Housing Code Violations as Consumer Fraud

In Legislation, Real Estate by Richard Bianco

On October 3, 2017, the Council enacted an amendment to the D.C. Consumer Protection Procedures Act to allow the Attorney General to prosecute cases of consumer fraud against landlords who fail to correct housing code violations in rental units.

The At-Risk Tenant Protection Clarifying Emergency Amendment Act of 2017, is intended to clarify that the DC Attorney General, who is empowered to enforce by injunction, the Consumer Protection Procedures Act, can now do so in cases of landlord and tenant relations.

Let’s unpack that a little bit.

So the Consumer Protection Procedures Act (CPPA) is intended to offer legal protections for “consumers” from fraudulent or unscrupulous trade practices of “merchants.” The simplest way to understand this is in the context of an actual transaction. Say you purchase a television from an electronics store, and the salesperson assures you numerous times that it is a “smart TV” capable of connecting directly to the internet without the need for additional equipment. However, when you get it home and plug it in, you find out that it is a “stupid TV,” and cannot do the things promised by the store.

This is a classic merchant/consumer situation, and the CPPA sets forth the remedies that you may be entitled to if you can prove your case. If successful, the electronics store would have to pay your attorneys fees and three-times the amount you were harmed (treble damages) or $1,500.00 in the absence of actual economic harm. Now, in the real world, of course, you are probably not going to pursue the case of smart v. stupid television, because you would just return the thing, the store would give you some kind of refund and it would end there.

However, suppose you wanted to pursue the matter without filing a lawsuit yourself. That is where the CPPA comes in. The law appoints two government agencies to take action on behalf of consumers to stop fraudulent business practices.

First, the D.C. Department of Consumer and Regulatory Affairs (DCRA) is empowered to investigate the behavior of “merchants,” issue cease and desist orders, levy civil fines in addition to a litany of other things. Further, as a “consumer,” you can ask DCRA to take action by filling out a simple form on their website, for free.

In addition to DCRA’s role as protector of consumers, the Office of the Attorney General (OAG) is authorized to file injunction cases in Superior Court asking for the Cort to order merchants to stop unlawful trade practices. D.C. Code Sec. 28-3909.

So, to go back to the oversimplified TV example, you, and a bunch other people complain to DCRA that some store is lying about smart/stupid tvs. Ideally, DCRA and/or the AG actually does something about it, the evildoer is punished, and all is right with the world.

However, there is a notable exception to DCRA’s authority, specifically, DCRA may not apply its enforcement powers to “landlord and tenant relations.” D.C. Code Sec. 28-3903(c)(2)(a)

The section of the CPPA that authorizes the AG to file a lawsuit asking for an injunction, on the other hand, (D.C. Code Sec. 28-3909), does not contain a similar exclusion for landlord and tenant relations. Moreover, Sec. 3909 also provides that the AG can recover any actual losses by consumers, a $1000.00 civil penalty for each CPPA violation and the attorney’s fees incurred in bringing the action.

To date, the AG has tried to prosecute at least one landlord using Sec. 3909, under the guise of a CPPA injunction.

Perhaps because of the untested legal waters the AG found himself in with his landlord injunction theory, the Council has stepped in with the “clarifying” legislation.

The At-Risk Tenant Protection Clarifying Emergency Amendment Act of 2017, adds an additional subsection to D.C. Code Sec. 28-3909, that expressly states that the AG is authorized to file for an injunction in cases involving landlord and tenant relations.

Landlords should understand that this legislation exponentially increases the power of District tenants and those acting on their behalf, to avoid rental obligations in residential leases. The express authority for the AG to seek injunctions is added to the battery of remedies available to tenants including housing inspectors, administrative tenant petitions, Housing Conditions Court, or simply withholding rent in protest of alleged code violations.

This “nuclear bomb” in the AG’s arsenal has already resulted in the bankruptcy of a very large residential housing provider in the District, and could potentially affect other housing businesses as well.

If you have questions about your obligations as a landlord, whether related to housing code violations, AG enforcement proceedings or otherwise, give us a call or schedule an appointment by clicking the button at the top of the homepage.