Seattle landlords and property managers have won a case against the Seattle City Council’s ordinance that mandated landlords and property managers accept the first qualified tenant who applied.
Seattle is thought to be the only city in the country that has tried to use this type of ordinance.
Small landlords had sued the city saying the ordinance violated their due process, free speech and property rights.
A King County Superior Court Judge, Suzanne Parisien, struck down the ordinance saying “choosing a tenant is a fundamental attribute of property ownership.” She also said the ordinance was an unreasonable means by the city of pursuing anti-discrimination.
She wrote that the ordinance, called the “first-in-time (FIT)” law’s “few concessions to landlords do not redeem it. While landlords are permitted to set their own rental criteria …general criteria does not substitute for the discretion to choose a specific tenant.”
“Notably, the ability to negotiate for instance, – a key element of the right to freely dispose of property – is extinguished by the FIT rule. Even if landlords can impose some limits on the pool of qualified applicants, landlords and tenants still cannot bargain for an arrangement that suits their interests.”
She wrote in the opinion that “to determine if a law violates due process, courts must address three questions:
- Is the regulation aimed at achieving a legitimate public purpose?
- Does the regulation use means reasonably necessary to achieve that purpose?
- Is the regulation unduly oppressive?
“As to the first question, the court finds that the regulation is aimed at achieving a legimate public purpose.
An unreasonable means of pursuing anti-discrimination
“As to the second question, the court finds it does not. The principle that government can eliminate ordinary discretion because of the possibility that some people may have unconscious biases has no limiting principle – it would expand the police power beyond reasonable bounds. While the city can regulate the use of property so as not to injure others, a law that undertakes to abolish or limit the exercise of rights beyond what is necessary to provide for the public welfare cannot be included in the lawful police power of the government,” the judge wrote.
“The FIT rule is also an unreasonable means of pursuing anti-discrimination because of its sweeping overbreadth. The FIT rule is overbroad since with few exceptions, landlords renting to the general population cannot deny tenancy to the first qualified applicant, period.”
“As to the third question, the court finds the FIT rule is unduly oppressive because it severely restricts innocent business practices and bypasses less oppressive alternatives for addressing unconscious bias,” the judge wrote citing case law,” the judge wrote.
FIT rule restricts free speech
“The FIT rule mandates methods by which landlords communicate with prospective tenants and controls the content of those communications. The rule must therefore face immediate scrutiny as a commercial free speech restriction.
“Under the FIT rule, landlords must post written notice of all rental criteria in the leasing office or at the rental property, as well as in any website advertisement of the unit. The information that must be communicated via these means is comprehensive, including all “the criteria the owner will use to screen prospective occupants and the minimum threshold for each criterion that the potential occupant must meet to move forward with the application process.
FIT rule restrains landlords’ free speech and advertising
“The notice must include all information, documentation, and other submissions necessary for the owner to conduct screening using the criteria stated in the notice. An application is deemed ‘complete’ once the applicant has provided all the information stated in the mandatory notice. The landlord must offer the unit to the first applicant who satisfies the criteria in the advertisement.
“The FIT rule not only constrains the means by which landlords communicate, it also controls the content of that communication. A landlord may not post a rental on the web and say ‘call to learn how to apply’ or ‘email me for further details.’ Rather, the landlord must list online all information regarding how to apply and all criteria by which applications will be assessed.
“It is undisputed that FIT rule violates landlords’ speech rights by prohibiting advertisements based on content and dictating how landlords can advertise,” the judge wrote.
FIT rule does not prevent discrimination
The judge also wrote that, “The FIT rule does not ‘directly and materially’ advance the city’s interest in preventing discrimination because it precludes the use of landlord discretion. To satisfy this component of the commercial speech test, the city must offer more than ‘mere speculation and conjecture, rather a government body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real and that its restrictions will in fact alleviate them to a material degree.”
The Pacific Legal Foundation had sued over the ordinance claiming it violated landlords’ due process, free speech and property rights.
The decision stemmed from a lawsuit filed by several small-scale landlords whose rights were threatened by the first-in-time rule. The rule forced landlords to rent their property to the first qualified applicant, even if the landlord has good reasons to pick someone else, the foundation said in a statement.
“The city insisted the rule was needed to overcome landlords subconscious discriminatory tendencies when selecting tenants. But Judge Parisien disagreed writing in her opinion that choosing a tenant is a fundamental attribute of property ownership, and that the rule restricts far more speech than necessary to achieve its purposes in stopping discrimination,” the foundation said.
The foundation had filed suit against the city on behalf of MariLyn Yim, who owns a duplex and triplex in Seattle with her husband.
“We are so glad to once again have our rightful ability to carefully select tenants and manage our risk. One bad tenant could take us years to recover from financially,” she said in the release.
City may appeal the ruling
“We disagree with the court’s ruling, and we’re studying it to determine our next steps,” Deputy City Attorney John Schochet told the Seattle Times.
Councilmember Lisa Herbold championed the first-come, first-served law in 2016, saying her goal was to ensure all renters were treated equally. At the time, officials said they were unaware of any other U.S. city with such a law.
When landlords are allowed to choose among multiple qualified applicants, their biases — conscious or unconscious — may come into play, Herbold and other proponents said.
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