultimately an escrow deposit. It is not a fee, and it is required to be returned upon the completion of the lease if there is no damage. Even though it may be in the landlord's personal account does not mean the funds are not considered escrow for purposes of the term. BUt no, they are not kept in a 3rd party escrow account.

1 hour ago, Brutus_buckeye said:

Have you read the legislation. Based on what you are stating, which you are incorrect on a number of points, you are very misinformed.

 

I have read the ordinance. 

 

1 hour ago, Brutus_buckeye said:

Yes, there are other companies that do this, but unfortunately, the legislation is drafted in a way to cut them out. So while you may be correct about the other companies, this legislation does not allow them to play.

 

The only rules the ordinance imposes is that the insurer must be licensed by the Ohio Dept of Insurance, they must permit payment of premiums on a monthly basis, the insurance must be effective the entire term, the coverage must be at least as much as the security deposit amount, and the insurer must agree to approve or deny a claim no more than two business days after it is made. That's it. These are not difficult to abide by. You seem to be implying that there are additional regs in the ordinance, but there are not. 

 

 

2 hours ago, Brutus_buckeye said:

That is cute your partner is a housing attorney. I also have significant experience in the industry and would qualify as an expert too.

 

Did you leave out the part where I said I had a master's degree in public policy and focused on housing issues on purpose? I've also been the person writing these ordinances on many occasions. 

 

2 hours ago, Brutus_buckeye said:

It is comical that you question my accuracy on this subject when you have just read an article and have not read the actual legislation, but carry on, you're cute.

 

It seems this may be projection. I've actually read the ordinance. It seems you have not. Or you're being dishonest. You already demonstrated that you don't understand the dynamics of low-income renters by claiming that most stay in one rental for many years. The funny thing about this entire exchange is that instead of actually providing other options or explaining why you thought the idea was bad by citing actual language from the ordinance that you objected to, you repeatedly misrepresented the ordinance and your own understanding of housing issues. And you did so in the most obvious and easily debunked way possible. This is why a lot of people here don't like to engage with you. It's just not productive. I'm done with this exchange now.

2 hours ago, DEPACincy said:

 

I have read the ordinance. 

 

 

The only rules the ordinance imposes is that the insurer must be licensed by the Ohio Dept of Insurance, they must permit payment of premiums on a monthly basis, the insurance must be effective the entire term, the coverage must be at least as much as the security deposit amount, and the insurer must agree to approve or deny a claim no more than two business days after it is made. That's it. These are not difficult to abide by. You seem to be implying that there are additional regs in the ordinance, but there are not. 

 

 

 

Did you leave out the part where I said I had a master's degree in public policy and focused on housing issues on purpose? I've also been the person writing these ordinances on many occasions. 

 

 

It seems this may be projection. I've actually read the ordinance. It seems you have not. Or you're being dishonest. You already demonstrated that you don't understand the dynamics of low-income renters by claiming that most stay in one rental for many years. The funny thing about this entire exchange is that instead of actually providing other options or explaining why you thought the idea was bad by citing actual language from the ordinance that you objected to, you repeatedly misrepresented the ordinance and your own understanding of housing issues. And you did so in the most obvious and easily debunked way possible. This is why a lot of people here don't like to engage with you. It's just not productive. I'm done with this exchange now.

 Those are the only rules of the ordinance. While the language may seem inclusive, the only provider that actually meets the standards of providing the product and allowing monthly payments is Rhino. Again, you have not done sufficient research on the matter.

 

Again it is cute how you feel I misrepresent the issue. as someone who is in housing and understands what workforce rentals encompass, I have first hand knowledge to see how this language will harm tenants long term.  As someone who has studied this matter recently, I am happy to put my experience up against yours any day of the week. You tend to want to overlook many of the flaws of the legislation because it does not fit into your narrative.  If it passes, it does not matter much to me, property owners will be fine and will thrive off of this. It is the low income renters who will be harmed the most by this. YOu seem to be blinded by this fact because you seem like you would rather disagree with me solely for the fact you think you are not allowed to like me instead of actually examining the legislation.  

16 hours ago, Brutus_buckeye said:

YOu seem to be blinded by this fact because you seem like you would rather disagree with me solely for the fact you think you are not allowed to like me instead of actually examining the legislation.  

 

I disagree with you because you got the basic facts completely backward. As usual.

Both of you need to stop being so condescending to each other. Just drop it. 

This is an absolutely horrible idea that is presented as if it's helping out low income folks, but is really more like a payday loan. They can keep a little bit of cash up front, but are instead subjected to a monthly fee in perpetuity. Cui bono? A handful of insurance companies who get to pocket the monthly premiums.

