New Regulations in the City of Cleveland

[Scott Schnabel]

Quick blurb about the new out of county landlord rules.

[Ryan Arth]

Obviously they are putting more pressure on out of state investors that invest within Cleveland proper, but spreading liability to the property manager is a new twist. The mayor has been hot on out of state investors and poor property managers since his campaign. 

I was speaking with an agent last night who said that their brokerage told the property management division to get out of any contracts within the city limits. They don't want the company to be potentially liable if an owner doesn't follow through with the inspections and repairs.

After the GFC, we needed the capital investment or they would have had to tear down more houses than the thousands that they already have. Apparently now those investments are less interesting to city hall. 

As always, some bad actors cause burdensome regulations for everyone else.

Per the Akron Cleveland Association of Realtors:

"For example, in Cleveland, a local agent in charge must be identified if the property is not owner-occupied. However, if the owner lives in Cuyahoga County or a contiguous county, the owner may be listed as the local agent in charge. If the owner does not meet that residency requirement, another human being must be identified as the local agent in charge. If a problem arises with the property, the City will attempt to contact the owner and hold them accountable. However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property." 

[Joshua Janus]

Quote from @Ryan Arth:

Obviously they are putting more pressure on out of state investors that invest within Cleveland proper, but spreading liability to the property manager is a new twist. The mayor has been hot on out of state investors and poor property managers since his campaign. 

I was speaking with an agent last night who said that their brokerage told the property management division to get out of any contracts within the city limits. They don't want the company to be potentially liable if an owner doesn't follow through with the inspections and repairs.

After the GFC, we needed the capital investment or they would have had to tear down more houses than the thousands that they already have. Apparently now those investments are less interesting to city hall. 

As always, some bad actors cause burdensome regulations for everyone else.

Per the Akron Cleveland Association of Realtors:

"For example, in Cleveland, a local agent in charge must be identified if the property is not owner-occupied. However, if the owner lives in Cuyahoga County or a contiguous county, the owner may be listed as the local agent in charge. If the owner does not meet that residency requirement, another human being must be identified as the local agent in charge. If a problem arises with the property, the City will attempt to contact the owner and hold them accountable. However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property." 

However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property."

^ that is nuts

[Scott Schnabel]

Agreed.  Good luck finding someone who wants to take on that role.

[Michael Smythe]

This has been going on for years in the Metro Detroit area.

[Scott Schnabel]

Quote from @Michael Smythe:

This has been going on for years in the Metro Detroit area.

 I don't think they're holding the agent liable for violations in Detroit though.

[Jake Burkons]

Quote from @Joshua Janus:

Quote from @Ryan Arth:

Obviously they are putting more pressure on out of state investors that invest within Cleveland proper, but spreading liability to the property manager is a new twist. The mayor has been hot on out of state investors and poor property managers since his campaign. 

I was speaking with an agent last night who said that their brokerage told the property management division to get out of any contracts within the city limits. They don't want the company to be potentially liable if an owner doesn't follow through with the inspections and repairs.

After the GFC, we needed the capital investment or they would have had to tear down more houses than the thousands that they already have. Apparently now those investments are less interesting to city hall. 

As always, some bad actors cause burdensome regulations for everyone else.

Per the Akron Cleveland Association of Realtors:

"For example, in Cleveland, a local agent in charge must be identified if the property is not owner-occupied. However, if the owner lives in Cuyahoga County or a contiguous county, the owner may be listed as the local agent in charge. If the owner does not meet that residency requirement, another human being must be identified as the local agent in charge. If a problem arises with the property, the City will attempt to contact the owner and hold them accountable. However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property." 

However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property."

^ that is nuts

 Agreed. This is Crazy

[Michael Smythe]

@Scott Schnabel actually, the cities of Hazel Park and Warren require a DL from someone at the PMC and write the tickets in their personal name.

[James Wise]

Quote from @Ryan Arth:

Obviously they are putting more pressure on out of state investors that invest within Cleveland proper, but spreading liability to the property manager is a new twist. The mayor has been hot on out of state investors and poor property managers since his campaign. 

I was speaking with an agent last night who said that their brokerage told the property management division to get out of any contracts within the city limits. They don't want the company to be potentially liable if an owner doesn't follow through with the inspections and repairs.

After the GFC, we needed the capital investment or they would have had to tear down more houses than the thousands that they already have. Apparently now those investments are less interesting to city hall. 

As always, some bad actors cause burdensome regulations for everyone else.

