Digging Rent Control Up from Its Grave, Boston Welcomes Disaster Instead of Innovation by Amir Shahsavari W hen Boston Mayor Michelle Wu announced the formation of a 25-member Rent Stabilization Advisory Committee in March 2022, the Small Property Owners Association (SPOA) questioned the exclusion of organizations representing small property owners from this committee, which has tried to rebrand rent control as “rent stabilization,” even though it is the same idea that died historically in Boston and surrounding cities — before it was appropriately buried in the graveyard of failed ideas. It was later apparent that city officials made a point of excluding any groups that oppose rent control from this committee according to various reports. The city then proceeded to orchestrate the first of its rent control “listening sessions” in the month of May. The gravediggers stumble The initial listening session was canceled just before it was scheduled to begin on Tuesday, May 10. It took over two hours for the city to issue a statement that the cancellation was caused by the absence of only one translator. The city further announced that the listening session would be rescheduled for May 24, which it said was just “one week” away, when it was actually two weeks away. This disjointed flurry happened to coincide with a large group of property owners indicating that they would register for the May 10 event just two days before it was scheduled to commence. It also happened to coincide with reports that city officials were conducting a “listening session” just to hear from people with whom they already agree, rather than including all members of the community, especially the many others who have grave concerns about rent control for well founded reasons. The echo chamber shudders On the same evening of the hasty cancellation, State Representative Mike Connolly took to Twitter 1 to attack the Greater Boston Real Estate Board (GBREB) for voicing legitimate concerns against rent control. The representative claimed that the group’s well researched criticism of rent control, pertaining to its negative effects on St. Paul’s housing market 2 , was too “narrow” in scope and that rent control has historically been a part of the “fabric” of this nation. But the rest of us know better However, the rest of us outside of that small echo chamber know better. We know that small property owners—and all who disagree with rent control—were excluded from the city’s rent control advisory committee continued on page 2 1 https://twitter.com/MikeConnollyMA/status/1524155677312274433?s=20&t=GKTMaSnbneH HfOiNaBynDw 2 https://assets.nationbuilder.com/repmikeconnolly/pages/370/attachments/original/1652220158/ GBREB_on_Rent_Control.png?1652220158 Jews and Property Owners Targeted with Hate Speech by Amir Shahsavari A s one of the organizations targeted by the so-called “Mapping Project,” the Small Property Owners Association (SPOA) joined with elected officials, Jewish organizations, and many others in condemning BDS Boston’s hateful act, while demanding that they take corrective action immediately. Fueling false and vulgar tropes about Jews—as well as landlords—this group has called upon others to “disrupt” and “dismantle” organizations with any connection to the Jewish community in Massachusetts, including our own. As small rental housing providers committed to serving all our neighbors, we reject this antisemitic and prejudicial act and we condemn any organization that promotes the hatred, demonizing, and targeting of Jews or any other communities. This threat stems from a website for a group called “The Mapping Project” www.mapliberation.org that appeared on June 3, 2022. The authors referred to themselves anonymously as “The Mapping Project Collective.” Indeed, the internet has become our wild west, prone to conspiracy theories and false news. We suspect that this is not a Russian hoax, but a locally grown hate group. We base this assumption on unpublished and self- published manuscripts that are quoted on their website. BDS, which stands for “Boycott, Divestment, Sanctions,” is a pro-Palestinian group that advocates for boycotting products and companies that deal with Israel. Although Palestinians are entitled to the same rights as the rest continued on page 8 840 Summer St, Boston, MA 02127 617-354-5533 www.spoa.com Twitter: @SPOA_Mass July 2022 Small Property Owners News Small Property Owners Association 2 Digging Rent Control Up from Its Grave, Boston Welcomes Disaster Instead of Innovation continued from page 1 deliberately. We know that rent control has failed wherever it has been implemented, including the United States and Europe, among other places. If it was ever a part of our nation’s “fabric,” per Representative Connolly, the fabric was clearly stained and torn. We know that rent control violates the rights of property owners by making it more difficult to collect their hard earned rental income, which would be subject to artificial price controls. The policy would create additional challenges in removing noncompliant tenants for nonpayment and other disturbances, including vandalism, to the detriment of not only the owners, but the many good tenants who rely on housing providers to bestow them with safe, maintained places that they can call home. We also know that rent control leads to displacement, gentrification, and stagnation, as well as the disrepair and devaluation of property—all of which harm tenants, owners, and the housing stock itself. Likewise, the policy would negatively impact the property tax revenues for cities and towns, likely triggering tax increases on the general public to compensate for those lost revenues. Tenants