REINCheck

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VO [00:00:06] You're listening to REINCheck with Andrea Rice, Contracts and Industry Specialist, at REIN where you get the latest member news and information delivered straight from the source, REIN MLS.

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Andrea Rice [00:00:20] Hello and welcome to REINCheck. I am your host, Andrea Rice. And we are back from our summer hiatus just in time for a special episode. Today we are checking in with REIN's Property Manager Advisory Committee legal counsel, attorney Brandon Allred, to discuss a critical update to the REIN lease. Even if you do not use the REIN lease, you want to stay tuned as Brandon and I take a deep dive into this important update because it will affect how you do business moving forward. Brandon, thank you so much for joining me today.

Brandon Allred [00:00:51] Well, Andrea, thank you so much for having me. I am looking forward to talking about this and excited to shed some light on this important change.

Andrea Rice [00:01:00] Yes, a great episode to come back with from hiatus. And for those of you listening, you know that REIN strives to keep form updates limited to two times per year. Updates are typically released in January and July, but occasionally a new law or issue comes up that initiates a special form release. Today's discussion is focused on just such an occasion. The REIN lease will be updated and released on September 20th, 2023. This update is a complete reworking of paragraph five, the military clause, and will have a major impact on how our members approach enforcement of this section.

Brandon Allred [00:01:40] Yeah. Andrea, that's absolutely right. I think agents and brokers need to circle September 20th on their calendar. And really this shift is more than just paperwork. It's a paradigm shift in how we approach the military cause in the REIN lease. And it really relates back to enforcement of the concepts addressed in the military clause in the Hampton Roads area. And given the military presence here, this is a significant issue for many of our members.

Andrea Rice [00:02:15] Yeah. Brandon, as you said, this is this is going to impact a lot of our members. So can you give everyone some background on how we got here?

Brandon Allred [00:02:26] Yeah, absolutely. I'm happy to do that. So, you know, talking about the the military clause, many of you are familiar that there are special rights for military tenants in Virginia and there are rights afforded to military tenants through the Virginia Landlord Tenant Act. And then there are also rights afforded to military tenants through the Service Members Civil Relief Act. And those are federal rights. And unfortunately, there is a conflict between the rights afforded to military tenants under the SCRA, the federal rights, and the rights afforded to military tenants under the Virginia Landlord Tenant Act, the state rights, if you will. Those of you who have worked in Virginia leasing residential real estate to service members for a long time will remember the 35 mile rule, which basically says that if you are in the military, if you are a residential tenant, you can terminate your lease without penalty if you have orders to move more than 35 miles from your present assigned location. That concept has been a part of the Virginia Landlord Tenant Act for a very long time. Many brokers and agents and landlords are extremely familiar with that. You're probably also familiar with the Service Members Civil Relief Act, and that is a comparable set of rights for military tenants. Gives them the right to terminate residential leases again without penalty if they receive orders to move locations. But the SCRA is actually broader than the Virginia Landlord Tenant Act. So there is no 35 mile restriction in the SCRA. The SCRA would permit a military tenant to terminate a lease if that tenant received orders to move two miles down the road. So it's a different approach. It's a much broader approach. And for better or worse, the SCRA, as federal law, is going to take precedence over the Virginia Landlord Tenant Act. So this has created an awful lot of confusion locally. It's created confusion with landlords, brokers, and agents. And we unfortunately encounter situations where landlords and property managers have tried to enforce the more restrictive Virginia Landlord Tenant Act when dealing with military tenants rather than looking to and respecting the rights under the SCRA that military tenants have. And that's created some real issues for for some of our members. I will tell you that this is a priority item for the DOJ and certainly for local JAG officers. They take this very seriously and this is high on their enforcement list and the penalties can be fairly significant. So we want to make sure that everybody's aware of the issue and that we're doing everything that we can to address it. And part of that comes through addressing this in the REIN lease.

Andrea Rice [00:06:25] Thank you for that background, Brandon. I think that really sets the stage for why we felt this change was necessary and why we didn't want to wait until January. This really deserved its own special release. So now can you tell us what specifically changed in paragraph five of the REIN lease?

Brandon Allred [00:06:45] Absolutely. So paragraph five of the REIN lease as it previously existed, effectively parroted the Virginia Residential Landlord Tenant Act. It made reference to the SCRA, and it certainly contemplated that military tenants were entitled to exercise and enforce their rights under the SCRA. But then after making that statement, the prior iteration of the REIN lease went through more or less word for word the military termination rights, as stated in the Virginia Residential Landlord Tenant Act. So it created at least we thought it created a little bit of opportunity for confusion because really in most cases, the SCRA is going to govern and control over the Virginia Residential Landlord Tenant Act. And we didn't specifically address the conflict that existed between the two in the prior iteration of the TREIN lease. And, you know, many of you who are familiar with the REIN lease know that it is very much code driven. It is intended to be compliant with the Virginia Residential Landlord Tenant Act. And that's the reason that Section five of the REIN lease existed in the way that it did. But as we looked at the issue, as the Property Managers Advisory Committee looked at the issue and considered feedback that they were getting from members, they decided that in this instance, given the inherent conflict between the federal and the state law, a change was appropriate and necessary to eliminate any confusion and really clarify for members, for brokers and agents who are using the lease what their obligations are under the SCRA and relevant Virginia law. So with that said, the new approach, as Andrea noted, is a wholesale revision of Section five of the REIN lease. We have removed the language that tracks the Virginia Residential Landlord Tenant Act. Again, that is not going to be enforceable in many, if not all situations and the SCRA will generally govern. So for that reason, Section five has now been replaced with language that tracks the SCRA and specifically contemplates military tenants having the rights to terminate without penalty residential leases afforded to them in the SCRA. We walk through the vast majority of those termination rights. I will tell you that there are some additional circumstances contemplated by the SCRA that we elected not to cover in the REIN lease simply because, as a practical matter, our members are telling us that they don't run into those situations that frequently. Usually they run into a situation where a tenant is not a member of the military at the time they execute the lease. There after joins the military and they have a termination right. Or a situation where the military tenant receives orders to move locations for a period of longer than 90 days. So those are the termination rights that we focused on. There are other situations where a military tenant is injured in the line of duty and they and their dependents have rights in those situations as well. We direct you to the actual code, to the SCRA to address those. And then the other thing that we do is we expressly address the conflict between the Virginia Residential Landlord Tenant Act and and the SCRA. And we advise tenants, landlords and property managers in the lease that there is an inherent conflict that in a situation where there's a conflict, the SCRA is going to control over the Virginia Residential Landlord Tenant Act but that in the lease is in no way operative to waive any rights under the Virginia Residential Landlord Tenant Act. And we advise tenants, landlords and agents that they have to respect any statutory rights afforded to military tenants that are not expressly outlined in section five of the REIN lease. Again, we've tried to address the situations that landlords and property managers are encountering most frequently, but there are other instances. So our hope is that this really clarifies the obligations for landlords and tenants and is going to be a useful tool for brokers and agents as they talk with their clients and explain their relative rights and obligations under the lease and under the SCRA and Virginia law.