Per the Akron Cleveland Association of Realtors:

"For example, in Cleveland, a local agent in charge must be identified if the property is not owner-occupied. However, if the owner lives in Cuyahoga County or a contiguous county, the owner may be listed as the local agent in charge. If the owner does not meet that residency requirement, another human being must be identified as the local agent in charge. If a problem arises with the property, the City will attempt to contact the owner and hold them accountable. However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property." 

 Give it time, this is getting shredded in court as we speak. City's with radical liberals in power like to throw unenforceable laws on the books. County, State and Federal rights supersede the craziness that some random liberal city council & Obama impersonator try to pull. 

[Richard Kim]

I'm a fairly new small time out of state investor who owns a couple multi-family properties in Cleveland. This new "local agent" requirement has given me pause as my property manager has informed me that they will not be signing off on this. For those who have more experience investing - what would you recommend I do here? Seems like my options are:

1. Find a new property manager or someone who is willing to sign off as the "local agent" - which is obviously easier said than done

2. Sell my properties and get out of Celeveland 

3. Wait it out?

[Michael Smythe]

@Richard Kim wait, but start looking for a new PMC.

If you can't find one, start planning to sell.

If it goes away, no harm done, just some time spent.

[James Wise]

Quote from @Richard Kim:

I'm a fairly new small time out of state investor who owns a couple multi-family properties in Cleveland. This new "local agent" requirement has given me pause as my property manager has informed me that they will not be signing off on this. For those who have more experience investing - what would you recommend I do here? Seems like my options are:

1. Find a new property manager or someone who is willing to sign off as the "local agent" - which is obviously easier said than done

2. Sell my properties and get out of Celeveland 

3. Wait it out?

 Wait it out or sell. You aren't going to find a legitimate property management company who will have someone sign off on this radical new law.

I've had several property management company owners reach out to me about this law, not one of them is going to comply with it.

[Jack Dagnese]

Quote from @James Wise:

Quote from @Ryan Arth:

Obviously they are putting more pressure on out of state investors that invest within Cleveland proper, but spreading liability to the property manager is a new twist. The mayor has been hot on out of state investors and poor property managers since his campaign. 

I was speaking with an agent last night who said that their brokerage told the property management division to get out of any contracts within the city limits. They don't want the company to be potentially liable if an owner doesn't follow through with the inspections and repairs.

After the GFC, we needed the capital investment or they would have had to tear down more houses than the thousands that they already have. Apparently now those investments are less interesting to city hall. 

As always, some bad actors cause burdensome regulations for everyone else.

Per the Akron Cleveland Association of Realtors:

"For example, in Cleveland, a local agent in charge must be identified if the property is not owner-occupied. However, if the owner lives in Cuyahoga County or a contiguous county, the owner may be listed as the local agent in charge. If the owner does not meet that residency requirement, another human being must be identified as the local agent in charge. If a problem arises with the property, the City will attempt to contact the owner and hold them accountable. However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property." 

 Give it time, this is getting shredded in court as we speak. City's with radical liberals in power like to throw unenforceable laws on the books. County, State and Federal rights supersede the craziness that some random liberal city council & Obama impersonator try to pull. 

Nothing you are saying here is incorrect. However, I cannot find any court cases where this is currently being challenged. Could you provide some further insight? Don’t forget, the same radical politicians that enacted this law also appoint city judges….

[James Wise]

Quote from @Jack Dagnese:

Quote from @James Wise:

Quote from @Ryan Arth:

Obviously they are putting more pressure on out of state investors that invest within Cleveland proper, but spreading liability to the property manager is a new twist. The mayor has been hot on out of state investors and poor property managers since his campaign. 

I was speaking with an agent last night who said that their brokerage told the property management division to get out of any contracts within the city limits. They don't want the company to be potentially liable if an owner doesn't follow through with the inspections and repairs.

After the GFC, we needed the capital investment or they would have had to tear down more houses than the thousands that they already have. Apparently now those investments are less interesting to city hall. 

As always, some bad actors cause burdensome regulations for everyone else.

Per the Akron Cleveland Association of Realtors:

"For example, in Cleveland, a local agent in charge must be identified if the property is not owner-occupied. However, if the owner lives in Cuyahoga County or a contiguous county, the owner may be listed as the local agent in charge. If the owner does not meet that residency requirement, another human being must be identified as the local agent in charge. If a problem arises with the property, the City will attempt to contact the owner and hold them accountable. However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property." 