will be left with decaying buildings, along with reduced options in the housing market, due to less construction and reduced housing supply, as well as dwindling turn-over in units that are already rented. Meanwhile, tenants who already live in rent controlled units, including wealthier ones who are more affluent than their landlords, will typically remain in those units, while the tenants from lower socioeconomic backgrounds looking to rent will be displaced. In the process of taking miles after seizing inches, the radical tenant activists will likely push to mandate that all property owners guarantee lease renewals, even if an owner wishes not to a renew a lease after its expiration. This outrageous restriction defies the very purpose of forming a contract— which should be mutual—with anyone, while impeding the autonomy of the property owner. Consequently, the owner would have no recourse when confronted with difficult or abusive tenants. It would amount to giving away property, rather than renting it, with the tenant owning the housing provider. Tenant activists are reportedly pressing for this additional provision in New York, which passed the harshest version of rent control yet, statewide, in 2019. Hence, there is no doubt that rent control is “the best way to destroy a city, other than bombing,” per Assar Lindbeck, the world-renowned economist. Others have furthered this point by indicating that rent control devastates housing to the same degree that climate change endangers the environment and COVID-19 imperils the human body. Encouraging systemic extortion During the previous rent control era from the 1970s thru the mid 90s, property owners in Cambridge were persecuted by a spiteful and unelected rent control tribunal that denied their requests to raise rents and to make reasonable repairs to their properties, while issuing extreme and inappropriate orders for “repairs” which, in one instance, included raising the entire foundation of a home to correct a minor code issue. This led to the owner of that specific property dying from a heart attack days later. In Boston, meanwhile, tenant activists and rent control attorneys encouraged tenants to give property owners trouble by not paying rent, in addition to damaging property and calling in building inspectors under false pretenses, among other tactics. There were cases where tenants sued their housing providers for damages that the tenants created themselves, amounting to tens of thousands of dollars, per the advice of their attorneys and representatives. Some owners grew so desperate, they considered fire-selling their properties at significantly reduced prices that were even lower than the artificially depressed values imposed by rent control. The people who ultimately “bought” those buildings in the end included the same rent control attorneys and tenant activists who started all the trouble from the beginning. This amounted to an insidious form of theft in all aspects. Distorting the definition of a small property owner Furthermore, with regard to the claims of exempting small property owners from rent control, we know that Representative Connolly and other tenant activists define small property owners in a manner that is truly narrow in scope, limiting them to one home that is owner-occupied with a small number of units. This definition is truly absurd, considering that most small property owners, who provide over 60 percent of the rental housing in Boston and Massachusetts, do not fall in that category. Our status as small property owners is determined not by how many units continued on page 4 Dear SPOA members and friends, Our collective voice as landlords is very important —and I am pleased that we had a great turnout during the City of Boston’s first listening session for rent control on May 24, 2022. It is imperative to have an even higher turnout for the next session, which will be focused on landlords exclusively, on Thursday, July 21, from 6:00pm to 7:30pm. After engaging in an active lobbying effort by hiring Richard Tisei and Jim Eisenberg of Preti Strategies two years ago, the feedback that we consistently get is that our legislators never hear from housing providers. Tenant activists have been organizing for decades. They are very effective at messaging and they are well funded. We need to understand this and acknowledge that we are making up for lost time. As small landlords, you must prioritize communicating with and getting to know your elected officials. This should be treated as an essential part of your duty on a regular basis, if you wish to stay in business. Tenant activist groups have grabbed a firm hold of the COVID crisis to leverage emergency measures into one bad policy after another for housing providers. It amounts to death by 1,000 cuts for landlords, who must face the possibility of TOPA, rent control, ongoing eviction moratoriums, right to counsel, eviction sealing, and the list goes on. Rent control is the focus of much media coverage, as Mayor Michelle Wu draws attention to this in Boston. However, we should not be distracted by that yet, as the prospect of TOPA and surtaxes passing this month, either alone or as attachments to other bills, are more immediate threats. The Wu administration is pushing rent control in the form of “rent stabilization.” We all know that it is the same thing. While Mayor Wu created a Rent Stabilization Advisory Commission and charged it with “studying local housing conditions, as well as the structure and outcomes of rent stabilization programs in other cities... [and with] making recommendations...on strategies to stabilize Boston rents and protect tenants from displacement,” it