Advocates Warn Bill That Provides Security Deposit Alternatives May Hurt Renters
For many low-income renters, paying a security deposit is one of the biggest hurdles to finding an affordable home.
So City Council Vice President Sharon Green Middleton framed her bill to require landlords to provide alternatives to security deposits as one that would empower renters.
“It’s been a long time since we really looked at ways of having renter relief,” Middleton told council members in February.
But renters’ advocates say it would not empower renters, but their landlords.
Renters’ advocates take issue with one of the bill’s alternatives: surety bonds, or, as the bill calls them, ‘rental security deposit insurance.’
Marceline White, the executive director of the Maryland Consumer Rights Coalition, said that surety bonds are a potentially predatory practice, and that the term ‘insurance’ is misleading.
“What surety bonds actually do is they protect the landlord and provide no protection for a tenant,” White said.
White said tenants may buy surety bonds, thinking they would protect them from additional costs if something went wrong - for instance, if their property was damaged, or they could not pay rent.
But even after buying a surety bond in place of a security deposit, a tenant may still owe money, White said.
A landlord can file a claim to a surety company for fees like late rent or damages. The company would then charge the renter.
“It's really like they're paying twice,” White said. “This is really a bit of a Trojan horse that's been put in the bill that can really harm and attack renters at a time when they're most vulnerable.”
A renter who cannot pay what the surety company charges them can suffer long term consequences.
“That could affect your credit rating, that could also affect your ability to rent elsewhere,” White said.
Tisha Guthrie, a steering committee member of Baltimore Renters United, says the bill may hurt many desperate renters.
“A lot of the times when you're in financial distress, you do what is offered. Something that on site will provide you some kind of financial relief. You know you cross your fingers and hope for the best,” Guthrie said.
She’s urging the city council to consider the voices of advocates who know the struggles low-income renters face on a day to day basis.
“We're supposed to be on the same page,” she said. “We're supposed to be working with a common goal.”
The bill is part of what council members are calling a Housing Justice Package. For the most part, Guthrie and other renters advocates support other bills in the package. One bill would prevent landlords from evicting their tenants when their leases expire. Another would prevent landlords from charging late rental fees until after their tenant receives public assistance funds.
Among the council’s outspoken critics of the bill is Councilman Ryan Dorsey.
He says he supports an alternative in the bill that would allow renters to pay their security deposits in a series of smaller installment payments.
“That's a really good thing in this bill,” Dorsey said. “But the only way I could support this is if we're not promoting this surety bonding.”
He clashed with Middleton at a committee work session on the bill last month as he was not allowed to propose amendments. He then voted against moving the bill to second reader for the full city council.
“I am appalled at how transparently this bill is being rushed through this committee today without further discussion,” he told Middleton.
Middleton pushed back, saying Dorsey’s amendments were “reactionary” and “last-minute,” and that he could propose them at the next full city council meeting.
At that meeting, the bill was abruptly pushed from second reader to third reader for a final vote.
Dorsey moved to recommit the bill to committee, criticizing Middleton’s handling of the work session. His motion failed.
Middleton said she’d allowed Dorsey to speak in committee and insisted she had followed parliamentary rules.
Dorsey also proposed an amendment to strike surety bonds from the bill, but the council voted it down.
However, Middleton delayed a final vote on the bill. The City Council is now planning on a final vote Monday.