Andrea Rice [00:12:30] Thank you, Brandon. And with such a big shift in how we approach this section of the lease, I'm sure our members might be wondering do they need to get new leases signed for their existing rentals or just use the new lease moving forward? And what about lease renewals?

Brandon Allred [00:12:50] Yeah, that's a great question, Andrea. So I don't think it is necessary to have new leases signed with tenants. Though, you know, certainly there's nothing wrong with doing that. Just remember that the language in your old leases, particularly the language that references this 35 mile restriction, is not necessarily enforceable. You know, the problem that we see is not the language in the lease itself. The problem comes when the landlord tries to enforce that language, tries to enforce the 35 mile restrictions in situations where the tenant actually has a termination right under the SCRA. And then we're interfering with the tenant's exercise of its rights under the SCRA. So, you know, having a legacy lease in place that references and unenforceable provision of the Virginia Landlord Tenant Act is not, per se, improper or illegal, so to speak. It just creates an opportunity for confusion. So if you do have an opportunity, perhaps at a lease renewal to replace that lease with a current lease, that, you know, helps eliminate some of that confusion and addresses the conflict between federal and state law, I think it's certainly advisable to do so. But I don't think it's necessary for landlords and property managers to go around and start entering into new leases or amending and tearing up old leases without some other reason to do so. They just need to understand the enforcement limitations that exist with respect to that legacy language if it's in their lease.

Andrea Rice [00:14:52] Thank you. I think that's really good information for our members and really some good points about the enforcement of that existing language. And I think it is important to note here that we do understand that not all of our members use the REIN lease. So even if you do not use the REIN lease, you still may want to take this as an opportunity to check the lease that you are using to see if you want to make any adjustments to your current lease, you know, so you don't find yourself in a situation that could be potentially troublesome.

Brandon Allred [00:15:27] Andrea, I think that's a really great point. And, you know, just as some additional context here in looking at this issue with the Property Managers Advisory Committee, we did look at a number of leases that are in use in the Hampton Roads area in addition to the REIN lease, and many of these came from REIN members. And it was really interesting to see the various approaches here. We saw approaches similar to the REIN lease. We saw approaches where language was drawn directly from the Virginia code without reference to the SCRA. We saw leases where the SCRA approach was followed pretty much to the letter without reference to the conflict in the Virginia Code and pretty much everything in between. So, you know, there's a diverse range of approaches on this issue. Again, going back to our earlier comment, as long as you actually respect the rights in the SCRA that military tenants have and any other rights not in conflict that they may have under the Virginia Residential Landlord Tenant Act, from an enforcement perspective, you're going to be okay. But I think it is worthwhile to sit down and really look at these leases and think about the language that's there with respect to military tenants. Because, you know, when you put something in black and white in front of a landlord and tenant, that's sort of their starting point. And, you know, it can lead them. If it's not correct, it can lead them down a path that they don't necessarily want to go down or maybe shouldn't be going down. And it's a little bit harder to get to the right result if you've got a lease that says something that you know isn't entirely accurate as far as the statutory rights available to military tenants are concerned. And the other thing that I would say is if you do get into one of those situations and if there is confusion as to what a tenants and landlords rights might be in one of these situations, please check with with your broker or consult legal counsel. Again, you know, this does seem to be an enforcement priority for the DOJ and certainly for local JAG officers. And we don't want to see any of our members get into a difficult position there.

Andrea Rice [00:18:20] Absolutely. Thank you, Brandon. And thank all of you for listening. I really appreciate you taking the time to check in and stay informed. That new REIN lease will be available on REINMLS.com and Instanet starting September 20th. And redlines of this change will be available on REINMLS.com. As always, if you have any suggestions for SMAC or PMAC, please submit those to smac@reininc.com and we will make sure that your suggestion gets on an upcoming meeting agenda. And if you've not done so already, please subscribe to REINCheck so that you get future episodes delivered directly to you when they are released. Like I said, we've got some great content coming out at the end of this year. You don't want to miss it. Thank you and have a great rest of your day.

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VO [00:19:07] You've been listening to REINCheck with Andrea Rice. Stay in the know from those who know. Delivered straight from the source, REIN MLS.

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