is becoming clear that the Commission has already made up its mind. The administration’s apparent strategy is to adopt the policy as a given, carefully control the public process, and hope that rent control activists see the effort as sufficient, or get the Massachusetts legislature to cave on passing new laws allowing it, or both. In Massachusetts, rent control simply won’t be made law unless it passes as new legislation or gets voted on as a ballot initiative. Wu supporters claim that rent control was overwhelmingly mandated by her election. However, only three in every ten Boston voters cast a ballot. TOPA changes the way that private property conveyances happen. You have no exit strategy. If you look at the property that you have owned for decades as your savings and retirement, you will be penalized up to 227 days, or more, as your tenants organize to buy, peruse your financials, or get usurped by a predatory development company, or a large corporation that can afford to wait you out. How would legislators feel if their 401(k)s were subject to such a process? We should ask them. Please do so constantly throughout this month before the end of the legislative session on July 31. Rent control will need to be defeated by a broad-based coalition of shared interests coming together. We need to be preparing for that fight as well. SPOA keeps asking for money because of the lobbying effort that we have undertaken. We are all volunteers with our own properties and families as well. Your donations go to our legislative voice and the printing of our newsletter. It falls on us to advocate for ourselves—with all property owners participating. Either we gear up for the fight of our lives, or we risk the collapse of our industry—with small owners first on the chopping block. We need to wake up to that reality, and we need to fight not only for ourselves, but for our tenants and the many businesses that depend on us. The health and safety of our communities are on the line. Please donate and help us amplify our voice! Yours Sincerely, Allison Drescher President SPOA Letter from the President: Amplify Our Voice by Allison Drescher 3 4 Digging Rent Control Up from Its Grave, Boston Welcomes Disaster Instead of Innovation continued from page 2 we own or whether our buildings are owner-occupied, but by the degree to which we oversee management activities directly versus adopting complex corporate structures. Most small property owners also own and manage their properties through LLCs and trusts, which conveniently fall outside of the “exemption” criteria of tenant activists, who wish to lump us together with large owners as much as possible to further their false narrative, while condemning more owners—and more buildings—to the death grip of their destructive policies. Why are property owners blamed for the housing crisis? Moreover, why are property owners blamed for a housing crisis that we did not create? Even though rents have increased, the costs associated with running and repairing our properties have also risen. In fact, only nine cents on the dollar paid in rent is capitalized by the property owner, while the remainder of it is spent on the expenses of the property, as revealed in the image below. Despite this fact, the small property owners, who typically keep their rents lower and who often avoid raising them for years, are the first targets in the cross hairs of the rent control threat, along with other dangerous proposals put forth by tenant activists. Therefore, how can we afford to manage our properties if our income is restricted, or even denied? Who are these legislators, who know nothing about the business, to determine how much rental income is “fair?”And why are other industries not subject to the consideration of controls? What will happen to all of the other businesses that small property owners support when we are run out of business first? These include the tradespeople from the carpenters, electricians, and plumbers to the people who work in the banking, insurance, and brokerage industries—not to mention the local governments that collect property tax revenue. Where are the broader solutions that are supposed to help the entire community—as opposed to the proposals that scapegoat and victimize property owners? Many property owners rely upon their rental income to support their families and their personal lives, along with their businesses. Rent control will victimize these owners, who put their savings on the line to provide people with housing and to improve their communities. Why can’t the government give rental property owners credit and support as housing providers, instead of treating them like the enemy with punitive measures? While they acknowledge the vital need to increase housing production, continued on page 6 A critical part of doing business in the modern economy is access to information. When deciding which car to purchase, people typically compare several models based on their cost, safety, capacity, fuel efficiency, and a variety of other features. When deciding where to go out to eat, one can check out thousands of customer reviews commenting on the quality of the food, the service, and the ambiance before choosing a restaurant. There is also a remarkable variety of sources for this kind of information—for any given category of product or business, you can find some combination of expert professional reviewers and aggregators of user feedback competing to provide the most accurate and up-to-date data on the subject. In an economy as large and complex as the one we inhabit today, access to this kind of information is key to making sufficiently informed decisions for markets to