 Give it time, this is getting shredded in court as we speak. City's with radical liberals in power like to throw unenforceable laws on the books. County, State and Federal rights supersede the craziness that some random liberal city council & Obama impersonator try to pull. 

Nothing you are saying here is incorrect. However, I cannot find any court cases where this is currently being challenged. Could you provide some further insight? Don’t forget, the same radical politicians that enacted this law also appoint city judges….

 HoltonWise is currently involved in litigation on the topic. I will post case info when we win.

[Catherine Ding]

Quote from @James Wise:

Quote from @Jack Dagnese:

Quote from @James Wise:

Quote from @Ryan Arth:

Obviously they are putting more pressure on out of state investors that invest within Cleveland proper, but spreading liability to the property manager is a new twist. The mayor has been hot on out of state investors and poor property managers since his campaign. 

I was speaking with an agent last night who said that their brokerage told the property management division to get out of any contracts within the city limits. They don't want the company to be potentially liable if an owner doesn't follow through with the inspections and repairs.

After the GFC, we needed the capital investment or they would have had to tear down more houses than the thousands that they already have. Apparently now those investments are less interesting to city hall. 

As always, some bad actors cause burdensome regulations for everyone else.

Per the Akron Cleveland Association of Realtors:

"For example, in Cleveland, a local agent in charge must be identified if the property is not owner-occupied. However, if the owner lives in Cuyahoga County or a contiguous county, the owner may be listed as the local agent in charge. If the owner does not meet that residency requirement, another human being must be identified as the local agent in charge. If a problem arises with the property, the City will attempt to contact the owner and hold them accountable. However, if that effort fails, the local agent is equally liable – criminally and civilly – for any fees, fines, etc. associated with the property." 

 Give it time, this is getting shredded in court as we speak. City's with radical liberals in power like to throw unenforceable laws on the books. County, State and Federal rights supersede the craziness that some random liberal city council & Obama impersonator try to pull. 

Nothing you are saying here is incorrect. However, I cannot find any court cases where this is currently being challenged. Could you provide some further insight? Don’t forget, the same radical politicians that enacted this law also appoint city judges….

 HoltonWise is currently involved in litigation on the topic. I will post case info when we win.

 Curious if there's been any update on this?

[Vanessa Ivonne Hernandez]

I'm following along on this topic too. I have a property I'm interested in. I'm trying to avoid having to use a PM for cashflow purposes yet the only LAIC I can find will only do it if the property has a PM. 

[Jack Dagnese]

Quote from @Vanessa Ivonne Hernandez:

I'm following along on this topic too. I have a property I'm interested in. I'm trying to avoid having to use a PM for cashflow purposes yet the only LAIC I can find will only do it if the property has a PM. 

 Hi Vanessa, 
I’ve been trying to find something, anything to verify if this law is actually being challenged in court. Something of this magnitude would normally have a newspaper article, or a publicly accessible court docket. I’ve been unable to find anything.

I’m new to the Cleveland market and was able to navigate the LAIC issue. I’m not located too far from you - I also own an investment property in Southern NJ. Let’s connect. 

[Nir Avner]

Hi,

I'm also an out of state investor, and looking for LAIC for the same reasons as @Vanessa Ivonne Hernandez... 

[Sofia Komrskova]

Absolutely ridiculous. As per usual, more regulations = more burdensome b.s for legit PMs and investors. However, if you are an out-of-state slumlord, you can now pass 100% of the financial and legal liability of maintaining a property onto some poor local. Big brain moves down at City Hall. The irony is that this might actually attract more unscrupulous out of state investors. 

Some info below:

https://www.clevelandohio.gov/sites/clevelandohio/files/Loca...

From the City of Cleveland website:

"The City of Cleveland’s definition of “Local Agent in Charge” is in Cleveland Codified Ordinance § 365.01(k). In summary, a LAIC is someone who can take responsibility for a rental property in the same way an owner would. If there are things that need fixed, it’s the LAIC’s responsibility to fix them, if the owner doesn’t. If there is paperwork that needs managed, it’s the LAIC’s responsibility to manage it, if the owner doesn’t. If there are fines to pay, it’s the LAIC’s responsibility to pay them, if the owner doesn’t. A LAIC will be held responsible and liable for any issue at a property if the owner of the property refuses to fulfil their duties. However, the LAIC has the right to turn around and make sure that any costs paid by the LAIC that should have been handled by the property owner are reimbursed by the property owner—ultimately through the courts, if necessary."