Rental inspection and building code updates pass out of committee

This morning, the Council’s Planning, Land Use and Zoning Committee voted to send a batch of updates to the city’s Rental Registration and Inspection Ordinance and Building and Maintenance Code to the full Council for adoption. Most of the changes are pretty tame stuff, dealing with carbon monoxide detectors, lead paint, safety and security requirements, and adjustments to program fees. But one area — required inspections — dives into a topic with a rich history of legislation and litigation, and pushes the rules right up to the limits of (and possibly over) what the courts allow.

I wrote about the provisions of this ordinance to update the RRIO and SBMC two weeks ago when the committee began considering it. This morning there were a handful of amendments to the bill that were adopted before it was passed out of committee; nothing terribly controversial, mostly just tinkering with the parameters and language of the bill’s provisions.

The more substantive issue, and the one that in many ways is the impetus for the bill, is how the RRIO permits inspections to be carried out in a way that allows slumlords’ bad practices to go undetected. This currently happens in two ways:

  • The city notifies landlords 60 days in advance of a scheduled building inspection, and at the same time announces which specific units in a multi-unit building have been selected for inspection. This gives landlords time to fix up code violations in those units, while leaving other units potentially in violation of the code; inspectors, however, have no basis for inspecting other units if they find no violations in the pre-selected units and have received no complaints from other tenants.
  • If the landlord uses a certified private inspector instead of hiring one of the city’s inspectors (landlords have the choice), then if the inspector finds a violation the landlord can correct it, get the unit re-inspected, and issue the certificate of compliance to the city as required without city officials ever knowing that a unit was in violation. That denies the city the ability to learn of and track chronic code violators.

The RRIO is relatively new legislation: it was passed into law in 2012, and it phased in the registration requirements for rental units between 2014 and 2016. These kinds of loopholes and problems are bound to happen, and this is about the right timing for the city to discover and correct them. The ordinance discussed today addresses the two issues above:

  • The city still notifies landlords 60 days in advance of a scheduled inspection (or that an inspection is required within 60 days), but provides notification of the selected units to be inspected between 5 and 10 days in advance rather than the full 60. This gives the landlord time to notify tenants, but not enough time to correct large infractions in only specific units.
  • When private inspectors issue failed inspection reports, they must provide copies to the city for its records.

This sounds easy and straightforward — if you don’t know the history of legislation and litigation over the ability of the city to conduct inspections of rental housing. If you do, this is the point you run away screaming.

The Residential Landlord-Tenant Act of 1973 is the basis in state law for all things related to rental housing. In the early 1990’s the City of Seattle, in response to increasing issues with slumlords and substandard housing, began an effort to crack down. Through a complex analysis, it identified the 30% of rental units in the city most likely to be in violation of building codes and began inspections using city personnel. If landlords and tenants refused to consent — and they usually did — the city issued search warrants to force inspection of those units. That led to a 1994 lawsuit, City of Seattle vs. McCready, which generated two landmark decisions by the Washington Supreme Court. In McCready I, the Court ruled that lower courts are not authorized to issue search warrants, absent a statute or court rule, without probable cause.  The city, in turn, went back to the lower court, presented probable cause based on an inspector’s examination of the exterior of an apartment building, and got a search warrant — which was again challenged. That led to McCready II, in which the Court ruled that search warrants may only be issued for probable cause of a criminal offense, not a civil one — and building code violations are civil offenses. The Court followed up in 2005 with another case in which it found that issuing search warrants for noncriminal offenses violates the Fourth Amendment of the U.S. Constitution.

The workaround for this is simple: get the city out of the business of doing the inspections. The City of Pasco implemented such a system in 1997, in which landlords are required to submit a “certificate of compliance” that their rental unit meets the building code. The certificate of compliance is a requirement for a license to operate a business license. Nevertheless landlords and tenants still sued (Pasco vs. Shaw), in a case which also went to the state Supreme Court. But this time the Court ruled that the system was legal and proper, noting:

  • Unless the person conducting the inspection is a state actor, no violation of these constitutional provisions occurs… Absent state action, neither the Fourth Amendment, nor [Washington state constitution] article I, section 7 was violated.
  • A person is a state actor if that person functions as an agent or instrumentality of the state… In making this determination, Washington courts look to “the capacity in which [a person] acts at the time of the search” rather than to the person’s primary occupation… “Critical factors include [1] whether the government knew of and acquiesced in the intrusive conduct and [2] whether the party performing the search intended to assist law enforcement efforts or to further his [or her] own ends.”
  • Landlords first and foremost further their own ends when they engage in the inspections contemplated by the ordinance.
  • A tenant cannot unreasonably withhold consent to the landlord to enter into the rental unit in order to inspect the premises, and the act allows some third parties to accompany the landlord upon entrance… if the scope of a landlord’s entrance does not exceed the legitimate purposes contemplated by the Residential Landlord-Tenant Act of 1973 (RLTA), no unreasonable search has occurred.   Of course, the RLTA provides some limitations to landlord entry.   A landlord, accompanied by his or her chosen inspector, cannot enter without at least two days’ notice to the tenant, and they must enter at a reasonable time…  The inspection required by Pasco Ordinance 3231 does not exceed what is already allowed by the RLTA.
  • Significantly, if a private inspector finds code violations, the ordinance does not require the inspector to turn his or her findings over to the city. Thus, a landlord can remedy any violations found by an independent inspector, submit to another inspection, and obtain a license based on the new inspection, without the city ever being notified of the original violations.   The city insists only upon the certificate that an inspection has been successfully completed.

In 2010 the state Legislature updated the RLTA to allow cities to more easily embrace what the Court allowed in Pasco vs. Shaw, and that led to the City of Seattle’s RRIO in 2012 modeled on the same structure.

So let’s go back to the two prongs of the City Council’s approach to fixing the loopholes in the RRIO that they considered this morning. Requiring the selection of specific units 5-10 days before the scheduled inspection is well within the parameters of the 2-day minimum notice codified in state law and validated by the Court, so we’re good there. But the other part — requiring private inspectors to give copies of failed inspection reports to the city — is problematic. In Pasco vs. Shaw, the Court found it “significant” that landlords and private inspectors could do the very thing that the City Council now wants to outlaw: hiding failed inspection reports from the city. But the Court didn’t say it was “essential” to reaching the conclusion that the landlords and inspectors aren’t state actors, so this is now officially a legal gray area. When the RLTA was updated in 2010, the legislature added in language allowing cities to require copies of inspection reports from private inspectors:

If a rental property owner chooses to hire a qualified inspector other than a municipal housing code enforcement officer, and a selected unit of the rental property fails the initial inspection, both the results of the initial inspection and any certificate of inspection must be provided to the local municipality.

However, that language has not yet been tested in court. Since the state Supreme Court has already said that using state actors to do the inspections violates the U.S. Constitution, if it finds that requiring inspectors to give their reports to the city makes them state actors (and it has already hinted that it might), then it will toss out the law. And that, in a nutshell, is the question of the day: how much can the city require private inspectors to do before they are, in the eyes of the law, acting on behalf of the government? If the city crosses the line, the delicate legal structure allowing it to proactively enforce the housing code collapses.

The update to the RRIO that passed out of committee this morning will come before the full Council for final adoption on July 10. Assuming it goes forward in its current form, expect landlords to sue immediately upon passage. Then it will once again be up to the courts to decide where to draw the line.