function appropriately. Otherwise, it would be trivially easy for bad actors to take advantage of a naïve public by selling substandard goods or services and suffering no consequence. The more information there is available on the past behavior of each market participant, the more incentives all parties have to engage in cooperative, prosocial behavior and not abuse the system. A bill currently before the Massachusetts State Legislature, H.4505 1 , disregards this principle by allowing rental property tenants to have the court records of their past evictions sealed and by preventing any further use of these records for tenant screening or any other commercial purposes. Will this make life easier for tenants with eviction records? Potentially, but only at great cost to landlords and other tenants. In this excellent article 2 , MassLandlords. net explores some of the negative side effects that this bill would likely create. A condensed summary of these effects can be found below: • Prevents screening abusive tenants: While most tenants just want to play by the rules and enjoy a safe, maintained place to live, others are willing to abuse the system by refusing to pay rent (even when they can afford it) or creating an unpleasant, hazardous living environment for their fellow tenants. It is unfair both to landlords and to the majority of tenants to prevent property owners from investigating the records of 1 https://malegislature.gov/Bills/192/H4505 2 https://masslandlords.net/policy/eviction-sealing/ prospective tenants to determine who is likely to cause problems for the broader community. • Further disadvantages low-income tenants: If eviction records are no longer usable as a tool for screening renters, housing providers will have to rely more heavily on other metrics for tenant screening. This will likely mean greater emphasis on income and credit scores, making it significantly harder for low- income tenants without eviction records to find a place to live. It would also increase the burden on female, black, and Hispanic renters, who on average have lower income 3 and credit scores 4 than the general population. • Hinders dispute resolution: Court records can be a useful resource for both tenants and housing providers who wish to resolve inconsistencies between multiple parties’ accounts. For instance, a housing provider contacted as a reference for a tenant’s application to a new apartment stated that the tenant still owed him $1600 in back rent; the tenant denied this, saying she didn’t owe any money. By consulting court records, the new housing provider was able to establish that the tenant was telling the truth and approved her application. Under the eviction sealing bill, the new housing provider may not have been able to access these records and could have easily decided that the tenant wasn’t worth the risk and denied her application. • Prevents tenants from evaluating landlords: Open court records aren’t just useful for housing providers evaluating tenants; they can be used in the other direction as well. Not all housing providers have the same criteria for eviction; some are willing to expend considerable effort to work with tenants who fall behind on payment, but others are less forgiving and more likely to take renters to court. Tenants who have less stable income sources or other extenuating circumstances may prefer the former, but this kind of selection would be difficult or impossible under the proposed eviction sealing bill. • Creates opportunities for corruption: Even in Massachusetts 5 , courts don’t always live up to the promise of dispensing justice in a neutral, impartial continued on page 14 3 https://www.dol.gov/agencies/wb/data/earnings/median-annual-sex- race-hispanic-ethnicity 4 https://www.creditcards.com/statistics/race-age-gender-statistics/ 5 https://apps.bostonglobe.com/metro/investigations/spotlight/secret- courts-in-massachusetts/?p1=Article_Inline_Text_Link Keep Information Free: Oppose the HOMES Act by Chris Lehman 5 tenant activists persist in recommending policies that will destroy housing production counterproductively. How will this help the situation? Sadly, the proponents of rent control ignore appeals for reason. Instead, they are radically committed to unearthing a long buried corpse only to put lipstick on it, before forcing it onto the masses in the name of “innovation.” But we can do better than that—and we have the truth on our side! The success of May 24—and the importance of July 21—for property owners We were very pleased to see so many property owners attend the rent control session that was re-scheduled for May 24. Everyone noticed that housing providers turned out in full force—and we have YOU to thank for that. Please do not underestimate your voice or the importance of it. It has already made a difference. Since then, the city has scheduled different meetings exclusively for tenants and property owners. The session for tenants only was held on June 25. Meanwhile, the session for property owners is scheduled for Thursday, July 21, from 6:00pm to 7:30pm . It is vital for property owners to attend this meeting, as it will be the only one reserved for us. The city also plans to hold a second session for tenants later. It is not clear why tenants will have two sessions devoted to them, with only one for housing providers. But nevertheless, we must seize this opportunity to make our voice heard. Regardless of whether the Wu administration intends to listen to us in good faith, we are her constituents and voters as well. Property taxes paid by housing providers fund approximately 70 percent of Boston’s budget. We would be remiss in not informing you that this