 

On the other end, landlords will hate it because the paperwork involved to get $200 out of the insurance company to clean a mess, $25 to replace unreturned keys, etc. would be overly burdensome and not worth it. Instead, rents will just inch up for everyone to cover the costs that would have otherwise been covered by the responsible parties' deposits.

 

 

It almost sounds like a product designed to guilt landlords into offering it.

2 hours ago, ryanlammi said:

Both of you need to stop being so condescending to each other. Just drop it. 

 

On 12/11/2019 at 11:35 AM, DEPACincy said:

Not true at all. Several companies offer this product.

 

According to this research, only one company offers a product that satisfies all the requirements of the proposal - and, not surprisingly,  it's the company that Sittenfeld worked with to come up with the proposal. Several companies offer similar products, but none of them are compliant.

 

That link also has some great info about the proposal. The more I read about this, the more it seems like a big scam - just like a payday loan, but for security deposits.

 

https://www.cincinnatireia.com/Page.aspx?ID=Legislative-Updates

 

Here's a link to a PDF of the actual ordinance:

 

https://www.cincinnati-oh.gov/council/meeting-agendas-minutes/education-innovation-growth-committee/

3 hours ago, GCrites80s said:

It almost sounds like a product designed to guilt landlords into offering it.

It is not a meritless idea. The problem is that they are trying to mandate it in a one sized fits all approach and that causes a lot of problems.

It is a product that can make sense if you

1) Live on the coasts

2) are an upwardly mobile professionals

3) Care about your credit rating

4) Don't plan on being in the same location for more than 1-2 years.

 

The problem is that the Cincinnati market does not have a large enough concentration of these units (iit is not NYC or San Fran or LA) and the typical renter generally tends to be working class. Having the product in the community is not a bad product, but it is the mandate that causes the issue.

 

Believe it or not, most landlords are against it because of the mandate and the fact it will cause them to offer a predatory product to their tenants. They have the best interest of the tenant in mind on this because if the tenant defaults, it makes it more difficult on the landlord. Where the landlord can be creative in getting assurances, they will, but when you lock into a mandate, it actually makes the problem worse.

 

End of the day, this is not something most landlords would really fear. It would create an administrative burden, sure, but it would not be the end of the world. The bigger issue with the landlords is concern for their tenants.

But what if it is sold improperly to tenants, with the advertising and salesmanship focused on the clients that it doesn't serve properly? This happens with insurance and other financial products on a fairly regular basis.

24 minutes ago, GCrites80s said:

But what if it is sold improperly to tenants, with the advertising and salesmanship focused on the clients that it doesn't serve properly? This happens with insurance and other financial products on a fairly regular basis.

That is another issue with it too. Do you think a property manager who is responsible for renting apartments is necessarily qualified to be selling an insurance product to an individual and to be able to explain it thoroughly and properly to that individual? On top of that, add into the fact that the tenant likely does not understand the product well enough to make an informed choice in the matter, it leads to a recipe for disaster.

Then everyone in real estate management would have to go to insurance class for a week, do continuing education and take tests.

21 minutes ago, GCrites80s said:

Then everyone in real estate management would have to go to insurance class for a week, do continuing education and take tests.

In some places, there is a requirement to get a certificate to sell a limited line insurance such as this. The companies will have to have all their employees trained, but training is very short and really not very involved to truly qualify a person to sell the product. Think 30 min webinar.  Unlike most insurance providers, these individuals will not need their Series 6 to sell the product.

Just to clarify, Series 6 is only necessary for reps selling investment/insurance products as a part of life insurance. People can sell all the P&C and health insurance they want without a Series 6 in Ohio.

18 hours ago, GCrites80s said:

Just to clarify, Series 6 is only necessary for reps selling investment/insurance products as a part of life insurance. People can sell all the P&C and health insurance they want without a Series 6 in Ohio.

Right. I just used that as an example. But a better example would be the licensure requirements for selling auto insurance.

 

But a limited lines license would require much less effort to obtain. Namely complete a form and maybe watch a webinar

Edited December 13, 20195 yr by Brutus_buckeye

Or gap insurance on auto loans. Every F&I person at an auto dealership has to be licensed to sell that and I imagine it's a webinar scenario.

^ That is probably the best example

So it appears that this legislation is going to pass today.  Not good for working class residents in the city but otherwise, it will do nothing for people and have a lot of unintended consequences. Kudos PG and city council.