An appellate court’s definition of rent and costs has created confusion and ambiguity.
- The Appellate Court of Maryland (Appellate Court) ruling in Smith v. Westminster Management (Smith) defines rent in ways that create confusion and ambiguity.
- If Smith is allowed to stand, owners and operators will have to navigate a web of statutory and case definitions that may contradict each other, creating ambiguity as they seek to provide quality housing and operate their businesses in compliance with all legal requirements.
- The Smith decision may subject owners/operators to significant liability under Maryland Consumer Debt Collection Act and Maryland Protection Act.
The National Apartment Association (NAA), along with the Maryland Multi-Housing Association (MMHA) and the Apartment & Office Building Association (AOBA) have filed a brief as Amici Curiae in support of Westminster Management urging the Supreme Court of Maryland to agree to hear an appeal in a case that has the potential to greatly alter how rents and charges are collected in Maryland. The brief, filed on April 27, 2023, challenges the Appellate Court ruling in Smith v. Westminster Management. The Appellate Court decision in Smith upends longstanding definitions of “rent” and “costs” in accordance with Maryland landlord-tenant code.
Throughout the Appellate Court’s decision in Smith, the definition of “rent” is inconsistent and breeds confusion. While certain parts of Smith consider rent as the “periodic charge for use or occupancy of the premises,” other parts of Smith define rent with a narrower focus, calling “rent” a “fixed monthly charge a tenant pays the landlord to reside in the unit.” Later in Smith, the court defines “rent” with a third definition – “the fixed monthly charge” as “equal monthly installments of the annual rent.” In urging the Supreme Court of Maryland to hear the case, NAA, MMHA, and AOBA believe Maryland’s highest court should provide a clear definition of what constitutes “rent” so that all owners/operators have a clear understanding to use in their operations. Additionally, unless the Supreme Court of Maryland chooses to hear the case, owners/operators will continue to face uncertainty about what other fees will or will not meet the definition of “rent” or “costs” in summary ejectment actions.
Additionally, if allowed to stand, the ruling in Smith could potentially restrict the ability of owners/operators from entering what had been permissible contract provisions with residents of their properties. The brief noted that prior to the ruling in Smith, if a residential lease complied with the requirements under state law, Maryland Courts would tend to give regard to the terms of the lease contract. The Appellate Court ruled in Smith that owners/operators could be subject to “significant potential liability” under the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act if “rent” is defined in a manner contrary to the ruling in Smith.
NAA’s Legal Affairs team will continue to monitor this case.