battle will be ongoing—and that we need your advocacy. So please continue to support this ongoing effort! Moving ahead with more supply and a greater diversity of housing options If property owners and like-minded people stick together, we can win this fight. Otherwise, the victors will be those who seek to harm you, while using deceptively sweet language to take what is yours. Please join us in standing up to them before they “pressure” the state legislature to unearth disaster upon us and our communities. Innovative solutions can only be found when those who provide the housing and keep it affordable are heard and respected. We should turn our attention to increasing the supply of housing, as well as a greater diversity of housing options, instead. As supported by Governor Charlie Baker and the Massachusetts legislature, the SOLUTION is to pass zoning reform to encourage more housing and to construct both new and affordable housing units, instead of disrupting the operation of existing buildings. The availability of these new units will create more competition, which will then stabilize, and reduce, the rent prices in Massachusetts. Furthermore, other solutions that are truly original and worthy of the term “innovation” may present themselves when property owners, who know the business, are actually heard for a change. Rent control does not get new housing built and it prevents the owners of existing properties from maintaining them. This failed policy should be illegal, as it devastates tenants, property owners, and the housing market itself. The government must resolve to create an environment of mutual respect, security, and cooperation between housing providers and tenants, where both parties can prosper, rather than favoring one side over another to the detriment of the community. Please contact your representatives at the city and state levels to voice your opposition to rent control and all policy proposals that violate our property rights. We have the right to run our properties safely and with dignity, as we provide for our tenants. It is therefore time, once and for all, to move forward in the spirit of true innovation — and to let dead policies, like rent control, remain buried in the cemetery of failed ideas. Digging Rent Control Up from Its Grave, Boston Welcomes Disaster Instead of Innovation continued from page 4 6 7 T he process to apply for a rental unit looks much different than in years past. Rather than meeting with a landlord in person, applicants can send an application online without ever meeting face-to-face. Zoom calls are common, as are virtual showings. There are even companies that fully automate the entire leasing process including keycodes, so that you never need to meet the applicant for them to move in. Reducing fraud should be a top-tier concern as it becomes more and more commonplace. Every day we are hearing of more scams, from people queuing up others to be their ‘landlord’ for references to sophisticated operations generating paystubs and even tax returns. The digital pool of applicants adds more people to the pile of applications we are getting for every unit, but quite frankly, many of them are looking for a ‘mark’ they can swindle via one trick or another. Small housing providers are easier to deceive than major management companies due to the belief that they have a less robust set of tools. One of the leading credit bureaus, Trans Union, which is TenantTracks’ primary vendor, conducted a study in 2020 about application fraud. They found that in addition to the switch from in-person applications to digital applications, the COVID-19 pandemic was another contributing factor to the rise of fraud in the rental housing industry. They found that: • 41% of respondents discovered fraud after move-in • 67% are concerned about the increase of fraud in the future • Over the course of the coronavirus pandemic, fraud has steadily increased, and 22% of applicants failed authentication or were identified as high risk. During the pandemic, fraud reached a high of 15% compared to 10.3% over the same period in 2019. It’s important for housing providers to understand the risk factors of fraud, as it can result in several negative consequences. Some lasting impacts of fraud, as identified by Forrester, who conducted Trans Union’s study, include: • Increased repetitional damage: 59% • Increased evictions: 51% • Internal time spent comparing applications to find discrepancies: 46% • Increased financial loss: 35% • Lighter vacancies: 32% • Increased bad debt: 22% The best way to catch fraud is to have systems in place to prevent it. Through the process of identity verification, you can make sure that you are actually speaking to the person to whom you believe that you are speaking. Cross referencing the information that you see can show you what lines match up, as well as those that do not match. Does the applicant’s government-issued ID match with the person’s other records? That can include credit information, eviction history, criminal history, and employment records. Start with a completed rental application. Everything should be filled out, including a full release to conduct an extensive background check. If you are doing this online, you should have the applicants upload a copy of their government issued ID for a first line defense. If the information on the ID and the application do not match, this should be your first red flag. From there, you can verify everything your applicant provided, and whatever is required within your rental criteria (you do have a WRITTEN criteria checklist, right?) is accurate and meets with your expectations. That would include checking for omitted