Small Landlord Protection Insurance

I hope name of this post won’t generate controversy though it seems people don’t differentiate a landlord, specifically small landlord, from a real estate investor, which is a separate problem.

For one, I think it’s the real estate investor who does nothing except pushing the housing cost, so before I start I want to make sure we can align on the definitions. Small Landlord, in this case, is any natural person with 3 or less residential properties, i.e. 1 Primary Home, 1 Second Home, and 1 Investment (Landlord-able) Home. In a household, we could have 1 extra investment property per adult household member. Given a residential property is defined as 4-family or less, 3x properties would give you 12 units, minus the primary and second home, you would have 10 units available for rent, therefore making each unit about 10% or more in a person’s portfolio if all units are considered equal. Lastly, I want to emphasize that housing should NOT be a for-profit business and proper taxation will enforce that.

Adding to what I said in https://tinglik.medium.com/the-problem-with-housing-shortage-1ddf0c3e52aa, I think we should tax any landlords who own more than 3 properties where a single unit would have less than 10% impact on their total portfolio‘s bottom line.

Reduction of burden for reasonable landlord in an eviction

The thing about small landlord is the lack of resources, just like a tenant, especially when there is a non-paying occupant who cause damages to the property. The current system, while reasonable to protect the tenant against unfair landlord, completely ignores a landlord’s need. This means a landlord would have to maximize the future profit to compensate this loss, creating a lose-lose situation for BOTH the tenants and small landlord.

The Current Process for a Holdover Eviction

1. Issue a Notice to Quit/Termination (1 to 3 months)
2. File a Petition and Notice of Petition (1 to 3 months to schedule a court date)
3. Adjournments (about 1 month)
4. Settlement Negotiation (about 1.5 month)
5. Pre-Trial Conference (about 1 month)
6. Further Pre-Trial Conference as one PRO SE if Respondent failed to appear (about 1 month)
7. Trial or Settlement (about 3–6 months waiting to get the tenant an opportunity to move)
8. Warrant to Eviction (about 1–2 months, can process immediately upon the stipulation or judgement)
9. Eviction Notice (about 1–2 months)
10. Order to Show Cause (about 1 months)
11. Eviction Notice AGAIN (about 1–2 months)
12. Order to Show Cause for signatures from the appellate term (about 1 months)
13. Maybe the Final Eviction Notice (about 1–2 months)

The Proposed Process for a “Non-Payment Lease Termination” Holdover Eviction

1. Issue a Notice to Quit/Termination (1 to 3 months depending on the length of the tenancy)
2. File a Petition and Notice of Petition (1 to 3 months to schedule a court date) → The plaintiff, the landlord, has the burden of proof to show that the occupant has more than 2 missing payment in the last 6 months AND the landlord is a small landlord under the aforementioned definition AND the tenant fails to show proof that the lease termination IS NOT a retaliation. → When Tenant become Occupant
3. Trial or Settlement (about 1–3 months for the occupant to move or subjected to the settlement agreement)
4. Warrant to Eviction (about 1–2 months, which can process immediately upon the stipulation or judgement)
5. Eviction Notice (about 1–2 months)

With the Proposed Process, it would reduce the potential loss by the small landlord to a maximum of 11 months for tenant of 3+ years, instead of about 23 months.

Small Landlord Protection Insurance

With the new tax revenue stream, we can fund a Small Landlord Protection Insurance in which if the said Landlord is proven under the Proposed Process, the landlord may file a claim to recoup the loss from the eviction process as well as the potential damages done to the property by the occupant. Small Landlord Protection Insurance may cover upto 6 months of the rent loss, where the monthly rent is limited upto the rent thresholds mentioned, and upto $10k worth of damage per unit. The landlord may opt for additional assistance, upto $10k, if the landlord is willing to “sell” the tenant’s debt, at 15% of the court approved value, to the city collection agency, relinquishing the small landlord from collecting.

This way, we can help the small landlord manage the cost of repair and systemic non-payment. I know someone who has been trying to evict two non-paying occupants for almost two years. They trashed the place and the only way for the landlord to move forward is to price the rent as high as possible to recoup the damage done. This would help and reason with the landlord to keep the rental cost at the rent thresholds.