information, noticeable gaps in the applicant’s rental or employment history (cue criminal records possibility here), or references that just don’t seem to be accurate. Types of Fraud With increased digitization comes more types of fraud. We have all heard of data breaches. Nearly every week, we are notified that our own data has been compromised with an offer for free credit monitoring. You should take advantage of these offers. Forrester estimates that one recent breach alone caused an increase of 5% to 10% in identity theft-related fraud in the U.S. With fraudsters becoming smarter, companies are having difficulties staying ahead of their advanced tactics. Some types of fraud that landlords should be aware of include: continued on page 10 Rental Application Fraud in the Digital Age by Paul Jenney 8 Jews and Property Owners Targeted with Hate Speech continued from page 1 of humanity—and while it is valid to criticize the foreign policies of Israel and other countries objectively—without hating Israel itself or Jewish people in general—it is clear that The Mapping Project seeks to demonize Jews, as well as property owners, out of pure spite and prejudice. Many have described The Mapping Project’s message as “vile and sinister,” including Robert Trestan in his Boston Globe op-ed on June 22. It has been characterized as antisemitic and roundly criticized by many leaders and institutions, including the Anti-Defamation League, Senators Elizabeth Warren and Ed Markey, and Representative Ayanna Pressley among others. Surprisingly, SPOA was mentioned as one of nine real estate targets—and we were accused of complicity in ethnic cleansing and displacement, which constitute gentrification—just by virtue of being a property owner group that also includes Jewish members amid a diversity of people. Responding to our critics regarding gentrification Per Linda Levine in the April 2022 edition of Small Property Owners News (Short History and the Metrics of Rent Control in Cambridge) 1 , we have the benefit of census and other statistics, since rent control ended in 1994, to know that rent control CAUSES gentrification and reduced diversity. Cambridge is now a more diverse city than it was under rent control. Although rising real estate prices are a national trend—SPOA, property owners, and the demise of rent control are not to blame for this problem. As property owners are faced with the challenge of rising repair and maintenance costs themselves, SPOA supports the creation of more housing, including affordable housing, which is the primary solution to this regional and national issue. The Mapping Project connects SPOA with Harvard University. Although we had a different treasurer in 1994 who was affiliated with Harvard University Real Estate, he joined SPOA because he and his wife owned a four-family brick townhouse on a leafy street behind Cambridge City Hall. He joined SPOA because he was under rent control and had the same problems with the unelected Rent Control Board that caused us to form SPOA in 1987. This might be called very old news, so why connect this one 1 https://www.spoa.com/short-history-and-the-metrics-of-rent-control- in-cambridge/ member with SPOA and The Mapping Project? Could it be because he had a Jewish sounding last name? This former SPOA member sold his building and moved away years ago. Also, conversely to the claims of The Mapping Project, Harvard law students, under the supervision of their professors, practiced law at the rent control board during the rent control era. They represented Cambridge tenants pro-bono. Most landlords back then represented themselves at rent control board hearings. This was very unfair to those housing providers. When SPOA objected to this practice, another group of Harvard law students volunteered to help the Cambridge housing provider community. Cautioning against extremism from The Mapping Project — and segments of government The FBI has stepped in to investigate The Mapping Project. They call this project “dangerous” for obvious reasons—and we must not underestimate this threat. In addition to rejecting all forms of hatred, discrimination, and demonization against any group, whether based on religion, occupation, or any other characteristic, SPOA calls upon all members of the community to guard against any acts of violence or vandalism that may ensue from this hate speech, as well as hatred that comes from other places. In a separate incident that appears unrelated to The Mapping Project itself, we were shocked to hear an elected official from Somerville attack the housing provider community in similar fashion. The city council in Somerville passed an extreme ordinance requiring owners to provide tenants with paperwork about how to stall a potential eviction action at the start of each new tenancy, in addition to the start of an actual eviction process—despite the tenants’ ability to research these matters on their own. After passing the ordinance, its author, City Councilor Willie Burnley Jr., said the following: “Throughout the city of Somerville, renters suffer in silence every day as their rights are violated by landlords more concerned with maximizing their bottom line than caring for tenants.” Councilor Burnley added that tenants should “never be forced to leave” their rental units. The tone of his remarks was further consistent with those of extremist groups elsewhere that have contradicted reality by referring continued on page 10 S ince producing a webinar about the dangerous impact of proposed Tenant Opportunity to Purchase Act (TOPA) legislation on April 14, 2022 1 , the Small Property Owners Association (SPOA) has advanced its rebuke of this proposal to the media and the legislature. As numbered currently, Senate bill 890 and House bill 1426 would impose a tenant right of first refusal on the sale of rental properties throughout Massachusetts, including all LLCs. If you are not a resident of Massachusetts and own one condominium that you rent out, but have moved to another state, TOPA still applies to you. House bill 4208, meanwhile, is a home rule petition that would apply the same restrictions in the city of Somerville exclusively. These bills would negatively impact the rental housing stock in Massachusetts, while restricting rental property owners from selling their properties at market value. The law restricts the seller’s ability to select the strongest offer and instead forces the seller to accept contingencies and abide by terms and conditions spelled out in the legislation, rather than the marketplace. In turn, this legislation could also create significant delays and uncertainty for buyers, especially when trying to secure financing, as the buyer must wait in place for the right of first refusal process prescribed in the bills to play out. This would make it much more difficult for buyers to purchase and invest in rental 1 https://www.spoa.com/webinar-on-proposed-tenant-opportunity-to- purchase-legislation / property. Tenants, meanwhile, would be diverted from finding alternative and affordable housing options after being used as pawns by a subset of lawyers and speculators who would benefit instead. After all, TOPA failed miserably in Washington, D.C., where less than 5 percent of tenants end up purchasing the properties that they rent. Currently, this proposal is only for apartment buildings, but the concept could potentially expand to single-family homes, where the government would grant preferred local buyers the privilege of purchasing a property before letting an owner sell to the broader market. This deliberate and artificial devaluing of property would negatively impact the property tax revenues for cities and towns, likely triggering tax increases on the general public to compensate for those lost revenues. Moreover, if this policy is imported to Massachusetts, the property owners who wish to sell their properties as part of their retirement plans would be barred from doing so, as they witness their lifelong work to build equity stolen from them. The TOPA debate in the media After East Boston News published a version of the TOPA article from SPOA’s April 2022 edition of Small continued on page 11 SPOA Takes TOPA Argument to the Media and the Massachusetts Legislature by Amir Shahsavari Please note: While the article below is up to date as of the date of printing, developments surrounding TOPA are continually evolving. For the most up-to-date information, please sign up for our Action Alert emails at tinyurl.com/spoaactionalerts and follow SPOA on Twitter at twitter.com/SPOA_Mass 9 Renew your commitment to Property Rights by visiting the new SPOA website today! www.SPOA.com THIS AD SPACE IS AVAILABLE! CALL 617-354-5533 FOR OUR ADVERTISING RATES 10 • Rental application fraud: This the practice of lying on a rental application, whether it be providing false income or uploading an altered photo. • Synthetic fraud : This is one of the fastest-growing types of fraud, where an applicant creates a fake identity using real and false information. For example, a fraudster may create a fake Social Security number and pair it with a real address to create a false identity to gain access to a rental property. • First-party fraud: This type of fraud is performed by the individual, typically the tenant, who uses fake or altered information, such as pay stubs and previous addresses, to qualify for a rental property. • Third-party fraud: This is when an individual uses another person’s identity or information to qualify for a rental property, such as misrepresenting who they are with someone else’s social security number, name, and date of birth. Much of this can be mitigated with adequate screening both on the due-diligence phase of calling landlords and employers, verifying documentation, and during the tenant screening report. You must learn how to QUALIFY the reference as a reliable historian (this skill is a must have) to weed out those feeding you false information. You also need to be able to identify if a government issued ID is falsified. Bartenders have been doing this for years, so it is a skill that can be acquired Consumer reporting agencies are extremely good at returning complete and accurate information, even when identities are manipulated. It is central to their business and there are extraordinary business and regulatory pressures on them to do this well. They must have sophisticated tools for finding addresses, social security number fraud, address matches and mismatches, soundex and nickname logic, and a host of other tools to correlate the data supplied versus the output data that paints a complete picture of the applicant—and that it is actually the same individual who is applying. Future TenantTracks improvements will include more tools for income and landlord verifications once they pass the first part of the background check. The more homework you do at the outset to prevent fraud, the better the outcome for your bottom line. Rental Application Fraud in the Digital Age continued from page 7 to “the landlord class” as greedy “parasites” and, essentially, the root of all evil. Whereas Councilor Burnley did not call for violence against property owners, maligning an entire group of good citizens in this inflammatory manner could have dangerous consequences. To hear this radical and divisive misinformation coming from officials in go